UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON D.C. 20549

                                    FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934 For the Fiscal Year Ended September 30, 2001

                                       or

[ ] 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 0-17187

                           LOGIC DEVICES INCORPORATED
              -----------------------------------------------------
                          (Exact name of registrant as
                            specified in its charter)

         CALIFORNIA                                     94-2893789
---------------------------                     ---------------------------
  (State of Incorporation)                           (I.R.S. Employer
                                                    Identification No.)

                     1320 ORLEANS DRIVE, SUNNYVALE, CA 94089
          -------------------------------------------------------------
                    (Address of principal executive offices,
                               including Zip Code)

                                 (408) 542-5400
          -------------------------------------------------------------
                         (Registrant's telephone number,
                              including Area Code)

           Securities registered pursuant to Section 12(b) of the Act

     Title of Class              Name of each exchange on which registered

          NONE                                     NONE

           Securities registered pursuant to Section 12(g) for the Act

                         COMMON STOCK, WITHOUT PAR VALUE
                -------------------------------------------------
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes     X     No
     ------      -------

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]

The aggregate market value of voting stock held by non-affiliates of the
registrant on December 19, 2001 was approximately $20,387,900. On that date,
there were 6,841,888 shares of Common Stock issued and outstanding.

Documents Incorporated By Reference: Part III incorporates certain information
by reference to the registrant's definitive Proxy Statement to the registrant's
annual meeting of shareholders to be held March 12, 2002.


                                  PAGE 1 OF 42
                      INDEX TO EXHIBITS APPEARS AT PAGE 41

<PAGE>
CAUTIONARY STATEMENT

         This Report contains forward-looking statements which include, but are
not limited to, statements concerning projected revenues, expenses, gross
margin, and income, market acceptance of our products, the competitive nature
of, and anticipated growth in our markets, our ability to achieve further
product integration, the status of evolving technologies and their growth
potential, the timing of new product introductions, the adoption of future
industry standards, our production capacity, our ability to migrate to smaller
process geometries, and the need for additional capital. These forward-looking
statements are based on our current expectations, estimates and projections
about our industry, management's beliefs, and certain assumptions made by us.
Words such as "anticipates, expects, intends, plans, believes, seeks, estimates,
may, will," and variations of these words or similar expressions are intended to
identify forward-looking statements. In addition, any statements that refer to
expectations, projections or other characterizations of future events or
circumstances, including any underlying assumptions, are forward-looking
statements. These statements are not guarantees of future performance and are
subject to risks, uncertainties, and assumptions that are difficult to predict.
Therefore, our actual results could differ materially and adversely from those
results expressed in any forward-looking statements, as a result of various
factors, some of which are listed under the section, "Factors Affecting Future
Results," at the end of Item 1 of this Report. We undertake no obligation to
revise or update publicly any forward-looking statements for any reason.


                                     PART I

ITEM 1. BUSINESS


GENERAL DEVELOPMENT OF THE BUSINESS

         LOGIC Devices Incorporated (the Company) develops and markets
high-performance digital integrated circuits that address the requirements of
original equipment manufacturers (OEMs) to provide high-speed electronic
computation in digital signal processing (DSP), video image processing, and
telecommunications applications. The Company's product strategy is to develop
and market proprietary circuits that offer superior performance to meet specific
application requirements.

         The Company's fiscal year is comprised of 52 weeks of seven days, each
beginning on Monday and ending on Sunday, with each year's fiscal quarters
comprised of exactly 13 weeks. The Company's fiscal year 2001 ended September
30, 2001, its fiscal year 2000 ended October 1, 2000, and its fiscal year 1999
ended October 3, 1999.

         The Company's products generally address DSP requirements involving
high-performance arithmetic computational and high-speed storage functions. The
Company is focused on developing proprietary catalog products to address
specific functional application needs or performance levels that are not
otherwise commercially available. The Company seeks to provide related groups of
circuits that OEMs purchase for incorporation into high-performance electronic
systems. As a result of the Company's focus on high value proprietary products,
it reduced the number of products that it offers from approximately 200 variants
of 38 base functions at the end of fiscal 1999, to approximately 100 variants of
35 base functions at the end of fiscal 2001.

         The Company relies on third party silicon foundries to process silicon
wafers, each wafer having up to several hundred integrated circuits of a given
Company design, from which finished products are then assembled. The Company's
strategy is to out-source wafer processing to third party foundries to avoid the
substantial investment in capital equipment required to establish a wafer
fabrication facility. See "Business - Background." The Company utilizes
foundries to take advantage of their processing expertise and continues to
explore additional foundry relationships to minimize its dependence on any
single wafer foundry.

         The Company markets its products worldwide through its own direct sales
force, a network of 10 national and international independent sales
representatives, and one domestic and 20 international distributors. In fiscal
year 2001, approximately 31% of the Company's net revenues were derived from
OEMs, while sales through foreign and domestic distributors accounted for
approximately 69% of net revenues. Among the Company's customers are Snell and
Wilcox, Quantel, Philips, Hitachi, Ikegami, NEC, Sony, Toshiba, Honeywell, SDX,
Solectron, Acuson, Pinnacle Microsystems, Lockheed Martin, Boeing, Hewlett


                                       2
<PAGE>
Packard, and Advanced Technologies Laboratories. Approximately 68% of the
Company's net revenues were derived from within the United States and
approximately 32% were derived from foreign sales.

         The Company was incorporated under the laws of the State of California
in April 1983. The Company's principal offices are located at 1320 Orleans
Drive, Sunnyvale, California 94089, and the telephone number is (408) 542-5400.

BACKGROUND

         Rapid advances in fabricating silicon-based semiconductors are driving
a global revolution in electronics. With these ongoing advances, the ability to
economically compute, communicate, and control seems to be limited only by the
creativity required to implement ever more complex electronic systems. It is
becoming increasingly common to implement entire electronic systems on a single
small sliver of silicon. The challenges to the industry have increasingly turned
toward innovative product definition, timely product development, technical
customer support, and heavy capital investments in advanced semiconductor wafer
fabrication facilities. The rapid advances in chip fabrication technology have
resulted in a specialization of skills within the industry. In addition to the
specialization in materials processing skills required to fabricate
semiconductor wafers, the industry increasingly requires and values system
architecture development, interoperability standards, signal processing
algorithms, and circuit design expertise as essential skills for developing
financially successful products. Opportunities have thus emerged for
semiconductor companies that focus on product definition, advanced design
techniques, and technical application support, and that rely on third parties
for wafer fabrication. The Company focuses its resources on defining and
developing high-performance integrated circuit components for growing markets,
which require demanding computational throughput.

         The semiconductor industry is intensely competitive and is
characterized by rapid technological change, product obsolescence, wide
fluctuations in both demand and capacity, and steep price erosion. These factors
can obsolete processes and products currently utilized or produced by the
Company. In such cases, the Company is required to develop products utilizing
new processes and to either integrate such products into its existing foundry
processes or seek new foundry sources.

MARKETS AND PRODUCT STRATEGIES

         The Company believes it possesses competencies in two areas: DSP
algorithm and architecture development and high speed, very large scale,
integrated circuit implementation.

         DSP involves converting light, sound, or other naturally occurring
analog waveforms into a stream of digital values that may then be processed,
manipulated, exchanged, or sorted by electronic systems. DSP provides many
advantages, including: the ability to process and manipulate digital data with
consistency and precision; the ability to store and recall information; and the
ability to extract information content and compress the amount of data that must
be stored, processed, or transmitted. Manipulation of video images and speech
requires signal-processing rates and precision that are not practical with
analog technology or with general-purpose (non-DSP) processors. DSP is an
increasingly important technology for many emerging product technologies.

         With the increasing cost effectiveness of DSP as a result of rapid
advances in semiconductor process technology, DSP is becoming ubiquitous in our
lives. As a result, DSP has attracted the considerable attention of very large
and formidable competitors. Generally, these competitors, out of necessity,
focus on very high volume, application specific markets, or on general-purpose
DSP products that can be programmed to address a wide variety of applications.
To avoid direct competition with these formidable competitors, the Company seeks
to identify products and market niches that demand greater performance than can
be accomplished with a programmable DSP and that are small enough not to attract
significant attention from larger chip manufacturers.

         High quality video image processing currently requires over 10 times
more computational capacity than programmable DSP processors can deliver. Mass
market video graphics and image processing products, such as 3D personal
computer graphics boards, are generally targeted at selling price points that
cannot support broadcast quality images. Moreover, broadcast quality equipment
may generally be required to process video images many times in the composition
and editing of on-air material. As a result, while the underlying mathematical
computations for processing both broadcast and computer images are similar, two
distinct markets exist. As a result of the very high volume potential available


                                       3
<PAGE>
for a successful personal computer graphics chip product, many companies compete
fiercely over this market opportunity. In contrast, the broadcast industry,
while it requires more robust mathematical precision in processing images,
consumes far fewer chips. Due to its more modest market size, this market has
been relatively ignored by the chip industry. As a result, the Company has
identified this area as a productive area to apply its core strengths, given its
resources, capabilities, and size.

         Beginning in November 1998, the Federal Communications Commission
directed that television broadcasters begin a transition from current analog
broadcasts to high definition digital television (HDTV). All analog broadcasts
are scheduled to cease by the year 2006. In addition to providing improved image
quality as a result of increased resolution, the image aspect ratio
(width/height) will be changed from the traditional, nearly square 4 by 3 size
ratio of current televisions to a wider screen 16 by 9 ratio more similar to
motion picture screens. Due to the large base of currently installed equipment,
both formats will co-exist for a number of years. In addition, due to the
initially limited availability of content in the wide format, the industry faces
the need to resize images back and forth between the two formats with
exceptionally high computational precision, so as to preserve the image quality
advantages of the newer digital format. It is generally acknowledged that the
industry is behind schedule in meeting this FCC mandate. The industry's slow
transition adversely affected the Company's revenues for fiscal 2001 and 2000.

         With its significant presence in the broadcast equipment industry, the
Company and its customers jointly defined a family of very high-performance
digital image filtering circuits that facilitate the smoothing of edges as video
images are stretched and resized. The Company developed and sampled these to
OEMs for incorporation into HDTV studio production systems. During fiscal 2000,
many of those OEMs completed their system level product development on this new
generation of HDTV compatible studio systems. While sales of HDTV studio
equipment in fiscal 2001 and 2000 lagged behind market forecasts, the Company
believes that its products offer unique solutions to certain video image
filtering problems required in that equipment. When the HDTV studio equipment
begins to sell in higher volume, the Company should benefit from these
increasing sales.

         As a result of its initial work on digital filtering and image resizing
circuits, the Company identified secondary applications for its product
technology. Many of the current products are also applicable to, and have been
incorporated into, advanced medical imaging equipment, such as computer aided
tomography (CAT) and ultrasound scanners. As a result of the recent need to
replenish stocks of advanced military weapons systems, the Company expects to
enjoy an increased level of sales for certain military programs during fiscal
2002.

         Telecommunications, in all of its various forms, is a fast growing
market for DSP chips. The Company has found that its digital filtering
components also have applications in wireless base station processing. Analogous
to video image processing, major industry suppliers have tended to concentrate
their efforts on the high volume, handset side of the wireless link, while the
base station side receives far less attention. Due to demands for fewer,
smaller, and less intrusive antenna sites, the digital filtering required in
multi-channel wireless base stations is computationally intensive and power
limited. The Company continues to believe this area is an attractive target and
is focusing much of its product development efforts on this market.

PRODUCTS IN DEVELOPMENT

         The Company has historically experienced a correlation between its
success in introducing new products and increases in revenues. Consequently, the
Company is committed to a high level of product design and development activity,
as it considers new product development critical to its future success. In the
hope of accelerating new product introductions, the Company increased its
research and development expenses from 14% of total revenues in fiscal 2000 to
19% of total revenues in fiscal 2001.

         With the benefit of on-going customer input resulting from its current
digital filtering products, the Company has a number of new DSP product
opportunities that it will undertake to develop in fiscal 2002. These products
generally will be utilized in conjunction with the Company's current products to
further facilitate high-performance signal processing. At current resource
levels, the Company does not expect to be able to complete all of the new
product opportunities that it has identified. The level of product development
expenditures will be dependent on the Company's success in meeting its staffing
objectives.

                                       4
<PAGE>
WAFER FABRICATION TECHNOLOGY

         The Company relies on third party silicon foundry suppliers to produce
processed wafers from mask patterns designed by the Company. Through these wafer
suppliers, the Company has access to advanced high-speed, high-density
complimentary metal oxide semiconductor (CMOS) process technology, without the
significant investment in capital equipment and facilities required to establish
a wafer fabrication facility. Products developed in fiscal 2001 utilize process
technology with effective channel lengths under 0.25 micron. Coupled with the
Company's structured custom design methodology and experience in high-speed
circuit design, this technology has allowed the Company to create products that
offer high computational speeds, high reliability, high levels of circuit
integration (complexity), and low power consumption.

         The Company is primarily dependent on Taiwan Semiconductor
Manufacturing Company as its primary wafer-processing source. Wafers are
processed to pre-agreed specifications to produce integrated circuits designed
by the Company. There can be no assurance that such relationship will continue
to be on terms satisfactory to the Company. The Company's foundry source does
not guarantee minimum supplies. At times, the Company's revenues have been
limited by its inability to obtain adequate quantities of processed wafers. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Overview."

         The Company carries a large inventory of unassembled wafers that can be
packaged into a variety of carrier styles to support customer requirements and
to insulate the customer and the Company from possible disruptions in wafer
supplies. The Company is also developing new products with a new foundry source,
and expects to begin prototype production in the second quarter of fiscal 2002.

PRODUCTION, ASSEMBLY AND TEST

         The Company's production operations consist of functional and
parametric wafer testing, package marking, hot and cold testing, final
inspection, quality inspection, and shipment. As is customary in the industry,
the Company's commercial grade devices are shipped to high-volume assembly
subcontractors in the Far East for assembly. Thereafter, the assembled devices
are returned to the Company for final testing and shipment to customers. The
Company continues to test raw material through finished product at various
stages in the manufacturing process, utilizing automated test equipment capable
of volume production.

MARKETING, SALES AND CUSTOMERS

         The Company markets its products worldwide to a broad range of
customers through its own sales efforts, a network of 10 national and
international independent sales representatives, and one domestic and 20
international electronics distributors. The Company concentrates its direct
marketing efforts on high-performance segments of the telecommunication, medical
imaging, and broadcast equipment markets in applications where high speed is
critical. Among the Company's OEM customers are Snell and Wilcox, Quantel,
Philips, Hitachi, Ikegami, NEC, Sony, Toshiba, Honeywell, SDX, Solectron,
Acuson, Pinnacle Microsystems, Lockheed Martin, Boeing, Hewlett Packard, and
Advanced Technologies Laboratories.

         The Company coordinates North American sales from its Sunnyvale,
California facility. The Company also has a sales office in Warminster, England
to support the Company's international sales activities. Sales representatives
obtain orders on an agency basis and the Company ships directly to its
customers. Sales representatives receive commissions on sales within their
territories. Distributors purchase the Company's products for resale, generally
to a broad base of small to medium-size customers. As is customary in the
industry, distributors are entitled to certain price rebates and limited stock
rotation rights, for which the Company has made a provision in its consolidated
financial statements. During fiscal 2001 and 2000, sales through both
international and domestic distributors accounted for approximately 69% and 78%,
respectively, of net sales, while direct sales to OEMs accounted for
approximately 31% and 22%, respectively, of net sales.

         In fiscal 2001, Jan Devices, Inc., a domestic distributor, accounted
for approximately 32% of net revenues. In fiscal 2000, All American
Semiconductor, the Company's former domestic distributor, accounted for
approximately 31% of net revenues, and Insight Memec, an international
distributor, accounted for approximately 10% of net revenues.

                                       5
<PAGE>
         International sales are conducted by sales representatives and
distributors located in Belgium, Canada, Denmark, England, Finland, France,
Germany, Hong Kong, Israel, Italy, Japan, Korea, Netherlands, Spain, Sweden, and
Taiwan. During fiscal 2001, 2000, and 1999, the Company's export sales were
approximately 32%, 39%, and 32%, respectively, of net revenues (see Note 9 in
"Notes to Consolidated Financial Statements" contained in Item 8). The Company's
international sales are billed in United States dollars, and therefore,
settlements are not directly subject to currency exchange fluctuations. However,
changes in the relative value of the dollar may create pricing pressures for the
Company's products. Although the Company's international sales are subject to
certain export restrictions, including the Export Administration Amendments Act
of 1985 and the regulations promulgated thereunder, the Company has not
experienced any material difficulties because of these restrictions.

         The Company's domestic distributor markets many products competitive
with the Company's products. The Company's independent sales representatives and
foreign distributors also may represent competitors of the Company.

         The Company warrants its products against defects in materials and
workmanship for a period of 12 months from the date of shipment. Warranty
expenses to date have been nominal.

BACKLOG

         As of November 28, 2001 and 2000, the Company's backlog was
approximately $261,800 and $1,435,100, respectively. The Company includes in its
backlog all released purchase orders shippable within the following 18 months,
including orders from distributors. The Company's backlog, although useful for
scheduling production, does not represent actual sales and should not be used as
a measure of future sales or revenues at any particular time. In accordance with
accepted industry practice, orders on the backlog are subject to cancellation
without penalty at the option of the purchaser at any time prior to shipment.
Changes in delivery schedules and price adjustments that may be passed on to
distributors and credits for returned products are not reflected. The Company
produces catalog products that may be shipped from inventory within a short time
after receipt of a purchase order. The Company's business for its catalog
products, like the businesses of many companies in the semiconductor industry,
is characterized by short-term orders and shipment schedules rather than by
volume purchase contracts. For these reasons, the Company's backlog as of any
particular date is not representative of actual sales for any succeeding period
and the Company believes that its backlog is not a good indicator of future
revenues.

RESEARCH AND DEVELOPMENT

         The Company's engineering staff is involved in the design of integrated
circuits. In fiscal 2001 and 2000, the Company's development efforts were
focused on the development of new digital processing circuits that address video
image processing and digital communications applications. The Company's product
design efforts are supplemented by computer aided design and simulation
equipment. The Company also has an experienced test-engineering group that works
closely with the designers to develop production test software. The Company
continues to view new product development as the most important factor affecting
its efforts to grow; therefore, it continues its commitment to increase research
and development levels. Research and development expenditures were 19%, 14%, and
11% of sales in fiscal 2001, 2000, and 1999, respectively. See "Selected
Financial Data," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Consolidated Statements of Operations" contained
in Items 6, 7, and 8, respectively.

COMPETITION

         The semiconductor industry is intensely competitive and characterized
by rapid technological change and rates of product obsolescence, price erosion,
periodic shortage of materials, variations in manufacturing yields and
efficiencies, and increasing foreign competition. The industry includes many
major domestic and international companies that have substantially greater
financial, technical, manufacturing, and marketing resources than the Company.
In addition, there are many emerging companies that are attempting to obtain a
share of the existing market. The Company faces competition from other
manufacturers of high-performance integrated circuits, many of which have
advanced technological capabilities and internal wafer production capabilities.
The ability of the Company to compete in this rapidly evolving environment
depends on elements both in and outside the control of the Company. These
elements include: the Company's ability to develop new products in a timely
manner; the cost effectiveness of its manufacturing; the acceptance of new
products by customers; the speed at which customers incorporate the Company's
products into their systems; the continued access to advanced semiconductor


                                       6
<PAGE>
foundries; the number and capabilities of its competitors as well as general
economic conditions. In the area of high-performance DSP circuits, the Company
competes with Altera, Analog Devices, Fairchild Semiconductor, Genesis, Gennum,
Grey Chip, Harris, Lucent Technologies, Texas Instruments, and Xilinx, among
others.

PATENTS AND COPYRIGHTS

         Because of the rapidly changing technology in the semiconductor
industry, the Company relies primarily upon its design know-how, rather than
patents and copyrights, to develop and maintain its competitive position. The
Company attempts to protect its trade secrets and other proprietary information
through confidentiality agreements with employees, consultants, suppliers, and
customers, but there can be no assurance that those measures will be adequate to
protect the Company's interests.

         The Company is of the opinion that patent maskwork protection is of
less significance in the Company's business than factors such as the experience
and innovative skill of its personnel and the abilities of its management. There
can be no assurance that others will not develop or patent technology similar to
the Company's technology or copy or otherwise duplicate the Company's products.
The Company owns five patents awarded by the United States Patent and Trademark
Office.

         Since others have obtained patents covering various semiconductor
designs and processes, certain of the Company's present or future designs or
processes may be claimed to infringe upon the patents of third parties. The
Company has previously received, and may in the future receive, claims that one
or more aspects or uses of the Company's products infringe on patent or other
intellectual property rights of third parties. See Item 3 - "Legal Proceedings."
The Company does not believe that it infringes upon any known patents at this
time. If any such infringements exist or arise in the future, the Company may be
liable for damages and may, like many companies in the semiconductor industry,
find it necessary or desirable to obtain licenses relating to one or more of its
current or future products. Based on industry practice, the Company expects that
any necessary licenses or rights under patents could be obtained on conditions
that would not have a material adverse effect on the Company. There can be no
assurance, however, that licenses could in fact be obtained on commercially
reasonable terms, or at all, or that litigation would not occur. The Company's
inability to obtain such licenses or the occurrence of litigation could
adversely affect the Company.

FACTORS AFFECTING FUTURE RESULTS

         This Form 10-K report contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Any statements about the Company's
expectations, beliefs, plans, objectives, assumptions, or future events or
performance are not historical facts and may be forward-looking. Words and
phrases such as, anticipate, estimate, plans, projects, continuing, ongoing,
expect, believes, intends, and similar words or phrases may identify
forward-looking statements.

         Forward-looking statements involve estimates, assumptions, and
uncertainties that could cause actual results to differ materially from those
expressed in them. Any forward-looking statements are qualified in their
entirety by reference to the factors discussed throughout this Form 10-K report.
Among the key factors that could cause actual results to differ materially from
the forward-looking statements, include:

- Delay in product or technology development;
- Lack of market acceptance or demand for new products;
- The impact of competitive products and prices;
- Changes in economic conditions of the Company's various markets;
- Dependencies on silicon wafer suppliers and subcontracted assemblers and
  testers;
- The availability and terms of financing; and
- Opportunities or acquisitions the Company may pursue.

         Actual results could differ materially from those expressed in any
forward-looking statements made by the Company. Further, any forward-looking
statement applies only as of the date on which it is made. The Company is not
required to update any forward-looking statement to reflect events or
circumstances after the date on which such statement was made, or to reflect the
occurrence of unanticipated events.

                                       7
<PAGE>
Company-related Risks

Dependence on limited sources of silicon wafers

         The Company does not manufacture silicon wafers. Although the Company
expects to begin prototype production of certain products with another foundry
in the second quarter of fiscal 2002, Taiwan Semiconductor Manufacturing
Corporation (TSMC), in Taiwan, currently manufactures essentially all of the
Company's silicon wafers. If TSMC interrupts or reduces its wafer supply, the
Company's operating results could be harmed. In the past, the Company has
experienced delays in obtaining wafers and in securing supply commitments.

         Other factors could disrupt the Company's wafer supply, which are
beyond its control. Since worldwide manufacturing capacity for silicon wafers is
limited, significant industry-wide increases in overall wafer demand or
interruptions in wafer supply could harm the Company. In addition, a disruption
of TSMC's foundry operations as a result of a fire, earthquake, or other natural
disaster could disrupt its wafer supply and could harm future operating results.

         Furthermore, the Company depends on its foundry to deliver reliable
silicon wafers with acceptable yields in a timely manner. If TSMC is unable to
produce silicon wafers that meet the Company's specifications, with acceptable
yields, for a prolonged period, operating results could be harmed. The Company's
revenue is derived from products based on advanced silicon wafer manufacturing
technology. The reliable manufacture of high performance semiconductor wafers is
a complicated and technically demanding process requiring:

- A high degree of technical skill;
- State-of-the-art equipment;
- The absence of defects in the masks used to print circuits on a wafer;
- The elimination of minute impurities and errors in each step of the
  fabrication process; and
- Effective cooperation between the wafer supplier and the circuit designer.

         As a result, the Company's foundry may experience difficulties in
achieving acceptable quality and yield levels when manufacturing its silicon
wafers.

Product development risks

         The semiconductor industry is a dynamic environment marked by rapid
product obsolescence. The Company's future success depends on its ability to
introduce new or improved products that meet critical customer needs, while
achieving acceptable profit margins. If it fails to introduce these new products
in a timely manner or these products fail to achieve market acceptance,
operating results would be harmed.

         The introduction of new products in a dynamic market environment
presents significant business challenges. Product development commitments and
expenditures must be made well in advance of product sales, while the success of
new products depends on accurate forecasts of long-term market demand and future
technology developments.

         Future revenue growth is dependent on market acceptance of new products
and the continued market acceptance of existing products. The success of these
products is dependent on a variety of specific technical factors, including
successful product definition; timely and efficient completion of product
design; timely and efficient implementation of wafer manufacturing and assembly
processes; and product performance, quality and reliability. If, due to these or
other factors, new products do not achieve market acceptance, the Company's
operating results would be harmed.

         Furthermore, to develop new products and maintain the competitiveness
of existing products, the Company needs to migrate to more advanced wafer
manufacturing processes that use larger wafer sizes and smaller device
geometries. Because it depends upon foundries to provide facilities and support
for its process technology development, the Company may experience delays in the
availability of advanced wafer manufacturing process technologies at its
existing or new wafer fabrication facilities. As a result, volume production of
its process technologies may be delayed or not be achieved. This could harm
future operating results.

                                       8
<PAGE>

Assembly risks

         The Company relies on subcontractors to assemble devices with
acceptable quality and yield levels. As is common in the semiconductor industry,
the Company has occasionally experienced quality and yield problems in the past.
If it experiences prolonged quality or yield problems in the future, the
Company's operating results could be harmed.

         The majority of the Company's revenues are derived from semiconductor
devices assembled in advanced packages. This requires a high degree of technical
skill; state-of-the-art equipment; the absence of defects in lead frames used to
attach semiconductor devices to the package; the elimination of raw material
impurities or errors in each stage of the process; and effective cooperation
between the assembly subcontractor and the device manufacturer. As a result,
subcontractors could experience difficulties in achieving acceptable quality and
yield levels when assembling the Company's semiconductor devices.

International operations

         The Company's primary silicon wafer supplier operates fabs located in
Asia. Finished silicon wafers are also assembled and tested by independent
subcontractors located in the Philippines, South Korea, and Taiwan. Economic,
financial, social, and political conditions in Asia have been volatile.
Financial difficulties, government actions or restrictions, prolonged work
stoppages, or any other difficulties experienced by the Company's suppliers
could harm its operating results.

         The Company also has many overseas customers. These export sales are
affected by unique risks frequently associated with foreign economies, including
governmental controls and trade restrictions; export license requirements and
restrictions on the export of technology; changes in local economic conditions;
political instability; changes in tax rates, tariffs, or freight rates;
interruptions in air traffic; and difficulties in staffing and managing foreign
sales offices. Significant changes in the economic climate in the foreign
countries to which the Company derives its export sales could harm future
operating results.

Fluctuation in operating results

         The Company's quarterly operating results have fluctuated and may
continue to fluctuate. Consequently, its operating results may fail to meet the
expectations of analysts and investors. As a result of industry conditions and
the following specific factors, quarterly operating results are more likely to
fluctuate and are more difficult to predict than a typical non-technology
company of similar size and maturity:

- General economic condition in the countries where the Company's products
  are sold;
- The timing of new product introductions by the Company and its competitors;
- Product obsolescence;
- The scheduling, rescheduling, and cancellation of large orders by customers;
- The cyclical nature of demand for customers' products;
- The Company's ability to develop new products and achieve volume production
  at new fabs;
- Changes in manufacturing yields;
- Adverse movements in exchange rates, interest rates, or tax rates; and
- The availability of adequate supply commitments from wafer foundries and
  assembly and test subcontractors.

         As a result of these and other factors, past financial results are not
necessarily good predictors of the Company's future operating results.

Fluctuations in stock price

         In recent years, the price of our common stock has fluctuated greatly.
These price fluctuations have been rapid and severe, and have left investors
little time to react. The price of our common stock may continue to fluctuate
greatly in the future due to a variety of factors, including shortfalls in
revenue or earnings from levels expected by analysts and investors;
quarter-to-quarter variations in operating results; and announcements of
technological innovations or new products by other companies.

                                       9
<PAGE>
Industry-related Risks

Cyclical nature of semiconductor industry

         The semiconductor industry is cyclical. The Company's financial
performance has been negatively impacted by significant downturns in the
semiconductor industry as a result of general reductions in inventory levels by
customers; excess production capacity; the cyclical nature of the demand for
products of semiconductor customers; and accelerated declines in the average
selling prices. If these or other conditions in the industry occur, the
Company's operating results could be harmed.

Competitiveness of semiconductor industry

         The semiconductor industry is highly competitive and many of the
Company's direct and indirect competitors have substantially greater financial,
technological, manufacturing, marketing, and sales resources. If it is unable to
compete successfully in this environment, the Company's operating results could
be harmed.

         The current level of competition is high and may increase as the
Company's market expands. The Company currently competes directly with companies
that have developed similar products. It also competes indirectly with numerous
semiconductor companies that offer products and solutions based on alternative
technologies. These direct and indirect competitors are established
multinational semiconductor companies, as well as emerging companies. In
addition, the Company may experience additional competition from foreign
companies in the future.

Ability to maintain adequate technical and management personnel

         The Company's future success greatly depends on its ability to attract
and retain highly qualified technical and management personnel. As a small
company, it is particularly dependent on a relatively small group of key
employees. Competition for skilled technical and management employees is intense
in the semiconductor industry. As a result, the Company may be unable to retain
its existing key technical and management employees, or attract additional
qualified personnel, which could harm its operating results.

EMPLOYEES

         As of September 30, 2001, the Company had 42 employees, consultants,
and part-time employees, of which 34 were full-time employees. The Company's
ability to attract and retain qualified personnel is an important factor in its
continued success. None of the Company's employees are represented by a
collective bargaining agreement, and the Company has never experienced any work
stoppage. The Company believes that its employee relations are good.

REGULATIONS

         Federal, state, and local regulations impose various environmental
controls on the discharge of chemicals and gases in connection with the wafer
manufacturing process. Since the Company relies on third party manufacturers and
its activities do not involve utilization of hazardous substances generally
associated with semiconductor processing, the Company believes such regulations
are unlikely to have a material affect on its business or operations.


ITEM 2. PROPERTIES

         The Company's executive offices, as well as its manufacturing and
principal research and design facilities, are located in approximately 21,600
square feet of space in Sunnyvale, California, pursuant to a lease expiring on
December 15, 2002. The Company maintains additional sales or field application
support offices in the metropolitan area of San Diego, California and
Warminster, England. The Company believes that its facilities will be adequate
to meet its reasonably foreseeable needs and, if necessary, that alternative
facilities will be available to it on acceptable terms so as to meet its
requirements.

                                       10
<PAGE>

ITEM 3. LEGAL PROCEEDINGS

         From time to time, the Company receives demands from various parties
asserting patent claims. These demands are often not based on any specific
knowledge of the Company products or operations. Because of the uncertainties
inherent in litigation, the outcome of any such claim, including simply the cost
of a successful defense against such a claim, could have a material adverse
impact on the Company.

         In January 1998, the Company was contacted by the attorneys
representing the estate of Mr. Jerome Lemelson, charging that the Company
infringed on certain patents registered by Mr. Lemelson. The attorneys for the
estate have not filed suit, but have urged the Company to enter into a licensing
agreement with the estate in order to avoid litigation. The Company understands
a similar demand has been made upon other manufacturers of integrated circuits.
Should the estate file suit, the Company would vigorously defend itself in this
matter. However, because of the inherent uncertainties of litigation, the
outcome of this action could be unfavorable, in which event, the Company might
be required to pay damages and other expenses, which could have a material
adverse effect on the Company's financial position and results of operations. In
addition, the Company could be required to alter certain of its production
processes or products as a result of this matter.


ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

         No matters were submitted to a vote of the Company's security holders
during the last quarter of fiscal 2001.



                                       11
<PAGE>
                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

         The Company's Common Stock is traded under the symbol "LOGC" on the
Nasdaq National Market System. The following table sets forth, for the period
indicated, the high and low closing sale prices for the Company's Common Stock,
as reported by Nasdaq during the following calendar quarters:

        CALENDAR YEAR                    HIGH                     LOW
        -------------                    ----                     ---
        1999

        Fourth Quarter                   $3.94                    $1.88


        2000

        First Quarter                    $8.44                    $3.13
        Second Quarter                   $6.13                    $2.31
        Third Quarter                    $2.88                    $1.75
        Fourth Quarter                   $2.00                    $0.88

        2001

        First Quarter                    $1.59                    $1.06
        Second Quarter                   $1.65                    $1.00
        Third Quarter                    $1.48                    $0.83

HOLDERS

         As of December 12, 2001, there were approximately 3,500 holders of
record of the Company's Common Stock.

DIVIDENDS

         The Company has not paid any dividends on its Common Stock since its
incorporation. The Company has entered into bank credit agreements that preclude
the payment of dividends without the prior consent of the parties to such
agreements. See Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources -
Financing."


ITEM 6. SELECTED FINANCIAL DATA

         The Company's fiscal year is comprised of 52 weeks of seven days, each
beginning on Monday and ending on Sunday, with each year's fiscal quarters
comprised of exactly 13 weeks. The Company's fiscal 2001 ended September 30,
2001, its fiscal 2000 ended October 1, 2000, and its fiscal 1999 ended October
3, 1999.

         The following table sets forth selected financial data for the Company
for the fiscal years ended September 30, 2001, October 1, 2000, October 3, 1999,
the nine months ended September 30, 1998, and the fiscal year ended December 31,
1997. This information has been derived from the Company's audited consolidated
financial statements, unless otherwise stated. Certain amounts have been
restated to reflect the correction of errors that arose in the year ended
December 31, 1997. This data should be read in conjunction with the consolidated
financial statements, related notes and other financial information included
elsewhere in this report.



                                       12
<PAGE>
<TABLE>
<CAPTION>
(Dollars in thousands, except per share amounts)




                                         Fiscal Years Ended:                      Nine Months          Fiscal
                            --------------------------------------------------       Ended           Year Ended
                              September 30,     October 1,        October 3,      September 30,     December 31,
                                  2001             2000              1999             1998              1997
                            ---------------  ----------------  ---------------   ---------------  -----------------
                                                                  (Restated)       (Restated)        (Restated)
<S>                         <C>                <C>               <C>               <C>              <C>
Net revenues                $       10,007     $       11,786    $      12,922     $       9,562    $       12,519

Research and
  development               $        1,926     $        1,661    $       1,367     $         959    $        1,406

Net (loss) income           $        (212)     $          522    $         601     $     (6,334)    $        (558)

Basic and diluted
  (loss) income per
  common share              $       (0.03)     $         0.08    $        0.09     $      (1.03)    $       (0.09)

Weighted average
  common shares
  outstanding (thousands)            6,842              6,772            6,635             6,178             6,122

Working capital             $       14,882     $       14,115    $      12,031     $       9,385    $       15,121

Property and
  equipment (net)           $        1,592     $        2,424    $       3,542     $       4,775    $        4,950

Total assets                $       17,231     $       17,589    $      21,244     $      23,502    $       27,397

Long-term liabilities       $            3     $           38    $         205     $         414    $        1,148

Shareholders' equity        $       16,652     $       16,845    $      15,934     $      14,984    $       20,568
</TABLE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS

         Reported financial results may not be indicative of the financial
results of future periods. All non-historical information contained in the
following discussion constitutes forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These statements are not guarantees of future performance
and involve a number of risks and uncertainties, including but not limited to
operating results, new product introductions and sales, competitive conditions,
customer demand, capital expenditures and resources, manufacturing capacity
utilization, and intellectual property claims and defense. Factors that could
cause actual results to differ materially are included in, but not limited to,
those identified in "Factors Affecting Future Results." The Company undertakes
no obligation to publicly release the results of any revisions to these
forward-looking statements that may reflect events or circumstances after the
date of this report.

OVERVIEW

         Historically, the Company has been one of the smallest publicly-traded
semiconductor manufacturers. Following its formation, the Company initially
developed plug-compatible second source products that were form, fit, and
function compatible with products offered by other manufacturers. Beginning in
1996, the Company began identifying unique, proprietary products driven by its
existing customer base. While this transition to proprietary products required
the Company to access advanced design automation tools and to increase the
number of people involved in product development, it enables the Company to
focus its sales channels and limit the costs of those channels, and to compete
in markets with pricing and delivery demands that are not as highly competitive
as the markets for second source products.



                                       13
<PAGE>
         The Company focus on DSP proprietary products continues. The Company
introduced a number of such products in 1997 and 1998, following its transition
to that focus. In fiscal 1999, the Company developed newer products that were
designed-in (incorporated) into end system level products in the HDTV market. In
fiscal 2000 and 2001, the Company increased its efforts to develop chips for use
in wireless digital communications. The Company presently derives its revenues
primarily from the sale of semiconductor chips that perform high-speed DSP in
video image filtering and digital communications applications.

         The Company's increased focus on proprietary products had a dramatic
impact on the Company's financial results in fiscal 1998, when the Company
recorded significant write-downs of inventory and long-lived assets and incurred
severance costs as it recognized the obsolescence of its more mature, second
source products. In fiscal 1999 through 2001, the Company recognized fewer
revenues from the HDTV market than it anticipated because the ramp up in
high-definition broadcasting was slower than independent market research had
suggested would occur. In addition, sales of the Company's existing products
were adversely impacted as broadcasters delayed planned incremental upgrades of
facilities that would have become obsolete as a result of the transition to
television broadcasting from analog to digital. The Company believes that the
transition to digital broadcasting will expand future opportunities for its
newer products that facilitate the processing of studio quality broadcast
images.

         Notwithstanding the impact of the transition in the broadcasting
industry, the Company enjoyed improvements in balance sheet liquidity and
reduced indebtedness. This improved financial performance resulted from the
Company's fiscal 1998 restructuring and from its aggressive expense controls and
capital expenditure limitations since that restructuring.

         The Company's fiscal year is comprised of 52 weeks of seven days, each
beginning on Monday and ending on Sunday, with each year's fiscal quarters
comprised of exactly 13 weeks. The Company's fiscal 2001 ended on September 30,
2001 and consisted of 364 days, its fiscal 2000 ended on October 1, 2000 and
consisted of 364 days, and its fiscal 1999 ended on October 3, 1999 and
consisted of 368 days due to the change in fiscal year-end on September 16,
1999.

RESULTS OF OPERATIONS

Fiscal Year Ended September 30, 2001 compared to Fiscal Year Ended
October 1, 2000

         Net revenues for fiscal 2001 were $10,007,300, down 15 percent from the
$11,785,900 recorded in fiscal 2000. The decrease is largely due to the downturn
in the industry and economy, the continued transition to proprietary products,
the obsolescence of mature products, and the stalled ramp-up in high definition
broadcasting.

         Cost of revenues decreased from $7,278,800 in fiscal 2000 to $6,167,300
in fiscal 2001, due to the decrease in sales. While gross profit decreased from
$4,507,100 for fiscal 2000 to $3,840,000 in fiscal 2001, as a percentage of
sales, it remained consistent at 38 percent.

         Research and development expenses were $1,926,100 in fiscal 2001
compared to $1,660,600 in fiscal 2000. Research and development expenses as a
percentage of net revenues increased from 14 percent in fiscal 2000 to 19
percent in fiscal 2001. As the Company continues to focus on developing new
products to encourage future revenue growth, it believes it is necessary to
spend additional resources on research and development, including the hiring of
experienced engineering personnel.

         Selling, general, and administrative expenses remained consistent
($2,076,200 in fiscal 2000 and $2,091,400 in fiscal 2001). As a percentage of
net revenues, selling, general, and administrative expenses increased slightly
from 18 percent fiscal 2000 to 21 percent in fiscal 2001. This is due to many
selling, general, and administrative costs being fixed while revenues were lower
than anticipated.

         For fiscal 2001, the Company recorded an operating loss of $177,500,
compared to an operating income of $770,300 during fiscal 2000. This is mainly
due to revenues being lower than anticipated, while fixed costs remained
relatively unchanged and spending on product development increased.

                                       14
<PAGE>
         Interest expense decreased 83 percent from $314,100 in fiscal 2000 to
$54,700 in fiscal 2001, as a result of the Company having a zero balance in bank
borrowings for the majority of the fiscal year and the fact that the majority of
the Company's capital lease obligations are nearly completed.

         Due to the decrease in revenues, increased spending for product
development, and fixed selling, general, and administrative costs, net earnings
decreased from $522,400 for fiscal 2000 to a net loss of $212,000 for fiscal
2001.

Fiscal Year Ended October 1, 2000 compared to Fiscal Year Ended October 3, 1999

         Net revenues for the fiscal year ended October 1, 2000 were
$11,785,900, down nine percent from the $12,921,600 recorded in the fiscal year
ended October 3, 1999. The decrease is due to the continued transition to
proprietary products, the obsolescence of mature products, and the stalled
ramp-up in high definition broadcasting.

         Cost of revenues decreased from $8,126,200 in the fiscal year ended
October 3, 1999 to $7,278,800 in the fiscal year ended October 1, 2000. Gross
profit decreased from $4,795,400 for fiscal 1999 to $4,507,100 in fiscal 2000,
due to the decrease in sales. Gross profit as a percentage of sales increased
from 37 percent in fiscal 1999 to 38 percent in fiscal 2000. This increase in
gross profit margin on revenue from product sales in fiscal 2000 was due to
improved margins on proprietary products and lower costs resulting from the
Company's expenditure controls since its fiscal 1998 restructuring.

         Research and development expenses were $1,660,600 in the fiscal year
ended October 1, 2000 compared to $1,367,400 in the fiscal year ended October 3,
1999. Research and development expenses as a percentage of net revenues
increased from 11 percent in fiscal 1999 to 14 percent in fiscal 2000. Research
and development expenses increased in fiscal 2000 compared to fiscal 1999 as a
result of increased staffing of more senior product development personnel.

         Selling, general and administrative expenses decreased nine percent
from $2,276,600 in the fiscal year ended October 3, 1999 to $2,076,200 in the
fiscal year ended October 1, 2000. As a percentage of net revenues, selling,
general and administrative expenses remained consistent at 18 percent for both
fiscal years.

         For the fiscal year ended October 1, 2000, operating income decreased
to $770,300 from $1,151,400 for the fiscal year ended October 3, 1999, due to
the above-mentioned factors. As a percentage of net revenues, operating income
decreased from nine percent in fiscal 1999 to seven percent in fiscal 2000.

         Interest expense decreased 45 percent from $571,600 in fiscal 1999 to
$314,100, as a result of the Company using its aggressive accounts receivable
collections to eliminate its bank borrowings during fiscal 2000.

         Due to decreased revenues and increased spending for product
development, net earnings decreased from $600,600 for the fiscal year ended
October 3, 1999 to $522,400 for the fiscal year ended October 1, 2000.



                                       15
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

         During fiscal 2001, the Company used net cash of $171,900 in
operations, as a result of the net loss of $212,000 and an increase in accounts
receivable of $1,703,400. The unfortunate downturn in the industry and the
economy, as a whole, caused many of our customers to pay 14 to 30 days past due.
While certain customers have extended payments, the Company has maintained its
current schedule of paying vendors within terms, without drawing on its line of
credit. This also contributed to the net cash used in operations, as the Company
reduced accrued expenses by $62,400, paid $163,200 for capital expenditures, and
repaid capital leases aggregating $209,700. Fortunately, the Company was able
to reduce physical inventories by $1,055,200 and its inventory reserves by
$568,600, which saved it from expending additional cash in operations.

         During fiscal 2000, the Company had $4,088,000 of net cash provided
from operations, resulting from net income of $522,400 and a decrease in
accounts receivable of $3,398,100. During fiscal 2000, the Company worked
closely with customers to spread their shipments more evenly throughout a
quarter, and maintained close relations to encourage prompt payment. During the
fiscal year, the Company used this cash from operations and $389,300 of cash
from the exercise of warrants and stock options, to reduce accounts payable by
$638,400, repay related party notes payable of $250,000, and reduce bank
borrowings by $3,490,000.

         During fiscal 1999, the Company had $2,050,900 of net cash provided
from operations, resulting from net income of $600,600, a decrease in prepaid
expenses of $193,200, and a reduction in the allowance for doubtful accounts of
$84,000. While the Company's net inventories decreased by $697,300, the Company
increased its inventory reserves by $1,194,200 during fiscal 1999, which also
accounts for the net cash provided by operations. The ability to use inventories
on-hand rather than build more product, resulted in less cash being used in
operations and aided in the reduction of accounts payable by $891,600. The
Company also received $307,500 from a common stock subscription receivable and
$250,000 from related party notes payable, which helped the Company reduce
accounts payable by $891,600, make $430,200 in capital expenditures, and repay
$553,600 in capital lease obligations.

         The Company has addressed its requirements for working capital by
reducing expenditures, accelerating certain accounts receivable collections, and
shifting its focus to higher margin products. The Company believes that these
actions, combined with anticipated after-tax cash earnings and reductions in the
levels of inventories, as well as the financing available under its existing
line of credit, will be sufficient to support its working capital and capital
expenditure requirements for the next 12 months.

Working Capital

         The Company's investment in inventories has been significant and will
continue to be significant in the future. Over prior periods, the Company, due
to the nature of its business, has maintained high levels of inventories in
order to be responsive to its customer base. As it continues to shift from more
competitive second source products to proprietary sole source products, the
Company believes it will be able to streamline its inventories. It also intends
to continue its shortened accounts receivable collection cycle by re-focusing on
direct sales to customers rather than through distribution channels.

         The Company relies on third party suppliers for its raw materials,
particularly its processed wafers, for which there is currently one primary
supplier, and as a result, maintains substantial inventory levels to protect
against disruption in supplies. The Company has periodically experienced
disruptions in obtaining wafers from its supplier. As the Company continues to
shift towards higher margin proprietary products, it expects to be able to
reduce inventory levels by streamlining its product offerings. In the event
economic conditions remain slow, the Company may consider writing off a portion
of its inventory.



                                       16
<PAGE>
         Historically, due to customer order scheduling, up to 80% of the
quarterly revenues were often shipped in the last month of the quarter, so a
large portion of the shipments included in year-end accounts receivable were not
yet due per the Company's net 30-day terms. This resulted in year-end accounts
receivable balances being at their highest point for the respective period. In
the past few years, the Company has been able to reduce its accounts receivable
levels through increased interaction with its customers to spread their orders
and shipments more evenly between months and through added pressure to pay
within the Company's terms. The current slowdown in the economy and industry,
and some special 90-day term accounts, resulted in an increase in accounts
receivable in fiscal 2001.

         Although current levels of inventory impact the Company's liquidity,
the Company believes that these items are a cost of doing business as a fab-less
operation. The Company continues to evaluate alternative suppliers to diversify
its risk of supply disruption. However, this requires a significant investment
in product development to tool with new suppliers. Such efforts compete for the
Company's limited product development resources. The Company seeks to achieve
on-going reductions in inventory, although there can be no assurance it will be
successful.

Financing

         The Company has a $2,000,000 revolving line of credit with Comerica
Bank-California, which matures July 31, 2002. The line of credit bears interest
at the bank's prime rate (6.0% at September 30, 2001) plus 0.25%, is secured by
all of the Company's assets, and is guaranteed, in part, by a federal agency.
The borrowings under the line of credit are to finance the cost of
manufacturing, producing, purchasing, or selling the Company's finished goods
and services, which are intended for export. The Company is required to maintain
a quarterly minimum quick ratio of 1.1 to 1.0, maintain a quarterly
debt-to-effective tangible net worth rate of not more than 0.60 to 1.0, maintain
a quarterly effective tangible net worth of at least $16.5 million plus 50
percent of the previous quarter's cumulative net earnings, and have positive net
earnings as of the end of each fiscal year. Borrowings supported by
export-related inventory are required to not exceed 70% of the total outstanding
borrowings. As of September 30, 2001, the Company had no outstanding borrowings
under its line of credit, and was in compliance with its covenants, except the
profitability requirement, for which it has not obtained a waiver.

         Under the terms of its line of credit, the Company is precluded from
paying any dividends without the consent of the parties to such agreements, even
if the Company is in compliance with all of the financial covenants.

         While the Company will continue to evaluate debt and equity financing
opportunities, it believes its financing arrangements and cash flow generated
from operations provide an adequate base of liquidity to fund operations and
meet the capital needs to support the Company's operations.

New Accounting Pronouncements

         In June 1999 and June 2000, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133,
Accounting for Derivative Instruments and Hedging Activities, and SFAS No. 138,
Accounting for Certain Derivative Instruments and Certain Hedging Activities, an
amendment of SFAS No. 133, respectively. SFAS No. 133 and No. 138 require
companies to recognize all derivative contracts as either assets or liabilities
in the balance sheet and to measure them at fair value. If certain conditions
are met, a derivative may be specifically designated as a hedge, the objective
of which is to match the timing of gain or loss recognition on the hedging
derivative with the recognition of (i) the changes in the fair value of the
hedged assets or liabilities that are attributable to the hedged risk or (ii)
the earnings effect of the hedged forecasted transaction. For a derivative not
designated as a hedging instrument, the gain and loss is recognized in income in
the period of change. In June 2000, the FASB issued SFAS No. 137, Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB Statement No. 133, which amends SFAS No. 133 to be effective,
concurrently with SFAS No. 138, for all fiscal quarters of all fiscal years
beginning after June 15, 2000.

                                       17
<PAGE>
         Historically, the Company has not entered into derivative contracts
either to hedge existing risks or for speculative purposes. Accordingly, the
adoption of the new standard did not have a material impact on the Company's
financial position, results of operations, or cash flows.

         In June 2001, the FASB issued SFAS No. 141, Business Combinations, and
SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires
business combinations initiated after June 30, 2001 to be accounted for using
the purchase method of accounting. It also specifies the types of acquired
intangible assets that are required to be recognized and reported separately
from goodwill. The Company does not anticipate any material impact from the
adoption of this standard. SFAS No. 142 will require that goodwill and certain
intangibles no longer be amortized, but instead be tested for impairment at
least annually. SFAS No. 142 is effective for all fiscal years beginning after
December 15, 2001, with early application permitted in certain circumstances.
The Company plans early adoption of SFAS No. 142 during fiscal 2002, and does
not expect any impairment of goodwill upon adoption. Goodwill amortization
aggregated $30,700 for fiscal 2001, 2000, and 1999.

         In June 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations. The statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The statement is effective for
all fiscal years beginning after June 15, 2002, with early application
permitted. The Company does not expect the adoption of SFAS No. 143 to have a
material impact on the Company's financial position, results of operations, or
cash flow.

         In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. This statement supersedes SFAS No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of, and the accounting and reporting provisions of APB
Opinion No. 30, Reporting the Results of Operations - Reporting the Effects of
Dispsal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions, for the disposal of a segment of a business.
The statement is effective for all fiscal years beginning after December 15,
2001, with early application permitted. The Compnay does not expect the adoption
of SFAS No. 144 to have a material impact on the Company's financial position,
results of operations, or cash flows.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company conducts all of its transactions, including those with
foreign suppliers and customers, in U.S. dollars. It is therefore not directly
subject to the risks of foreign currency fluctuations and does not hedge or
otherwise deal in currency instruments in an attempt to minimize such risks. Of
course, demand from foreign customers and the ability or willingness of foreign
suppliers to perform their obligations to the Company may be affected by the
relative change in value of such customer or supplier's domestic currency to the
value of the U.S. dollar. Furthermore, changes in the relative value of the U.S.
dollar may change the price of the Company's prices relative to the prices of
its foreign competitors. The Company also does not hold any market risk
sensitive instruments that are not considered cash under generally accepted
accounting principles. The Company's credit facilities bear interest at rates
determined from the prime rate of the Company's lender; therefore, changes in
interest rates affect the amount of interest that the Company is required to pay
thereunder.


                                       18
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND CONSOLIDATED
FINANCIAL STATEMENT SCHEDULES

CONSOLIDATED FINANCIAL STATEMENTS:                                        Page
----------------------------------                                        ----

Report of Independent Certified Public Accountants..........................20
Consolidated Balance Sheets, September 30, 2001 and October 1, 2000.........21
Consolidated Statements of Operations, fiscal years ended
   September 30, 2001, October 1, 2000, and October 3, 1999.................22
Consolidated Statements of Shareholders' Equity, fiscal years
   ended September 30, 2001, October 1, 2000, and October 3, 1999...........23
Consolidated Statements of Cash Flows, fiscal years ended
   September 30, 2001, October 1, 2000, and October 3, 1999.................24
Summary of Accounting Policies..............................................25
Notes to Consolidated Financial Statements..................................29
Quarterly Financial Data (unaudited), fiscal years ended
   September 30, 2001and October 1, 2000....................................37

CONSOLIDATED FINANCIAL STATEMENT SCHEDULE:

Schedule II - Valuation and Qualifying Accounts.............................39



                                       19
<PAGE>
INDEPENDENT AUDITORS' REPORT



To the Board of Directors
LOGIC Devices Incorporated
Sunnyvale, California

We have audited the accompanying consolidated balance sheet of LOGIC Devices
Incorporated as of September 30, 2001, and the related consolidated statements
of operations, shareholders' equity, and cash flows for the fiscal year then
ended. We have also audited the 2001 information included in Schedule II -
Valuation and Qualifying Accounts (the Schedule). These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit. The consolidated financial statements of LOGIC
Devices Incorporated for the fiscal years ended October 1, 2000 and October 3,
1999, and the 2000 and 1999 information included in Schedule II, were audited by
other auditors, whose report dated November 7, 2000, expressed an unqualified
opinion on those statements.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the 2001 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of LOGIC
Devices Incorporated as of September 30, 2001, and the results of its operations
and its cash flows for the fiscal year then ended in conformity with accounting
principles generally accepted in the United States of America. Also, in our
opinion, the Schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
2001 information set forth therein.

                                          /s/ Hood and Strong LLP
                                         ----------------------------
                                              Hood and Strong LLP

Menlo Park, California
November 12, 2001




                                       20
<PAGE>
                           LOGIC DEVICES INCORPORATED

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                             September 30,              October 1,
                                                                                      2001                    2000
-------------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>                    <C>
ASSETS

Current assets:
     Cash and cash equivalents                                            $        217,500       $         753,300
     Accounts receivable, net of allowance for doubtful
       accounts of $20,000 (Notes 9 and 10)                                      3,352,200               1,648,800
     Inventories (Notes 1 and 10)                                               11,695,700              12,182,300
     Prepaid expenses and other current assets                                     192,600                 235,300
                                                                           ---------------        ----------------
         Total current assets                                                   15,458,000              14,819,700

Property and equipment, net (Notes 2 and 11)                                     1,592,000               2,423,700

Other assets (Note 4)                                                              181,000                 345,100
                                                                           ---------------        ----------------

                                                                          $     17,231,000       $      17,588,500
                                                                           ===============        ================


LIABILITIES AND SHAREHOLDERS' EQUITY:

Current liabilities:
     Accounts payable                                                     $        268,100       $         192,000
     Accrued payroll and vacation                                                  190,900                 153,500
     Accrued commissions                                                            54,600                 115,300
     Other accrued expenses                                                          5,500                  44,600
     Capital lease obligations, current portion
         (Notes 2, 7, and 11)                                                       54,700                 194,200
     Income taxes payable (Note 6)                                                   1,900                   5,200
                                                                           ---------------        ----------------
         Total current liabilities                                                 575,700                 704,800

Capital lease obligations, less current portion
     (Notes 2, 7, and 11)                                                            2,900                  38,300
                                                                           ---------------        ----------------

Total liabilities                                                                  578,600                 743,100
                                                                           ---------------        ----------------

Commitments and contingencies (Note 7)

Shareholders' equity (Notes 3 and 8):
     Preferred stock, no par value; 1,000,000 shares
       authorized; 5,000 designated as Series A;
       0 shares issued and outstanding                                                   -                       -
     Common stock, no par value; 10,000,000 shares
       authorized; 6,841,888 shares issued and outstanding                      18,522,700              18,522,700
     Additional paid-in capital                                                     19,000                       -
     Accumulated deficit                                                        (1,889,300)             (1,677,300)
                                                                           ---------------        ----------------

Total shareholders' equity                                                      16,652,400              16,845,400
                                                                           ---------------        ----------------

                                                                          $     17,231,000       $      17,588,500
                                                                           ===============        ================

</TABLE>

          See accompanying summary of accounting policies and notes to
                       consolidated financial statements.



                                       21
<PAGE>
                           LOGIC DEVICES INCORPORATED

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                            Fiscal Years Ended:
                                                       ------------------------------------------------------------
                                                           September 30,           October 1,           October 3,
                                                                    2001                 2000                 1999
-------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>                  <C>                  <C>
Net revenues (Note 9)                                  $      10,007,300    $      11,785,900    $      12,921,600

Cost of revenues                                               6,167,300            7,278,800            8,126,200
                                                        ----------------     ----------------     ----------------

Gross profit                                                   3,840,000            4,507,100            4,795,400
                                                        ----------------     ----------------     ----------------

Operating expenses:
     Research and development                                  1,926,100            1,660,600            1,367,400
     Selling, general, and administrative                      2,091,400            2,076,200            2,276,600
                                                        ----------------     ----------------     ----------------

Total operating expenses                                       4,017,500            3,736,800            3,644,000
                                                        ----------------     ----------------     ----------------

(Loss) income from operations                                   (177,500)             770,300            1,151,400
                                                        ----------------     ----------------     ----------------

Other (income) expense:
     Interest expense                                             54,700              314,100              571,600
     Interest income                                             (10,100)              (8,100)                (400)
     Other income                                                (20,500)             (47,900)             (40,400)
                                                        ----------------     ----------------     ----------------

Total other expense                                               24,100              258,100              530,800
                                                        ----------------     ----------------     ----------------

(Loss) income before provision for
     income taxes                                               (201,600)             512,200              620,600

(Provision) benefit for income taxes (Note 6)                    (10,400)              10,200              (20,000)
                                                        ----------------     ----------------     ----------------

Net (loss) income                                      $        (212,000)   $         522,400    $         600,600
                                                        ================     ================     ================

Basic and diluted (loss) income per share              $           (0.03)   $            0.08    $            0.09
                                                        ================     ================     ================

Basic weighted average
     common shares outstanding                                 6,841,888            6,771,826            6,635,427
                                                        ================     ================     ================

Diluted weighted average
     common shares outstanding                                 6,841,888            6,892,610            6,635,427
                                                        ================     ================     ================

</TABLE>

          See accompanying summary of accounting policies and notes to
                       consolidated financial statements.




                                       22
<PAGE>
                           LOGIC DEVICES INCORPORATED

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                                  Common Stock               Common     Additional
                                          --------------------------          Stock        Paid-in     (Accumulated)
                                             Shares          Amount      Subscribed        Capital          Deficit)          Total
-----------------------------------------------------------------------------------------------------------------------------------

<S>                                       <C>           <C>             <C>             <C>            <C>              <C>
Balances, September 30, 1998              6,632,388     $18,091,900     $  (307,500)    $        -      $(2,800,300)    $14,984,100

Issuance of common stock on
   exercise of stock options (Note 8)        18,100          41,500               -              -                -          41,500

Proceeds from common stock
   Subscribed (Note 3)                            -               -         307,500              -                -         307,500

Net income                                        -               -               -              -          600,600         600,600
                                          ---------     -----------     -----------     ----------      -----------     -----------

Balances, October 3, 1999                 6,650,488      18,133,400               -              -       (2,199,700)     15,933,700

Issuance of common stock on
   exercise of stock options (Note 8)        91,400         242,400               -              -                -         242,400

Issuance of common stock on
   exercise of warrants (Note 8)            100,000         146,900               -              -                -         146,900

Net income                                        -               -               -              -          522,400         522,400
                                          ---------     -----------     -----------     ----------      -----------     -----------

Balances, October 1, 2000                 6,841,888      18,522,700               -              -       (1,677,300)     16,845,400

Issuance of common stock
   options to nonemployees                        -               -               -         19,000                -          19,000

Net loss                                          -               -               -              -         (212,000)       (212,000)
                                          ---------     -----------     -----------     ----------      -----------     -----------

Balances, September 30, 2001              6,841,888     $18,522,700     $         -     $   19,000      $(1,889,300)    $16,652,400
                                          =========     ===========     ===========     ==========      ===========     ===========

</TABLE>

          See accompanying summary of accounting policies and notes to
                       consolidated financial statements.



                                       23
<PAGE>
                           LOGIC DEVICES INCORPORATED

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>


                                                                                      Fiscal Years Ended:
                                                                -----------------------------------------------------------
                                                                    September 30,          October 1,           October 3,
                                                                             2001                2000                 1999
---------------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>                  <C>                  <C>
Cash flows from operating activities:
     Net (loss) income                                          $        (212,000)   $        522,400     $        600,600
     Adjustments to reconcile net (loss) income
       to net cash (used in) provided by operating
       activities:
         Depreciation and amortization                                  1,181,200           1,357,200            1,842,000
         (Loss) gain on disposal of capital equipment                       3,600             (48,000)                   -
         Allowance for doubtful accounts                                        -            (233,500)              84,000
         Issuance of common stock options for services                     19,000                   -                    -
         Changes in assets and liabilities:
           Accounts receivable                                         (1,703,400)          3,398,100             (344,000)
           Inventories                                                    486,600            (344,000)             697,300
           Prepaid expenses and other current assets                       42,700               4,100              193,200
           Income taxes receivable                                              -              68,000               22,000
           Accounts payable                                                76,100            (638,400)            (891,600)
           Accrued payroll and vacation                                    37,400             (52,400)             (14,000)
           Accrued commissions                                            (60,700)             75,300                    -
           Other accrued expenses                                         (39,100)            (26,000)            (138,600)
           Income taxes payable                                            (3,300)              5,200                    -
                                                                 ----------------     ---------------      ---------------
Net cash (used in) provided by operating activities                      (171,900)          4,088,000            2,050,900
                                                                 ----------------     ---------------      ---------------

Cash flows from investing activities:
     Capital expenditures                                                (163,200)           (247,800)            (430,200)
     Proceeds from sale of capital equipment                                    -             158,100                    -
     Other assets                                                           9,000              49,500              288,700
                                                                 ----------------     ---------------      ---------------
Net cash used in investing activities                                    (154,200)            (40,200)            (141,500)
                                                                 ----------------     ---------------      ---------------

Cash flows from financing activities:
     Proceeds from issuance of common stock                                     -             389,300               41,500
     Receipt of common stock subscription receivable                            -                   -              307,500
     Proceeds from bank borrowings                                        500,000                   -              693,300
     Repayments of bank borrowings                                       (500,000)         (3,490,000)          (2,553,300)
     Proceeds from notes payable, related party                                 -                   -              250,000
     Payment of notes payable, related party                                    -            (250,000)                   -
     Payments of capital lease obligations                               (209,700)           (181,500)            (553,600)
                                                                 ----------------     ---------------      ---------------
Net cash used in financing activities                                    (209,700)         (3,532,200)          (1,814,600)
                                                                 ----------------     ---------------      ---------------

Net (decrease) increase in cash and cash equivalents                     (535,800)            515,600               94,800

Cash and cash equivalents, beginning of period                            753,300             237,700              142,900
                                                                 ----------------     ---------------      ---------------

Cash and cash equivalents, end of period                        $         217,500    $        753,300     $        237,700
                                                                 ================     ===============      ===============
</TABLE>

          See accompanying summary of accounting policies and notes to
                       consolidated financial statements.



                                       24
<PAGE>
                           LOGIC DEVICES INCORPORATED

                         SUMMARY OF ACCOUNTING POLICIES


The Company

LOGIC Devices Incorporated (the Company) develops and markets high-performance
integrated circuits. The Company's products include high-speed digital signal
processing chips that are used in digital communications, broadcast and medical
imaging processing applications, instrumentation, and smart weapons systems.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary, LOGIC Devices International, a foreign
sales corporation. All significant intercompany accounts and transactions have
been eliminated in consolidation.

Change in Fiscal Year

Effective September 16, 1999, the Company adopted a fiscal year consisting of 52
weeks of seven days, ending on Sundays. As a result of this change, the
Company's 2001, 2000, and 1999 fiscal years ended on September 30, October 1,
and October 3, respectively.

Reclassifications

Certain items were reclassified in the consolidated financial statements for
fiscal 2000 and 1999 to conform to the basis used in the consolidated financial
statements for fiscal 2001.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of
three months or less to be cash equivalents.

Accounts Receivable

The Company establishes a general allowance for doubtful accounts based on
collectibility.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market
(Notes 1 and 10). Cost includes the purchase price of parts, assembly costs, and
overhead.

Property and Equipment

Property and equipment are stated at cost. Depreciation on equipment is
calculated on the straight-line method over the estimated useful lives of the
assets, generally three to seven years. Leasehold improvements and assets held
under capital lease are amortized on a straight-line basis over the shorter of
the lease terms or the estimated lives of the assets. Certain tooling costs are
capitalized by the Company and are amortized on a straight-line basis over the
shorter of the related product life cycle or five years.



                                       25
<PAGE>
                           LOGIC DEVICES INCORPORATED

                         SUMMARY OF ACCOUNTING POLICIES


Costs in Excess of Fair Value of Net Assets Acquired

The Company amortizes costs in excess of the fair value of identifiable net
assets acquired on a straight-line basis, over ten years.

Capitalized Software Costs

Internal test computer software development costs are capitalized as incurred
during the application development stage, as defined by SOP 98-1, Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use. The
capitalized software costs are amortized on a straight-line basis over the
shorter of the related expected product life cycle or five years.

Revenue Recognition

Revenue is generally recognized upon shipment of product. Sales to distributors
are made pursuant to agreements that provide the distributors certain rights of
return and price protection on unsold merchandise. Revenues from such sales are
recognized upon shipment, with a provision for estimated returns and allowances
recorded at that time, if applicable.

Income Taxes

The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. Deferred
income tax assets and liabilities are recognized based on the temporary
differences between the financial statement and income tax basis of assets,
liabilities, and carryforwards using enacted tax rates. Valuation allowances are
established for deferred tax assets to the extent of the likelihood that the
deferred tax assets may not be realized.

Income (Loss) Per Common Share

Basic income (loss) per share is computed by dividing the net income (loss)
attributable to common shares, by the weighted average number of common shares
outstanding during each period. Diluted income (loss) per share is similar to
basic income (loss) per share, except that the weighted average number of common
shares outstanding is increased to reflect the dilutive effect of potential
common shares, such as those issuable upon the exercise of stock options or
warrants, contingent shares, and the conversion of preferred stock, as if they
had been issued.

For the fiscal years ended September 30, 2001, October 1, 2000, and October 3,
1999, there is no difference between basic and diluted income (loss) per share,
as there were no dilutive stock options in fiscal 2001 and 1999, and the number
of stock options with a dilutive effect was minimal in fiscal 2000. For fiscal
2001, 2000, and 1999, options to purchase 1,001,500, 754,800, and 1,061,400
shares of common stock were excluded from the computation of diluted income
(loss) per share since their effect would be antidilutive, respectively.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, and
accounts payable approximate fair value because of the short maturity of these
items. The Company's bank borrowings approximate fair value because the interest
rate fluctuates with changes in the prime rate. The Company's capital lease
obligations approximate fair value, based on rates currently available from the
bank for debt with similar terms and maturities.



                                       26
<PAGE>
                           LOGIC DEVICES INCORPORATED

                         SUMMARY OF ACCOUNTING POLICIES


Long-Lived Assets

Long-lived assets, including property and equipment, goodwill, and other
intangible assets, are assessed for possible impairment whenever events or
changes in circumstances indicate that the carrying amounts may not be
recoverable, or whenever management has committed to a plan to dispose of the
assets. Such assets are carried at the lower of book value or fair value as
estimated by management based on appraisals, current market value, and
comparable sales value, as appropriate. Assets to be held and used affected by
such impairment loss are depreciated or amortized at their new carrying amounts
over the remaining estimated life; assets to be sold or otherwise disposed of
are not subject to further depreciation or amortization. In determining whether
an impairment exists, the Company uses undiscounted future cash flows without
interest charges compared to the carrying value of the assets.

Stock-based Compensation

The Company has adopted the provisions of SFAS No. 123, Accounting for
Stock-Based Compensation. Under this standard, companies are encouraged, but not
required, to adopt the fair value method of accounting for employee stock-based
transactions. Under the fair value method, compensation cost is measured at the
grant date based on the fair value of the award and is recognized over the
service period, which is usually the vesting period. Companies are permitted to
continue to account for employee stock-based transactions under Accounting
Principles Board (APB) No. 25, Accounting for Stock Issued to Employees, but are
required to disclose pro forma net income (loss) and income (loss) per share as
if the fair value method had been adopted. The Company has elected to continue
to account for employee stock-based compensation under APB No. 25.

Segment Reporting

The Company is organized in a single operating segment for purposes of making
operating decisions and assessing performance. The president (the chief
operating decision maker) evaluates performance, makes operating decisions, and
allocates resources based on financial data consistent with the presentation in
the accompanying consolidated financial statements.

Adoption of New Accounting Pronouncements

In June 1999 and June 2000, the Financial Accounting Standards Board (FASB)
issued SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities and SFAS No. 138, Accounting for Certain Derivative Instruments and
Certain Hedging Activities, an amendment of SFAS No. 133, respectively. SFAS No.
133 and No. 138 require companies to recognize all derivative contracts as
either assets or liabilities in the balance sheet and to measure them at fair
value. If certain conditions are met, a derivative may be specifically
designated as a hedge, the objective of which is to match the timing of gain or
loss recognition on the hedging derivative with the recognition of (i) the
changes in the fair value of the hedged assets or liabilities that are
attributable to the hedged risk or (ii) the earnings effect of the hedged
forecasted transaction. For a derivative not designated as a hedging instrument,
the gain and loss is recognized in income in the period of change. In June 2000,
the FASB issued SFAS No. 137, Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FASB Statement No. 133, which
amends SFAS No. 133 to be effective, concurrently with SFAS No. 138, for all
fiscal quarters of all fiscal years beginning after June 15, 2000.

Historically, the Company has not entered into derivative contracts either to
hedge existing risks or for speculative purposes. Accordingly, the adoption of
the new standard did not have a material impact on the Company's financial
position, results of operations, or cash flows.



                                       27
<PAGE>
                           LOGIC DEVICES INCORPORATED

                         SUMMARY OF ACCOUNTING POLICIES


In September 2000, the FASB issued SFAS No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities. The statement
provides accounting and reporting standards for transfers and servicing of
financial assets and extinguishments of liabilities, and revises the accounting
standards for securizations and transfers of financial assets and collateral.
The adoption of SFAS No. 140 did not have a material impact on the Company's
financial position, results of operations, or cash flows.

In June 2001, the FASB issued SFAS No. 141, Business Combinations, and SFAS No.
142, Goodwill and Other Intangible Assets. SFAS No. 141 requires business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method of accounting. It also specifies the types of acquired
intangible assets that are required to be recognized and reported separately
from goodwill. The Company does not anticipate any material impact from the
adoption of this standard. SFAS No. 142 will require that goodwill and certain
intangibles no longer be amortized, but instead be tested for impairment at
least annually. SFAS No. 142 is effective for all fiscal years beginning after
December 15, 2001, with early application permitted in certain circumstances.
The Company plans early adoption of SFAS No. 142 during fiscal 2002, and does
not expect any impairment of goodwill upon adoption. Goodwill amortization
aggregated $30,700 in fiscal 2001, 2000, and 1999.

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations. The statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. The statement is effective for all fiscal
years beginning after June 15, 2002, with early application permitted. The
Company does not expect the adoption of SFAS No. 143 to have a material impact
on the Company's financial position, results of operations, or cash flows.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. This statement supersedes SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of, and the accounting and reporting provisions of APB Opinion No.
30, Reporting the Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions, for the disposal of a segment of a business. The
statement is effective for all fiscal years beginning after December 15, 2001,
with early application permitted. The Company does not expect the adoption of
SFAS No. 144 to have a material impact on the Company's financial position,
results of operations, or cash flows.



                                       28
<PAGE>
                           LOGIC DEVICES INCORPORATED

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       INVENTORIES

     A summary of inventories follows:
<TABLE>
<CAPTION>
                                                                                September 30,           October 1,
                                                                                         2001                 2000
                                                                            -----------------    -----------------
<S>                                                                        <C>                  <C>
         Raw materials                                                     $        1,544,800   $        3,826,400
         Work-in-process                                                            6,801,900            5,573,900
         Finished goods                                                             3,349,000            2,782,000
                                                                            -----------------    -----------------

                                                                           $       11,695,700   $       12,182,300
                                                                            =================    =================
</TABLE>


2.       PROPERTY AND EQUIPMENT

     A summary of property and equipment follows:
<TABLE>
<CAPTION>
                                                                                September 30,           October 1,
                                                                                         2001                 2000
                                                                            -----------------    -----------------
<S>                                                                        <C>                  <C>
         Equipment                                                         $        5,047,500   $        4,838,200
         Tooling costs                                                              2,175,100            2,962,500
         Leasehold improvements                                                        69,300              225,200
                                                                            -----------------    -----------------
                                                                                    7,291,900            8,025,900

         Less accumulated depreciation and amortization                             5,699,900            5,602,200
                                                                            -----------------    -----------------

                                                                           $        1,592,000   $        2,423,700
                                                                            =================    =================
</TABLE>

     Equipment under capital lease obligations aggregated $397,600 and $362,800
     as of September 30, 2001 and October 1, 2000, with related accumulated
     amortization of $257,400 and $179,100, respectively. For fiscal 2001, 2000,
     and 1999, amortization expense for equipment under capital lease
     obligations was $76,500, $120,000, and $225,200, respectively.


3.       RELATED PARTY TRANSACTIONS

     During fiscal 2001, the Company recognized $19,000 of expense related to
     the issuance of 67,000 stock options to related party consultants.

     During fiscal 1999, the Company received funds pursuant to two notes
     payable from principal shareholders aggregating $250,000. The notes bore
     interest at the Company's lender prime rate (8.25% at October 3, 1999) plus
     2% and were paid in full during the fiscal year ended October 1, 2000.



                                       29
<PAGE>
                           LOGIC DEVICES INCORPORATED

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     In 1995, the Company granted 220,000 warrants to three non-employee
     directors to purchase the Company's common stock. In 1996, 120,000 of these
     warrants were exercised at the original exercise price of $2.5625 via the
     issuance of two promissory notes bearing interest at a reference rate plus
     2%. These notes were included in common stock subscribed in the
     accompanying consolidated financial statements, and were repaid during
     fiscal 1999. The remaining warrants for 100,000 shares were exercised at
     $1.48675 on February 15, 2000.


4.       OTHER ASSETS

     A summary of other assets follows:
<TABLE>
<CAPTION>
                                                                                September 30,           October 1,
                                                                                         2001                 2000
                                                                            -----------------    -----------------
<S>                                                                        <C>                  <C>
         Capitalized software, net of accumulated amortization
           of $2,342,500 and $2,218,100, respectively                      $               -    $          124,400
         Costs in excess of fair value of net assets acquired,
           net of accumulated amortization of $199,200 and
           $168,500, respectively                                                     110,300              141,000
         Deposits and other assets                                                     70,700               79,700
                                                                            -----------------    -----------------

                                                                           $          181,000   $          345,100
                                                                            =================    =================
</TABLE>

     In fiscal 2001, amortization expense for other assets totaled $155,100, and
     for both fiscal 2000 and 1999, amortization expense for other assets
     totaled $178,300.


5.       BANK BORROWINGS

     The Company has a revolving line of credit up to $2,000,000, with a bank,
     which expires on July 31, 2002, bears interest at the bank's prime rate
     (6.0% at September 30, 2001) plus 0.25%, is secured by all the Company's
     assets, and is guaranteed, in part, by a federal agency. The line of credit
     requires the Company to maintain a quarterly minimum quick ratio of 1.1 to
     1.0, maintain a quarterly debt-to-effective tangible net worth ratio of not
     more than 0.60 to 1.0, maintain a quarterly effective tangible net worth of
     at least $16.5 million plus 50 percent of the previous quarter's cumulative
     net earnings, and have positive net earnings as of the end of each fiscal
     year. Borrowings supported by export-related inventory are required to not
     exceed 70% of the total outstanding borrowings. Under the terms of its line
     of credit, the Company is precluded from paying any dividends without the
     consent of the parties to such agreements, even if the Company is in
     compliance with all of the financial covenants. As of September 30, 2001,
     the Company had a zero balance and was in compliance with its covenants,
     except the profitability requirement, for which it has not obtained a
     waiver.




                                       30
<PAGE>
                           LOGIC DEVICES INCORPORATED

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


6.       BENEFIT (PROVISION) FOR INCOME TAXES

     The benefit (provision) for income taxes for fiscal 2001, 2000, and 1999,
comprise:
<TABLE>
<CAPTION>

                                                                 Current             Deferred                Total
                                                       -----------------    -----------------    -----------------
<S>                                                   <C>                  <C>                  <C>
     2001

         Federal                                      $                -   $                -   $                -
         State                                                   (10,400)                   -              (10,400)
                                                       -----------------    -----------------    -----------------

                                                      $          (10,400)  $                -   $          (10,400)
                                                       =================    =================    =================


                                                                 Current             Deferred                Total
                                                       -----------------    -----------------    -----------------

     2000

         Federal                                      $           21,800   $                -   $           21,800
         State                                                   (11,600)                   -              (11,600)
                                                       -----------------    -----------------    -----------------

                                                      $           10,200   $                -   $           10,200
                                                       =================    =================    =================


                                                                 Current             Deferred                Total
                                                       -----------------    -----------------    -----------------

     1999

         Federal                                      $          (18,000)  $                -   $          (18,000)
         State                                                    (2,000)                   -               (2,000)
                                                       -----------------    -----------------    -----------------

                                                      $          (20,000)  $                -   $          (20,000)
                                                       =================    =================    =================
</TABLE>

     The following summarizes the difference between the income tax (expense)
     benefit and the amount computed by applying the Federal income tax rate of
     34% in fiscal 2001, 2000, and 1999, to income (loss) before taxes:
<TABLE>
<CAPTION>

                                                                    2001                 2000                 1999
                                                       -----------------    -----------------    -----------------
<S>                                                   <C>                  <C>                  <C>
         Federal income tax at statutory rate         $           68,500   $         (174,100)  $         (211,000)
         Tax credit carryforwards                                      -               34,700              362,300
         State income taxes, net of federal
           tax benefit                                            11,500               (7,700)             (36,200)
         Stock option and warrant exercises                            -              171,000                    -
         Other, net                                             (192,300)              50,000              132,600
         Valuation allowance                                     101,900              (63,700)            (267,700)
                                                       -----------------    -----------------    -----------------

                                                      $          (10,400)  $           10,200   $          (20,000)
                                                       =================    =================    =================
</TABLE>




                                       31
<PAGE>
                           LOGIC DEVICES INCORPORATED

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     Deferred tax assets and liabilities comprise the following:
<TABLE>
<CAPTION>

                                                                                September 30,           October 1,
                                                                                         2001                 2000
                                                                            -----------------    -----------------
<S>                                                                        <C>                  <C>
         Deferred tax assets
           Net operating loss carryforwards                                $        1,226,800   $        1,450,900
           Reserves not currently deductible                                        1,088,200            1,085,000
           Capitalized inventory costs                                                312,600              456,700
           Tax credit carryforwards                                                   457,800              397,000
           Distributor sales reserves                                                       -               13,700
           Other                                                                       42,200               39,700
                                                                            -----------------    -----------------

              Gross deferred tax assets                                             3,127,600            3,443,000
                                                                            -----------------    -----------------

         Deferred tax liabilities
           State tax benefit                                                         (290,000)            (296,300)
           Depreciation                                                              (100,200)            (254,100)
           Capitalized software costs                                                       -              (53,300)
                                                                            -----------------    -----------------

              Gross deferred tax liabilities                                         (390,200)            (603,700)
                                                                            -----------------    -----------------

         Net deferred tax assets                                                    2,737,400            2,839,300

         Valuation allowance                                                       (2,737,400)          (2,839,300)
                                                                            -----------------    -----------------

         Net deferred taxes                                                $                -   $                -
                                                                            =================    =================
</TABLE>

     The valuation allowance was decreased $101,900 from fiscal 2000 to fiscal
     2001. This was the result of a decrease of the net deferred tax assets,
     primarily net operating loss carryforwards (NOLs) and capitalized inventory
     costs. Because the Company management is unable to determine whether it is
     more likely than not that the net deferred tax assets will be realized, the
     Company continues to record a 100 percent valuation against the net
     deferred tax assets.

     As of September 30, 2001, the Company has Federal and State NOLs totaling
     approximately $3,028,100 and $2,231,600, respectively, available to offset
     future taxable income. These NOLs expire at various times through 2021 and
     2006, respectively. The Company also has Federal and State research and
     development credit carryforwards totaling approximately $79,300 and
     $83,800, respectively, expiring at various times through 2021. The Company
     has state manufacturing tax credit carryforwards totaling approximately
     $294,800, which expire at various times through 2011.


7.       COMMITMENTS

     The Company leases its facilities and certain equipment under operating
     leases. The facility leases require the Company to pay certain maintenance
     and operating expenses, such as taxes, insurance, and utilities. Rent
     expense related to these operating leases was $816,700, $981,700, and
     $1,293,500, for fiscal 2001, 2000, and 1999, respectively.

     A summary of future minimum lease payments under capitalized leases,
     together with the present value of such minimum lease payments, and future
     minimum payments required under non-cancelable operating leases with terms
     in excess of one year, follows:



                                       32
<PAGE>
                           LOGIC DEVICES INCORPORATED

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>


                                                                                  Capitalized            Operating
                                                                                       Leases               Leases
                                                                            -----------------    -----------------
<S>                                                                        <C>                  <C>
     Fiscal years ended:

         September 29, 2002                                                $           56,800   $          589,400
         September 28, 2003                                                             3,000              273,200
         September 27, 2004                                                                 -              193,300
         September 26, 2005                                                                 -               80,600
         Thereafter                                                                         -                    -
                                                                            -----------------    -----------------

         Future minimum lease payments                                                 59,800   $        1,136,500
                                                                                                 =================
         Less amounts representing interest (4.08% to 10.75%)                           2,200
                                                                            -----------------

         Present value of future minimum lease payments                                57,600

         Less current portion                                                          54,700
                                                                            -----------------

                                                                           $            2,900
                                                                            =================
</TABLE>

     Sublease receipts aggregating approximately $17,200 and $8,800 in the
     fiscal years ended September 29, 2002 and September 28, 2003, respectively,
     will reduce future operating lease commitments.


8.       SHAREHOLDERS' EQUITY

     Stock Option Plan

     The Company issues common stock options to its employees, certain
     consultants, and certain of its board members. Options granted to its
     employees and consultants generally vest over four years and expire ten
     years from the date of grant. Options granted to board members generally
     vest immediately and expire five years from the date of grant. A summary of
     the status of the Company's stock option plan as of September 30, 2001,
     October 1, 2000, and October 3, 1999, and changes during the fiscal years
     then ended, is presented in the following table:
<TABLE>
<CAPTION>

                                                              Options Outstanding
                           ----------------------------------------------------------------------------------------
                               September 30, 2001                 October 1, 2000               October 3, 1999
                           ----------------------------     ---------------------------     -------------------------
                                            Wtd. Avg.                         Wtd. Avg.                      Wtd. Avg.
                             Shares         Ex. Price          Shares         Ex. Price       Shares         Ex. Price
                           ----------------------------     ---------------------------     --------------------------
<S>                            <C>        <C>                 <C>           <C>                 <C>        <C>
     Beginning                 754,800    $     3.076         1,061,400     $   3.087           818,000    $     3.015
     Granted                   314,500    $     1.835           115,000     $   3.832           301,000    $     3.216
     Exercised                       -              -           (91,400)    $   2.653           (18,100)   $     2.290
     Forfeited                 (67,800)   $     2.582          (330,200)    $   3.444           (39,500)   $     2.984
                           -----------                      -----------                      ----------

     Ending                  1,001,500    $     2.705           754,800     $   3.076         1,061,400    $     3.087
                           ===========     ==========      ============      ========        ==========     ==========

     Exercisable at
       year-end:               784,200                          656,900                         754,200
                           ===========                     ============                      ==========

     Weighted-average fair value
       of options granted during period   $     1.835                       $   3.832                      $     3.216
                                           ==========                        ========                       ==========
</TABLE>



                                       33
<PAGE>
                           LOGIC DEVICES INCORPORATED

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The following table summarizes information about stock options outstanding
     as of September 30, 2001:
<TABLE>
<CAPTION>
                                       Options Outstanding                          Options Exercisable
                         -----------------------------------------------     ------------------------------
                                              Wtd. Avg.
       Range of               Number          Remaining        Wtd. Avg.          Number         Wtd. Avg.
       Exercise             Outstanding      Contractual       Exercise         Exercisable      Exercise
        Prices              at 09/30/01         Life             Price          at 09/30/01        Price
-----------------------  -----------------------------------------------     ------------------------------
 <S>                             <C>          <C>            <C>                  <C>            <C>
    $0.000 - 2.000                281,500     9.1 years      $    1.787           100,300        $    1.683
    $2.001 - 4.000                668,000     6.9 years      $    2.825           631,900        $    2.825
    $4.001 - 6.000                 40,000     8.5 years      $    5.563            40,000        $    5.563
    $6.001 - 8.000                 12,000     4.3 years      $    8.000            12,000        $    8.000
                         ----------------                                    ------------


                                1,001,500                    $    2.705           784,200        $    2.897
                         ================                     =========      ============         =========
</TABLE>


     The difference between the exercise price and the fair market value of the
     options issued on the dates of grant is accounted for as unearned
     compensation and amortized to expense over the related vesting period. The
     Company recognized $19,000 of expense in fiscal 2001, related to stock
     options granted to consultants. As discussed in the Summary of Accounting
     Policies, the Company follows APB No. 25 for measurement and recognition of
     employee stock-based transactions. Had the Company elected to adopt the
     measurement and recognition provisions of SFAS No. 123, the Company would
     have incurred an additional $97,000, $509,200, and $317,300 in related
     compensation expenses during the fiscal years ended September 30, 2001,
     October 1, 2000, and October 3, 1999, respectively. Under the provisions of
     SFAS No. 123, the pro forma net (loss) income and basic and diluted (loss)
     income per share for the fiscal years ended September 30, 2001, October 1,
     2000, and October 3, 1999, follows:

<TABLE>
<CAPTION>
                                                            2001              2000                 1999
                                                      ----------        ----------           ----------
<S>                                                   <C>               <C>                  <C>
     Net (loss) income

         As reported                                  $(212,000)        $  522,400           $  600,600
                                                       ========          =========            =========

         Pro forma                                    $(299,000)        $   13,200           $  283,300
                                                       ========          =========            =========

     Basic and diluted earnings (loss)
       per share

         As reported                                  $   (0.03)        $     0.08           $     0.09
                                                       ========          =========            =========

         Pro forma                                    $   (0.04)        $     0.00           $     0.04
                                                       ========          =========            =========
</TABLE>

     The pro forma information provided above was estimated at the date of
     grant, using the Black-Scholes option-pricing model, with the following
     weighted average assumptions:
<TABLE>
<CAPTION>

                                                            2001              2000                 1999
                                                      ----------        ----------           ----------
<S>                                                          <C>               <C>                  <C>
         Expected life (in years)                            3.0               3.0                  4.0
         Risk-free interest rate                            3.5%              6.0%                 6.2%
         Volatility                                        90.4%             72.0%                91.0%
         Dividend yield                                      0.0               0.0                  0.0
</TABLE>



                                       34
<PAGE>
                           LOGIC DEVICES INCORPORATED

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The Black-Scholes option valuation model was developed for use in
     estimating the fair value of traded options that have no vesting
     restrictions and are fully transferable. Because the Company's options have
     characteristics significantly different from those of trading options,
     management believes that the existing pricing models do not necessarily
     provide a reliable single measure of the fair value of its options.


9.       MAJOR CUSTOMERS, MAJOR SUPPLIERS AND EXPORT SALES

     Major Customers and Suppliers

     For fiscal 2001, one customer accounted for approximately 32% of net
     revenues, with accounts receivable of $2,654,900 as of September 30, 2001.
     For fiscal 2000, two customers accounted for approximately 31% and 10% of
     net revenues, one of which was the Company's exclusive domestic
     distributor, with accounts receivable of $615,200 and $209,800,
     respectively, as of October 1, 2000. For fiscal 1999, one customer
     accounted for approximately 35% of net revenues, with accounts receivable
     of $1,820,500 as of October 3, 1999.

     The Company had one supplier that comprised approximately 23% of its
     purchases in fiscal 2001, while no suppliers comprised 10% or more of its
     purchases in fiscal 2000 and 1999.

     Export Sales

     The Company had the following export sales:
<TABLE>
<CAPTION>

                                                               2001             2000                1999
                                                      -------------     -------------      -------------
<S>                                                   <C>               <C>                <C>
         Western Europe                               $   2,652,800     $   3,520,500      $   3,204,600
         Far East                                           392,600         1,106,700            857,000
         Other                                              180,500            19,000             96,400
                                                      -------------     -------------      -------------

                                                      $   3,225,900     $   4,646,200      $   4,158,000
                                                      =============     =============      =============
</TABLE>

     No one country comprised more than 10% of net revenues in fiscal 2001,
2000, and 1999.


10.       USE OF ESTIMATES AND CONCENTRATION OF CREDIT RISKS

     The Company's consolidated financial statements are prepared in accordance
     with accounting principles generally accepted in the United States of
     America, which require the use of management estimates. These estimates are
     impacted, in part, by the following risks and uncertainties:

     Financial instruments, which potentially subject the Company to
     concentration of credit risk, consist principally of cash and cash
     equivalents and trade receivables. The Company places its cash and cash
     equivalents with high quality financial institutions, and, by policy,
     limits the amounts of credit exposure to any one financial institution.



                                       35
<PAGE>
                           LOGIC DEVICES INCORPORATED

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     A significant portion of the Company's accounts receivable has historically
     been derived from one major class of customer (distributors) with the
     remainder being spread across many other customers in various electronic
     industries. The Company believes any risk of accounting loss is
     significantly reduced due to (1) the provision being made at the date of
     sale for returns and allowances, and (2) the diversity of its products,
     end-customers, and geographic sales areas. The Company performs credit
     evaluations of its customers' financial condition whenever necessary. The
     Company generally does not require cash collateral or other security to
     support customer receivables.

     The Company currently is dependent on one supplier as its primary
     wafer-processing source. If this supply was to be interrupted or the
     pricing was to become unfavorable to the Company, this could have a
     material adverse impact on the Company's operations

     The Company produces inventory based on orders received and forecasted
     demand. The Company must order wafers and build inventory well in advance
     of product shipments. Because the Company's markets are volatile and
     subject to rapid technology and price changes, there is a risk that the
     Company will forecast incorrectly and produce excess or insufficient
     inventories of particular products. This inventory risk is heightened
     because many of the Company's customers place orders with short lead times.
     Demand will differ from forecasts and such differences may have a material
     effect on actual operations.

11.      STATEMENTS OF CASH FLOWS

     The Company paid $54,700, $314,100, and $557,600 for interest in the fiscal
     years ended September 30, 2001, October 1, 2000, and October 3, 1999,
     respectively. The Company paid $15,900 and $3,800 for income taxes during
     fiscal 2001 and 2000, respectively. The Company did not make any income tax
     payments during fiscal 1999.

     Non-cash investing and financing activities for fiscal 2001 and 2000
     consisted of the acquisition of $34,800 and $40,200 of equipment under
     capital leases, respectively, and the issuance of 67,000 stock options to
     consultants recorded at an amount of $19,000 for fiscal 2001. There were no
     non-cash investing and financing activities during fiscal 1999.

12.      401(K) SAVINGS PLAN

     The Company has a 401(k) savings plan (the Plan), which was adopted on
     September 1, 2000. Employees may make voluntary contributions and the
     Company has the discretion to make matching contributions. The Plan covers
     all employees meeting certain age and service requirements, and who are not
     covered by collective bargaining agreements. The Company funds expenses
     incurred in connection with the Plan, on a current basis. The Company made
     no matching contributions during fiscal 2001, 2000, and 1999.




                                       36
<PAGE>
QUARTERLY FINANCIAL DATA (UNAUDITED)

The following is a summary of unaudited results of operations (dollars in
thousands, except per share data) for the fiscal years ended September 30, 2001
and October 1, 2000:
<TABLE>
<CAPTION>

                                                    Fiscal Quarter Ended:
                            ------------------------------------------------------------------
                               12/31/00         04/01/01          07/01/01         09/30/01            Total
                            -------------     -------------    -------------     -------------    ---------------
<S>                         <C>               <C>              <C>               <C>              <C>
Net revenues                $       3,058     $       2,540    $       2,490     $       1,919    $       10,007

Gross margin                $       1,218     $       1,216    $       1,331     $          75    $        3,840

Income (loss) from
  operations                $         105     $          23    $          22     $        (328)   $        (178)

Income (loss) before
  income taxes              $          98     $          22    $          14     $        (336)   $        (202)

Net income (loss)           $          97     $          12    $          14     $        (335)   $        (212)

Basic income (loss)
  per share                 $        0.01     $           -    $           -     $       (0.04)   $       (0.03)

Weighted average
  common shares                     6,842             6,842            6,842             6,842            6,842
</TABLE>

<TABLE>
<CAPTION>

                                                   Fiscal Quarter Ended:
                            ------------------------------------------------------------------
                               01/02/00         04/02/00          07/02/00         10/01/00            Total
                            -------------     -------------    -------------     -------------    ---------------
<S>                         <C>               <C>              <C>               <C>              <C>
Net revenues                $       3,010     $      2,769     $       2,990     $       3,017    $        11,786

Gross margin                $       1,220     $      1,235     $       1,451     $         601    $         4,507

Income from operations      $         166     $        159     $         195     $         250    $           770

Income before
  income taxes              $          89     $         93     $         147     $         183    $           512

Net income                  $          88     $         93     $         147     $         194    $           522

Basic income                $        0.01     $       0.01     $        0.02     $        0.04    $          0.08
  per share

Weighted average
  common shares                     6,650            6,753             6,842             6,842              6,772

</TABLE>




                                       37
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
           AND FINANCIAL DISCLOSURE

Not applicable.



                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information required by this Item will be included in the Proxy
Statement and is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

         The information required by this Item will be included in the Proxy
Statement and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
           MANAGEMENT

         The information required by this Item will be included in the Proxy
Statement and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS

         The information required by this Item will be included in the Proxy
Statement and is incorporated herein by reference.



                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
           FORM 8-K

(a)  The following documents are filed as part of this report:

        (1) The Company's Consolidated Financial Statements, Summary of
            Accounting Policies, and Notes to Consolidated Financial
            Statements appear at pages 20 to 36 of this report; see Index
            to Consolidated Financial Statements at page 19 of this
            report.

        (2) The Consolidated Financial Statement Schedule appears on page
            39 of this report; see Index to Consolidated Financial
            Statements Schedule at page 19 of this report.

        (3) The Index to Exhibits appears at page 41 of this report.

(b)  Reports on Form 8-K: During the last quarter of fiscal 2001, the Company
     filed no current reports on Form 8-K.




                                       38
<PAGE>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>

                                                 Balance        Charged
                                                   at          to costs                        Balance
                                              beginning           and                         at end of
Description                                   of period        expenses       Deductions     period
-----------                                  --------------   ------------    ----------   -------------
<S>                                          <C>              <C>             <C>           <C>
2001

Allowance for:

   Doubtful accounts                         $     20,000     $        -      $        -    $     20,000

   Inventory reserve                         $  2,436,300     $    65,500     $ (634,100)   $  1,867,700

   Sales returns                             $     32,000     $   (32,000)    $        -    $          -

2000

Allowance for:

   Doubtful accounts                         $    253,500     $         -     $  233,500    $     20,000

   Inventory reserve                         $  1,784,200     $   652,100     $        -    $  2,436,300

   Sales returns                             $     50,000     $         -     $   18,000    $     32,000

1999

Allowance for:

   Doubtful accounts                         $    169,500     $    84,000     $        -    $    253,500

   Inventory reserve                         $    590,000     $ 1,194,200     $        -    $  1,784,200

   Sales returns                             $    149,100     $         -     $  (99,100)   $     50,000
</TABLE>





                                       39
<PAGE>
                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

LOGIC DEVICES INCORPORATED

Date: December 20, 2001              By:   /s/ William J. Volz
                                         --------------------------------------
                                             William J. Volz, President and
                                             Principal Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons in the
capacities and on the dates indicated.

Signature                      Title                           Date
---------                      -----                           ----

  /s/ William J. Volz          President and Director          December 20, 2001
----------------------------   (Principal Executive Officer)
    William J. Volz


  /s/ Kimiko Lauris            Chief Financial Officer         December 20, 2001
----------------------------   (Principal Financial and
    Kimiko Lauris              Accounting Officer)



  /s/ Howard L. Farkas         Chairman of the Board           December 20, 2001
----------------------------   of Directors
    Howard L. Farkas


  /s/ Albert Morrison, Jr.     Director                        December 20, 2001
----------------------------
    Albert Morrison, Jr.


  /s/ Frederic J. Harris       Director                        December 20, 2001
----------------------------
    Frederic J. Harris




                                       40
<PAGE>
                                INDEX TO EXHIBITS

Exhibit No.                Description

3.1      Articles of Incorporation, as amended. [3.1] (1)
3.2      Bylaws, as amended. [3.2] (1)
10.1     Real Estate lease regarding Registrant's Sunnyvale
         facilities. [10.1] (2)
10.2     LOGIC Devices Incorporated 1996 Stock Incentive Plan. [99.1] (3)
10.3     LOGIC Devices Incorporated 1999 Director Stock Incentive
         Plan. [10.1] (4)
10.4     Registration Rights Agreement dated October 3, 1998 between
         William J. Volz, BRT Partnership, and Registrant. [10.19] (5)
23.1     Consent letter of Hood & Strong LLP.
----------

[ ]      Exhibits so marked have been previously filed with the
         Securities and Exchange Commission (SEC) as exhibits to the
         filings shown below under the exhibit numbers indicated following
         the respective document description and are incorporated herein by
         reference.

(1)      Registration Statement on Form S-18, as filed with the SEC on
         August 23, 1988 [Registration No. 33-23763-LA].
(2)      Registration Statementof Form S-3, as filed with the SEC on
         November 21, 1996 [Registration No. 333-16591].
(3)      Registration Statement on Form S-8, as filed with the SEC on
         August 17, 1997 [Registration No. 333-32819].
(4)      Quarterly Report on Form 10-Q for the quarter ended June 30, 1999,
         as filed with the SEC on August 14, 1999.
(5)      Annual Report on Form 10-K for the transition period from
         January 1, 1998 to October 3, 1999, as filed with the SEC on
         January 13, 1999.




                                       41