AMPLIDYNE INC, SB-2/A, 1997-01-14

AMPLIDYNE INC
SB-2/A, 1997-01-14
ELECTRONIC COMPONENTS, NEC

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 14, 1997

REGISTRATION NO. 333-11015
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.

------------------------

AMENDMENT NO. 4
TO
FORM SB-2

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

------------------------

AMPLIDYNE, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 3679 22-3440510
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF ORGANIZATION) CLASSIFICATION CODE NO.) IDENTIFICATION NO.)
</TABLE>

------------------------

144 BELMONT DRIVE
SOMERSET, NEW JERSEY 08873
(908) 271-8473
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL
EXECUTIVE OFFICES AND PRINCIPAL PLACE OF BUSINESS)

------------------------

DEVENDAR S. BAINS
CHIEF EXECUTIVE OFFICER
144 BELMONT DRIVE
SOMERSET, NEW JERSEY 08873
(908) 271-8473
(NAME, ADDRESS AND TELEPHONE
NUMBER OF AGENT FOR SERVICE)

------------------------

Copies to:

<TABLE>
<S> <C>
STUART NEUHAUSER, ESQ. GERALD A. KAUFMAN, ESQ.
BERNSTEIN & WASSERMAN, LLP 33 WALT WHITMAN ROAD
950 THIRD AVENUE SUITE 233
NEW YORK, NY 10022 HUNTINGTON STATION, NY 11746
(212) 826-0730 (516) 271-2055
(212) 371-4730 (FAX) (516) 271-2488 (FAX)
</TABLE>

------------------------

APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as reasonably
practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis, pursuant to Rule 415 under the Securities Act of
1933, check the following box: /x/

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED
MAXIMUM OFFERING PROPOSED
TITLE OF EACH CLASS AMOUNT TO BE PRICE PER MAXIMUM AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED(1) SECURITY(2) OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Units, consisting of 1 Share of Common Stock and
1 Warrant(3).............................................. 1,610,000 $5.10 $8,211,000 $2,831.15
Common Stock, $.0001 par value per Share(3)............... 1,610,000 -- -- --
Warrants to purchase Common Stock (3)..................... 1,610,000 -- -- --
Common Stock issuable upon exercise of Warrants........... 1,610,000 $6.00 $9,660,000 $3,330.77
Representative's Purchase Option(4)....................... 140,000 $.001 $140 $.05
Common Stock underlying Representative's Purchase

Option(4)................................................. 140,000 $7.50 $1,050,000 $362.04
Warrants underlying Representative's Purchase Option...... 140,000 $0.15 $21,000 $7.24
Common Stock issuable upon exercise of Warrants underlying
Representative's Purchase Option.......................... 140,000 $9.00 $1,260,000 $434.45
Common Stock underlying Options Offered by Selling
Securityholders(5)........................................ 550,000 $5.00 $2,750,000 $948.20
Total Registration and Fee................................ -- -- $22,952,140 $7,913.90(6)
</TABLE>

(footnotes on next page)

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- --------------------------------------------------------------------------------

<PAGE>

(footnotes from first page)

(1) Pursuant to Rule 416 under the Securities Act of 1933 (the 'Act'), this
Registration Statement covers such additional indeterminate number of shares
of Common Stock as may be issued by reason of adjustments in the number of
shares of Common Stock pursuant to anti-dilution provisions contained in the
Warrant Agreement governing the Warrants and Representative's Purchase
Option (defined below). Because such additional shares of Common Stock will,
if issued, be issued for no additional consideration, no registration fee is
required.

(2) Estimated solely for purposes of calculating registration fee. It is
anticipated that the initial public offering price of the Units will be
$5.10. The value of each share and Warrant included in a Unit is $5.00 and
$.10, respectively. The exercise price of the Warrants will be $6.00.

(3) Includes 210,000 shares of Common Stock and 210,000 Warrants included in
210,000 Units which is subject to the Underwriters' over-allotment option
(the 'Over-Allotment Option').

(4) The Representative's Purchase Option entitles the Representative to purchase
up to 140,000 shares of Common Stock at $7.50 (150% of the value of each
share of Common Stock included in the Units) and 140,000 Warrants at $.15
(150% of the value of each Warrant included in the Units) (the
'Representative's Purchase Option'). The Warrants underlying the
Representative's Purchase Option are exercisable at 150% of the exercise
price of the public warrants.

(5) Common Stock underlying options owned by stockholders of the Company.

(6) $7,769.08 has been previously paid.

------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

EXPLANATORY NOTE

This registration statement covers the primary underwritten offering
('Offering') of 1,400,000 Units, each Unit consisting of one (1) share of Common
Stock, par value $.0001 ('Common Stock') and one (1) Redeemable Common Stock
Purchase Warrant ('Warrants') of Amplidyne, Inc. (the 'Company'), and the
concurrent offering of securities by certain selling securityholders ('Selling
Securityholders'). The primary prospectus ('Company Prospectus'), covers the
1,610,000 Units, consisting of 1,610,000 shares of Common Stock and 1,610,000
Warrants being offered by the Company. An alternate prospectus ('Selling
Securityholders Prospectus'), will be used by the Selling Securityholders in
connection with an offering by them for their accounts of up to 550,000 shares
of Common Stock underlying certain options ('Selling Securityholders Options').
The Selling Securityholders Prospectus is identical to the Company Prospectus,
except for: alternative cover and back pages (to be substituted for the cover
and back pages of the Company Prospectus), and the sections entitled 'Selling
Securityholders' and 'Plan of Distribution' (to be inserted in lieu of the
section entitled 'Underwriting' in the Company Prospectus) all which substitute
sections follow the Company Prospectus. All references contained in the Selling
Securityholders Prospectus to 'the Offering' or 'this Offering' shall refer to
the Company's Offering as referenced in the Company Prospectus.

<PAGE>

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF SUCH STATE.

SUBJECT TO COMPLETION, DATED JANUARY 14, 1997

PROSPECTUS
AMPLIDYNE, INC.

1,400,000 UNITS, EACH UNIT CONSISTING OF ONE SHARE OF COMMON STOCK
AND ONE REDEEMABLE COMMON STOCK PURCHASE WARRANT

------------------------

Amplidyne, Inc., a Delaware corporation (the 'Company' or 'Amplidyne'), is
hereby offering ('Offering') 1,400,000 Units ('Units'), at a price of $5.10 per
Unit. Each Unit consists of one (1) share of common stock, par value $.0001 per
share ('Common Stock' or 'Shares') and one (1) Redeemable Common Stock Purchase
Warrant ('Warrants', collectively with the Common Stock, the 'Securities'). The
Shares and Warrants included in the Units are detachable and separately
tradeable on issuance. The Units will not trade after issuance. Each Warrant
entitles the holder to purchase one (1) Share for $6.00 during the four (4) year
period commencing one (1) year from the date of this Prospectus. Commencing one
(1) year from the date of this Prospectus, the Company may redeem the Warrants
at a price of $.01 per Warrant, at any time upon not less than 30 days prior
written notice if the average closing price or bid price of the Common Stock as
reported by the principal exchange on which the Common Stock is traded, the
Nasdaq SmallCap Market or the National Quotation Bureau, Incorporated, as the
case may be, equals or exceeds $9.00 per Share for any twenty (20) consecutive
trading days ending within five (5) days prior to the date on which notice of
redemption is given. See 'Description of Securities.'

Prior to this Offering, there has been no public market for the Securities
and there can be no assurance that any such market will develop. It is currently
anticipated that the initial public offering price per Unit will be $5.10. For
information regarding the factors considered in determining the initial public
offering price of the Units and the exercise price of the Warrants, see
'Underwriting.' The Company has applied to have the Common Stock and Warrants
approved for quotation on the Nasdaq SmallCap Market under the symbols 'AMPD'
and 'AMPDW', respectively, although there can be no assurances that an active

trading market will develop even if the Securities are accepted for quotation or
that the Company will maintain certain minimum criteria established by Nasdaq
for continued quotation.

The registration statement of which this prospectus forms a part also
relates to the resale of 550,000 shares of Common Stock underlying options
('Selling Securityholder Options') exercisable at $2.50 per share which were
issued to certain persons ('Selling Securityholders') in connection with the
Company's Bridge Financings in January 1996 and April 1996 (sometimes
collectively referred to as 'Bridge Financing'). See 'Selling Securityholders.'
Patterson Travis, Inc. is acting as representative (the 'Representative') of the
several underwriters of this Offering ('Underwriters'). The Underwriters are not
offering any of the 550,000 Shares in this Offering and the Company will not
receive any of the proceeds derived from the resale of the securities by the
Selling Securityholders. The Selling Securityholders have agreed not to sell
their securities until twelve months from the date of this Prospectus, which
period is not subject to earlier release.

AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK AND IMMEDIATE SUBSTANTIAL DILUTION. SEE 'RISK FACTORS' WHICH BEGIN ON PAGE
7 AND 'DILUTION.'

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS PROCEEDS TO
PUBLIC AND COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
Per Unit.............................. $5.10 $.51 $4.59
Total(3).............................. $7,140,000 $714,000 $6,426,000
</TABLE>

(1) The value of each Share and Warrant included in a Unit is $5.00 and $.10,
respectively. Does not reflect additional compensation to be received by the
Representative in the form of: (i) a non-accountable expense allowance equal
to 3% of the gross proceeds of the Offering in the amount of $214,200
($246,330 if the Over-Allotment Option (defined below) is exercised in
full), and (ii) an option to purchase 140,000 shares of Common Stock at
$7.50 per Share and 140,000 Warrants at $.15 per Warrant, but which have an
exercise price of $9.00 per share (the 'Representative's Purchase Option').
The Company and the Representative have agreed to indemnify each other
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended (the 'Act'). See 'Underwriting.'

(2) Before deducting expenses of the Offering payable by the Company (including
the Representative's non-accountable expense allowance) estimated at
$514,200 ($546,330 if the Over-Allotment Option is exercised in full).

(3) The Company has granted the Underwriters an option exercisable within 30
days of the date of this Prospectus ('Over-Allotment Option') to purchase up
to 210,000 additional Units on the same terms as set forth above solely to
cover over-allotments, if any. If the Over-Allotment Option is exercised in
full, the total Price to the Public, Underwriting Discounts and Commissions
and Proceeds to the Company will be $8,211,000, $821,100, and $7,389,900,
respectively. See 'Underwriting.'

------------------------

The Securities are being offered hereby by the Underwriters on a 'firm
commitment' basis, when, as and if delivered to and accepted by the
Underwriters, and subject to their right to reject orders in whole or in part,
to the approval of certain legal matters by counsel and to certain other
conditions. It is expected that the delivery of the certificates representing
the Securities will be made against payment therefor at the offices of the
Representative on or about , 1997.

PATTERSON TRAVIS, INC.

THE DATE OF THIS PROSPECTUS IS , 1997

<PAGE>

AVAILABLE INFORMATION

The Company does not presently file reports and other information with the
Securities and Exchange Commission (the 'Commission'). However, following
completion of this Offering, the Company intends to furnish its stockholders
with annual reports containing audited financial statements examined and
reported upon by its independent public accounting firm and such interim
reports, in each case as it may determine to furnish or as may be required by
law. After the effective date of this Offering, the Company will be subject to
the reporting requirements of the Securities Exchange Act of 1934, as amended
(the 'Exchange Act') and in accordance therewith will file reports, proxy
statements and other information with the Commission.

Reports and other information filed by the Company can be inspected and
copied at the public reference facilities maintained at the Commission at Room
1024, 450 Fifth Street, N.W., Washington, DC 20549. Copies of such material can
be obtained upon written request addressed to the Commission, Public Reference
Section, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Commission maintains a web site on the Internet (http://www.sec.gov) that
contains reports, proxy and information statements and other information
regarding issuers that file electronically with the Commission through the
Electronic Data Gathering, Analysis and Retrieval System ('EDGAR'). The Company
has filed, through EDGAR, with the Commission a registration statement on Form
SB-2 (herein together with all amendments and exhibits referred to as the

'Registration Statement') under the Act of which this Prospectus forms a part.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which have been omitted in accordance
with the rules and regulations of the Commission. For further information
reference is made to the Registration Statement.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED IN THE NASDAQ SMALLCAP MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

SPECIAL STANDARDS FOR SECURITIES SOLD IN CALIFORNIA

EACH CALIFORNIA INVESTOR MUST HAVE AN ANNUAL GROSS INCOME OF AT LEAST
$65,000 AND A NET WORTH, EXCLUSIVE OF HOME, FURNISHINGS AND AUTOMOBILES, OF AT
LEAST $250,000, OR IN THE ALTERNATIVE, A NET WORTH, EXCLUSIVE OF HOME,
FURNISHINGS AND AUTOMOBILES, OF AT LEAST $500,000. IN ADDITION, AN INVESTOR'S
TOTAL PURCHASE MAY NOT EXCEED 10% OF SUCH INVESTOR'S NET WORTH.

<PAGE>

PROSPECTUS SUMMARY

The following is a summary of certain information (including financial
statements and notes thereto) contained in this Prospectus and is qualified in
its entirety by the more detailed information appearing elsewhere herein. In
addition, unless otherwise indicated to the contrary, the information appearing
herein does not give effect to (a) the exercise of the Over-Allotment Option,
the Representative's Purchase Option, Selling Securityholders Options or the
Warrants included in the Units offered hereby, (b) 350,000 Shares reserved for
issuance upon exercise of warrants exercisable at $2.50 per share ('701
Warrants'), (c) 187,500 shares of Common Stock reserved for issuance upon
exercise of warrants exercisable at $2.50 per share ('Bridge Warrants'), (d)
189,000 shares of Common Stock reserved for issuance upon exercise of warrants
exercisable at $4.00 per share ('Bridge II Warrants'), (e) 100,000 shares of
Common Stock reserved for issuance upon exercise of warrants exercisable at
$2.50 per share ('Bridge III Warrants'), (f) 1,267,000 Shares reserved for
issuance upon the exercise of options exercisable at $4.00 per Share ('Employee
Options') granted pursuant to the Company's 1996 Incentive Option Plan
('Incentive Option Plan'), (g) 233,000 Shares reserved for issuance upon the
exercise of options which may be granted pursuant to the Incentive Option Plan,
and (h) 30,000 Shares reserved for issuance upon the exercise of options
exercisable at $1.00 per Share ('Key Employee Options'). See 'Description of
Securities', 'Underwriting' and 'Certain Transactions.' See 'Glossary of Terms'
for the definition of certain terms used in this Prospectus. Each prospective
investor is urged to read this Prospectus in its entirety.

THE COMPANY

Amplidyne designs, manufactures and sells ultra linear power amplifiers and
related subsystems to the worldwide wireless, local loop and satellite uplink
telecommunications market. These power amplifiers, which are a key component in
cellular base stations, increase the power of radio frequency ('RF') and
microwave signals with low distortion, enabling the user to significantly
increase the quality and quantity of calls processed by new and existing
cellular base stations. The Company's wireless telecommunications products
consist of solid-state, RF and microwave, single and multi-carrier power
amplifiers that support a broad range of analog and digital transmission
protocols. The products are marketed to the cellular, wireless local loop and
personal communication systems ('PCS') segments of the wireless
telecommunications industry. The PCS segment of the market is one of the fastest
growing segments and the Company has devoted significant resources in 1996 to
develop products for this market. The Company's largest wireless
telecommunications customers are AT&T, DSC Communications, Samsung and Goldstar,
each of which is an OEM.

Amplidyne has several products with a patent application pending (for which
a notice of allowance has been issued by the United States Patent and Trademark
Office) for Pre-Distortion and Pre-Distortion Linearization which, the Company
believes, is more effective in reducing distortion than other currently
available technology. In addition to its presence in the wireless
telecommunications industry, the Company designs and manufactures products for
uplink satellite communications and for audio and TV transmission links.

In addition to the Company's product line of single channel power
amplifiers which are currently utilized by the wireless communications industry,
the Company has developed a Multicarrier Linear Power Amplifier ('MCLPA'). MCLPA
combines the performance capabilities of up to 25 single carrier amplifiers into
one unit, eliminating the need for numerous single carrier amplifiers and the
corresponding unnecessary space occupied by the cavity filters encasing the
amplifiers. Management believes that with its (i) proprietary technology (which
effectively reduces distortion), (ii) technological expertise and (iii)
established product line consisting of ultra linear single channel power
amplifiers, the Company can achieve similar performance with its MCLPAs. The
Company's linear power amplifiers and MCLPAs utilizes the Company's patent
pending predistortion and proprietary feed forward technology which amplifies
many channels with minimal distortion at the same time with one product.

<PAGE>

the next century, a 50% compounded annual growth rate ('CAGR'). The growth in

cellular communications has required, and will continue to require, substantial
investment by cellular service providers in wireless infrastructure equipment.

The PCS market is also one of the fastest growing segments in the wireless
telecommunications market. Recently, major OEMs such as AT&T have announced
digital PCS services nationwide; such service is expected to begin in early
1997. PCS service providers are attracting more subscribers than analysts had
projected. The attraction to consumers is lower prices than cellular and as well
as the fact that PCS phones use more powerful digital technology, which improves
call quality compared with cellular service. This result is due to the fact that
PCS transmits at a higher radio frequency. It is also easier to program PCS
phones for advanced features (i.e., sending electronic mail and news headlines).
Amplydine has developed PCS linear amplifiers and PCS MCLPAs. Management
believes that these products will produce a significant portion of its sales
during the next few years.

In addition to cellular and PCS system operators' need for base station
equipment, in many developing countries, where access to the public switch
telephone network ('PSTN') by the general population is significantly less than
in developed countries, the Company believes that wireless telecommunications
systems are the most economic means to provide basic telephone service. The
expense, difficulty and time requirements of building and maintaining a cellular
or PCS network is generally less than the cost of building and maintaining a
comparable wireline network. Thus, in many less developed countries, wireless
service may provide the primary service platform for both mobile and fixed
telecommunications applications.

The Company's business strategy focuses primarily on the wireless
communication market and consists of the following elements:

Develop Relationships with Emerging Wireless Equipment Manufacturers. The
Company anticipates that emerging wireless equipment manufacturers will make an
increasingly significant contribution to the growth of the wireless
telecommunications industry, particularly the PCS and cellular segments.
Management believes that its linear power amplifiers and MCLPAs will assist
these equipment manufacturers in providing high capacity, low distortion low
cost per channel products and has already begun to sell amplifiers to several
emerging wireless equipment manufacturers.

Develop Products for Multiple Protocols. The Company intends to continue
to invest resources in the research and development of new products for various
protocols. Amplidyne is continuing to develop products that incorporate
protocols which it believes will address the needs of established and emerging
wireless systems, such as the emerging PCS market.

Maintain a Technology Leadership Position. The Company, with its

innovative products, has been addressing the needs of its customers for products
that solve significant technical problems. The Company believes its interference
cancellation technologies are among the most advanced that are commercially
available in the industry, both in performance and diversity of methodology. The
Company intends to continue to invest substantial resources in research and
development associated with its interference cancellation technologies. See
'Technology'. The Company has emphasized research and development on PCS
products during 1996 which management believes will be a major growth area for
the Company during 1997.

The Company believes that its products, particularly the ultra linear
MCLPAs have several features which differentiate them from those of its
competitors, such as:

The Predistortion Solution. Utilizing its proprietary technology the
Company can obtain significant distortion reduction in its core amplifiers. This
enables the predistorted amplifier to have feed forward correction (See
'Business--Technology') applied to it to achieve distortion cancellation. The
Company believes that its competitors are only able to obtain this level of
distortion cancellation by use of complex and component intensive 'Dual Feed
Forward Loops' resulting in the use of more components within the amplifier
unit.

<PAGE>

upgrade of older analog systems. Amplidyne has developed proprietary
interference cancellation technology using multiple methods to achieve high
suppression of spurious output and distortion typically associated with higher
power amplifiers.

High Quality and Reliability. Amplidyne believes that it has consistently
provided high quality, reliable products to its customers. Management believes
that its reputation for quality and reliability will enable Amplidyne to attract
new customers and maintain existing customers for all its products.

Linearity, Low Distortion and High Amplification. Wireless service
providers' ability to manage scarce spectrum resources more effectively and
accommodate a larger number of subscribers is largely dependent on their ability
to broadcast signals with high linearity, which pertains to the ability of a
component to amplify a wave form without altering its characteristics in
undesirable ways. The Company has several products with a patent pending (for
which a notice of allowance has been issued by the United States Patent and
Trademark Office) which it believes gives it a significant advantage over its
competitors. These features for Pre-distortion and Pre-Distortion Linearization
designs significantly reduces distortion below that which is currently available
in the marketplace.

Multicarrier Designs. Multicarrier amplification, in which all channels

are amplified together by a MCLPA, rather than each channel using a separate
amplifier, allows for instantaneous electronic channel allocation. By virtue of
the Company's very high linearity products which incorporates pre-distortion and
feed forward technology achieving, in management's belief, the lowest distortion
in the industry, the MCLPA amplified signal remains within their prescribed band
and spectrum with low interference of adjacent channels thus providing
flexibility to accommodate any frequency plan. Management believes that its
leading technology in MCLPAs will enable Amplidyne to attract new customers.

The Company was incorporated on December 14, 1995 pursuant to the laws of
the State of Delaware as the successor to Amplidyne, Inc., a New Jersey
corporation ('Amplidyne-NJ'), which was incorporated in October 1988. The
Company was organized to effectuate a reincorporation of Amplidyne-NJ with and
into the Company on December 22, 1995. The Company maintains its executive
offices at 144 Belmont Drive, Somerset, New Jersey 08873 and its telephone
number is (908) 271-8473.

THE OFFERING

<TABLE>
<S> <C>
Securities Offered by the Company (1) .... 1,400,000 Units, each Unit consisting of one (1) share of Common
Stock and one (1) Warrant. The Shares and Warrants included in the
Units are detachable and separately tradeable on issuance. The Units
will not trade after issuance. Each Warrant entitles the registered
holder thereof to purchase, at any time during the four (4) year
period commencing one (1) year from the date of this Prospectus, one
share of Common Stock at a price of $6.00 per share. At any time
after one (1) year from the date of this Prospectus, the Company may
redeem the Warrants at a price of $.01 per Warrant on 30 days prior
written notice if the average closing price or bid price of the
Common Stock as reported by the principal exchange on which the
Common Stock is traded, the Nasdaq SmallCap Market or the National
Quotation Bureau, Incorporated, as the case may be, equals or exceeds
$9.00 per Share for any twenty (20) consecutive trading days ending
within five (5) days prior to the date on which notice of redemption
is given. See 'Description of Securities.'

Securities Outstanding Prior to the
Offering................................ 2,850,000 shares

Securities Outstanding Subsequent to the
Offering................................ 4,250,000 Shares
1,400,000 Warrants
</TABLE>

<PAGE>

Use of Proceeds........................... Purchase of test equipment, research and development, the purchase of
manufacturing machinery, the repayment of indebtedness, and for
working capital purposes. See 'Use of Proceeds.'

Risk Factors.............................. The Common Stock offered hereby involves a high degree of risk and
immediate and substantial dilution. See 'Risk Factors' and
'Dilution.'

Proposed Nasdaq SmallCap Market Symbols... Shares--AMPD; Warrants--AMPDW
</TABLE>

- ------------------
(1) Concurrently with this Offering, the Company is registering the resale of
the 550,000 shares of Common Stock underlying the Selling Securityholder
Options, which may not be sold until twelve (12) months from the date of
this Prospectus, which period is not subject to earlier release. See
'Selling Securityholders.'

SUMMARY FINANCIAL INFORMATION

The following table sets forth certain summary information concerning the
Company and is qualified by reference to the financial statements and notes
thereto included elsewhere in this Prospectus. The results for the nine months
ended September 30, 1996 are not necessarily indicative of the results to be
expected for the full year.

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
----------------- --------------------------
1994 1995 1995 1996
------ ------- ---------- ------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................................................... $3,575 $ 1,810 $1,558 $ 1,957
Cost of goods sold................................................. 2,713 1,756 1,332 1,889
Gross profit....................................................... 862 54 226 68
Selling, general and administrative................................ 722 527 436 922
Research, engineering and development.............................. 333 372 122 701
------ ------- ---------- ------------
Operating Loss..................................................... (193) (845) (332) (1,555)
Stock compensation and financing costs............................. -- 1,180 -- 2,553
------ ------- ---------- ------------
Provision for income taxes......................................... (15) -- -- --
------ ------- ---------- ------------
------ ------- ---------- ------------
Net loss........................................................... $ (178) $(2,025) $ (332) $ (4,108)
------ ------- ---------- ------------
------ ------- ---------- ------------
Net loss per share................................................. $ (.05) $ (.61) $ (.10) $ (1.23)
------ ------- ---------- ------------
------ ------- ---------- ------------

Shares outstanding(1).............................................. 3,346 3,346 3,346 3,346
------ ------- ---------- ------------
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1996
------------ ------------- -------------
AS
ADJUSTED(2)
-------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)............................................ $ (578) $(1,469) $ 4,443
Total assets......................................................... 722 1,467 5,869
Total liabilities.................................................... 1,276 2,881 1,371
Stockholders' equity (deficit)....................................... (554) (1,414) 4,498
</TABLE>

- ------------------
(1) All shares, warrants and options issued or granted within the past twelve
months from the most current period presented are considered to be
outstanding for all periods presented.

(2) Adjusted for the sale of 1,400,000 Units at an assumed offering price of
$5.10 per Unit and the application of the estimated net proceeds therefrom
as described under 'Use of Proceeds.'

<PAGE>
RISK FACTORS

An investment in the securities offered hereby is speculative and involves
a high degree of risk. Prospective purchasers, prior to making an investment,
should carefully consider the following risks as well as other information set
forth elsewhere in this Prospectus.

Recent History of Losses; Working Capital Deficit; Stockholder
Deficit. The Company incurred a net loss of $2,025,000 in the year ended
December 31, 1995 and a net loss of $4,108,000 for the nine months ended
September 30, 1996, although a substantial portion of the net loss for the year
ended December 31, 1995 and the nine months ended September 30, 1996 is due to a
nonoperating charge to earnings and research, engineering and development costs.
The Company expects that losses will increase and continue until such time, if
ever, as the Company can manufacture and market a new line of linear power
amplifiers including multicarrier linear power amplifiers (sometimes referred to
as 'MCLPA'). In addition, the Company had a working capital deficit of $578,000
and $1,469,000 at December 31, 1995 and September 30, 1996, respectively, and a
stockholders deficit of $554,000 and $1,414,000 at December 31, 1995 and
September 30, 1996, respectively. In addition, the Company had an accumulated

deficit of $1,739,126 at December 31, 1995 and $5,847,468 at September 30, 1996,
respectively. See 'Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources.'

Uncertainty of Future Revenues; Limited Experience in the Multicarrier
Linear Power Amplifier Business; Uncertainty of Market Acceptance. Revenues
for the first nine months of 1996 increased 26% compared to the first nine
months of 1995 and revenues for the year ended December 31, 1995 decreased 49%
compared to the year ended December 31, 1994. The Company believes that the
decrease was due primarily to the Company's shift in product emphasis from
single channel power amplifiers to linear power amplifiers including MCLPAs. The
Company anticipates that a substantial portion of the Company's future revenues
will be derived from sale of its new linear amplifiers and MCLPAs. Even though
the Company has substantial experience in the commercial cellular amplifier
business, having been involved in the business since 1989, the MCLPA is a
relatively recent development in the marketplace and the Company has focused on
the business only since early 1995. As a result, the Company is subject to all
of the risks associated with a new business enterprise, including without
limitation, failed product development efforts, the lack of market acceptance
and duplication of the Company's proprietary technology. The Company has sold
prototypes of its MCLPAs and believes that it will commence production orders in
the first quarter of 1997, although no assurances can be made that the Company
will be successful in these endeavors. The Company has received purchase orders
for linear power amplifiers which purchase orders may in the future include
MCLPAs. Market acceptance of the Company's linear amplifiers and MCLPAs will
depend in large part upon the public demand for power amplifiers in general and
the Company's ability to demonstrate its linear amplifiers and MCLPAs
advantages, including its performance features and cost-effectiveness. There can
be no assurance that the linear amplifiers and MCLPAs will be accepted by the
market, and if so accepted, whether it will result in increased revenues for the
Company in the future. See 'Business-- Products.'

Possible Need For Additional Financing. The Company believes that the
proceeds of this Offering together with cash flow from operations will be
adequate to fund its operations for at least twelve months following this
Offering. There can be no assurance, however, that the Company will not require
additional financing prior to or after such time. There can be no assurance that
any additional financing will be available to the Company on acceptable terms,
or at all. If adequate funds are not available, the Company may be required to
delay, scale back or eliminate its research, engineering and development or
manufacturing programs or obtain funds through arrangements with partners or
others that may require the Company to relinquish rights to certain of its
technologies or potential products or other assets. Accordingly, the inability
to obtain such financing could have a material adverse effect on the Company's
business, financial condition and results of operations. See 'Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources.'

Reliance upon Growth of Wireless Telecommunications Services. Demand for
the Company's products will depend in large part upon continued and growing
demand within the wireless telecommunications industry for power amplifiers.
Although demand for power amplifiers has grown in recent years, there can be no
assurance that the quantity and variety of wireless telecommunications services
will continue to grow, or that such services will create a demand for the

Company's products. See 'Business--Industry.'

<PAGE>

Need to Implement Automated Manufacturing Processes; Dependence on Contract
Manufacturers; Limited Number of Suppliers. The Company is in the process of
establishing a fully automated manufacturing facility so that it can manufacture
its products. The Company believes that such manufacturing facility will be
completed in the second quarter of 1997, although no assurances can be made that
the Company will be successful in these endeavors. The Company has allocated
$600,000 from the proceeds of this Offering towards the establishment of such
facility. See 'Use of Proceeds.' Until the manufacturing facilities are
completed, the Company expects to be dependent on contract manufacturing. There
can be no assurance that the Company's contract manufacturers will be able to
fulfill the Company's production commitments. There are no written agreements
with such contract manufacturers. Any inability to obtain timely deliveries of
finished assemblies of acceptable quality could delay the Company's ability to
deliver its products to its customers, which in turn would have a material
adverse effect on the Company's business, financial condition and results of
operations. In addition, in the event that production costs for the Company's
contract manufacturers increase, the Company may suffer losses due to an
inability to recover such cost increases under its fixed price commitments with
its original equipment manufacturer ('OEM') customers. See
'Business--Manufacturing.'

Power transistors and certain other key components used in the Company's
products are currently available from only a limited number of sources. Certain
of the Company's limited source suppliers have limited operating histories and
limited financial and other resources and, therefore, they may prove to be
unreliable sources of supply. The Company's principal suppliers of components
are NEC, Ericcson, Mini Circuits and Penny Technologies. The Company has no
written agreements with such suppliers. Further, the Company has generally not
previously purchased key components in large volume. If the Company were unable
to obtain sufficient quantities of components, particularly power transistors,
delays or reductions in product shipments could occur which would have a
material adverse effect on the Company's business, financial condition and
results of operations. Furthermore, delays in filling orders may have a material
adverse effect on the Company's relationships with its OEM customers, which may
result in the termination of material orders from its OEM customers and/or cause
a permanent loss of future sales. See 'Business--Manufacturing.'

Reliance on a Small Number of Customers; Possible Fluctuations in Operating
Results. In 1994, approximately 66% of net revenues were derived from sales to
one customer (AT&T). In 1995, approximately 61% of net revenues were derived
from four customers (Allen Telecom--18%; Kentrox Industries--17%; DSC
Communications--15%; and AT&T--11%). For the period ended September 30, 1996,
approximately 70% of net revenues were derived from sales to three customers
(DSC Communications--36%; Samsung--21%; and Airnet--13%). The Company
anticipates that sales of its products to relatively few customers (wireless
telecommunications OEMs) will account for a majority of the Company's revenues
in 1997. The reduction, delay or cancellation of orders from one or more
significant customers would materially and adversely affect the Company's

financial condition and results of operation. Moreover, as a result of the
uncertainty of such sales, the Company may in the future experience significant
fluctuations in net sales, gross margins and operating results. See
'Business--Markets.'

Limited Marketing Experience. The Company will be required to develop a
marketing and sales network that will effectively demonstrate the advantages of
its products over competing products. The Company's marketing experience with
its new products is limited as the Company has only sold prototypes of MCLPAs (a
product which the Company believes will represent a majority of its future
revenues) and has only recently received purchase orders for its linear power
amplifiers. The Company is engaged actively in expanding its in-house marketing
forces. There can be no assurance that the Company will be successful in its
marketing efforts or that it will be able to establish sales and distribution
capabilities. See 'Business Customers, Sales and Marketing.'

Substantial Portion of Proceeds To Satisfy Indebtedness, Including
Indebtedness Owed to Executive Officer and Director. Approximately 30% of the
net proceeds of the Offering will be used to repay indebtedness, including
approximately 6% to repay the Company's President for loans extended by him to
the Company. See 'Use of Proceeds.'

Broad Discretion in Application of Proceeds. Approximately $2,547,800 or
43% of the net proceeds of this Offering, have been allocated to working capital
of the Company, which funds will be utilized for general corporate purposes
including accounts payable, payroll and the purchase of material for the
Company's purchase orders. The allocation of proceeds described in 'Use of
Proceeds' represents the Company's best estimate of its

<PAGE>

allocation based upon the current state of its business, operations and plans,
current business conditions and the Company's evaluation of its industry. Future
events, including problems, delays, expenses and complications which may be
encountered, changes in economic or competitive conditions and the results of
the Company's sales and marketing activities may make shifts in the allocation
of funds necessary or desirable. Management of the Company will have broad
discretion in the application of such proceeds. See 'Use of Proceeds.'

Control by Management; Compensation and Audit Committees. Upon completion
of this Offering, officers and directors and persons who may be deemed
affiliates will beneficially own, in the aggregate, and will have the right to
vote approximately 53% of the then issued and outstanding Common Stock (not
including any options they may own) of the Company (approximately 50% if the
Over-Allotment Option is exercised in full). The Chairman and Chief Executive
Officer of the Company will own approximately 47% of the issued and outstanding
Common Stock after the Offering. Accordingly, such holders will be in a position
to elect all of the directors and thereby control the Company. See 'Principal
Stockholders'.

Currently, the Board of Directors consists of three members, two of which
(Devendar S. Bains and Tarlochan Bains) are insiders and principal stockholders.

In addition, such individuals comprise a majority of the Compensation Committee
and Audit Committee. Accordingly, such individuals will be in a position to
control the actions and decisions of the Board of Directors and such committees.
See 'Management.'

No Prior Public Market; Potential Limited Trading Market; Possible
Volatility of Stock Price. Prior to this Offering, there has been no public
market for the Securities and there can be no assurance that an active trading
market in the Company's Securities will develop or be maintained. In the absence
of such a market, an investor may find it more difficult to sell the Securities
offered hereby. The initial public offering price of the Units and the exercise
price of the Warrants were determined by negotiation between the Company and the
Representative, and may not be indicative of the market price for such
securities in the future, and does not necessarily bear any relationship to the
Company's assets, book value, net worth or results of operations of the Company
or any other established criteria of value. In addition, the stock market in
recent years has experienced extreme price and volume fluctuations that have
particularly affected the market prices of many smaller companies. The trading
price of the Securities is expected to be subject to significant fluctuations in
response to variations in quarterly operating results, changes in analysts'
earnings estimates, announcements of technological innovations by the Company or
its competitors, general conditions in the wireless communications industry and
other factors. These fluctuations, as well as general economic and market
conditions, may have a material adverse effect on the market price of the
Company's Securities. See 'Underwriting--Determination of Public Offering
Price,' 'Description of Securities' and 'Financial Statements.'

Dilution. This Offering involves immediate substantial dilution to
investors of $3.94 per share (or approximately 79% of the assumed per-Share
Offering price of $5.00), representing the difference between the pro forma net
tangible book value per Share immediately after the completion of this Offering
and the Offering price per Share. See 'Dilution.'

No Assurance of Successful Expansion of Operations. Recently, the Company
has substantially increased the scale of its operations significantly increasing
its operating expenses. The Company anticipates that its operating expenses will
continue to increase significantly after the Offering as a result of expansion
of its operations in anticipation of the full scale production of its linear
amplifiers and MCLPAs and to meet customers' orders. If the Company's net sales
do not correspondingly increase or the Company does not adequately manage the
growth of its operations, the Company's results of operations will be materially
adversely affected. See 'Business--Company Strategy.'

Declining Average Sales Prices. If wireless telecommunications OEMs come
under increasing price pressure from cellular and PCS service providers, the
Company could expect to experience downward pricing pressure on its products. In
addition, competition among non-captive amplifier suppliers could increase the
downward pricing pressure on the Company's products. To date, such pressure has
not been experienced. As these manufacturers frequently negotiate supply
arrangements far in advance of delivery dates, the Company often must commit to
price reductions for its products before it is aware of how, or if, cost
reductions can be obtained. If the Company is unable to achieve cost reductions,

the Company's gross margins will decline, which will have a material adverse
effect on the Company's business, financial condition and results of operations.

Rapid Technological Change and Intense Competition. The wireless
telecommunications equipment industry is extremely competitive and is
characterized by rapid technological change, new product development,

<PAGE>

product obsolescence and evolving industry standards. In addition, price
competition in this market is intense and characterized by significant price
erosion over the life of a product. Currently, the Company competes primarily
with non-captive suppliers of power amplification products. The Company believes
that its competition, and ultimately the success of the Company, will be based
primarily upon service, pricing, reputation, and the ability to meet delivery
schedules of its customers. The Company's existing and potential OEM customers
continuously evaluate whether to manufacture their own amplification products or
to purchase such products from outside sources. These customers and other large
manufacturers of wireless telecommunications infrastructure equipment could
elect to enter the market and compete directly with the Company. Many of the
Company's competitors have significantly greater financial, technical,
manufacturing, sales and marketing capabilities and research and development
personnel and other resources than the Company and have achieved greater name
recognition of their existing products and technologies. In order for the
Company to successfully compete it must continue to develop new products, keep
pace with advancing technologies and competitive innovations and successfully
market its products to OEM customers that will incorporate the Company's
products into their systems. There can be no assurance that the Company will be
able to compete successfully. See 'Business--Competition.'

In addition, there can be no assurance that new products or alternative
amplifier technology will not be developed that render the Company's current or
planned products obsolete or inferior. Rapid technological development by others
may result in the Company's products becoming obsolete before the Company
recovers a significant portion of the research, development and
commercialization expenses incurred with respect to those products.

Risks Associated with Sales Outside of the United States. International
sales represented approximately 8%, 30%, and 72% of the Company's net revenues
for the years ended December 31, 1994 and 1995 and for the nine months ended
September 30, 1996, respectively. The Company expects that international sales
will continue to account for a significant portion of its net revenues in the
future. To the extent that the Company does not achieve and maintain substantial
international sales, the Company's business, results of operations and financial
condition could be materially and adversely affected. There can be no assurance
that the Company will be able to maintain or increase its current level of
international sales. See 'Management's Discussion and Analysis of Financial
Condition and Results of Operation.'

Sales of the Company's products outside of the United States are
denominated in US dollars. An increase in the value of the U.S. dollar relative
to foreign currencies would make the Company's products more expensive and,

therefore, potentially less competitive outside the United Sates. Additional
risks inherent in the Company's sales abroad include the impact of recessionary
environments in economies outside the United States, generally longer
receivables collection periods, unexpected changes in regulatory requirements,
tariffs and other trade barriers, potentially adverse tax consequences,
restrictions on the repatriation of earnings, reduced protection for
intellectual property rights in some countries, and the burdens of complying
with a wide variety of foreign laws. There can be no assurance that such factors
will not have an adverse effect on the Company's future international sales and,
consequently, on the Company's business, financial condition and results of
operations. See 'Management's Discussion and Analysis of Financial Condition and
Results of Operation.'

Dependence Upon Management and Technical Personnel. The success of the
Company is highly dependent upon the continued services of Devendar Bains, the
Company's President and Chief Executive Officer. The Company has entered into a
five year employment agreement with Mr. Bains which terminates April 30, 2001
and contains a covenant not to compete against the Company for a two year period
following termination of employment. The Company is in the process of obtaining
key man insurance on the life of Mr. Bains in the amount of $1,000,000. There
can be no assurances that the Company will be able to replace Mr. Bains in the
event his services become unavailable or that the proceeds of such insurance
would be adequate to compensate the Company for the loss of his services. See
'Management.'

Due to the specialized nature of the Company's business, the Company is
highly dependent on the continued service of, and on its ability to attract and
retain, qualified technical and marketing personnel, particularly highly skilled
radio-frequency ('RF') and microwave design engineers involved in the
development of new products and processes and test technicians involved in the
manufacture and enhancement of existing products. In addition, as part of the
Company's team-based sales approach, the Company dedicates specific design
engineers to service the requirements of individual customers. The loss of any
such engineer could adversely affect the Company's ability to obtain future
purchase orders from the customers to which such engineer is dedicated. The

<PAGE>

Company has employment or non-competition agreements with most of its current
design engineers or test technicians. The competition for such personnel is
intense, and the loss of any such persons, as well as the failure to recruit
additional key technical personnel in a timely manner, would have a material
adverse effect on the Company's business, financial condition and results of
operations.

Proprietary Technology; Risk of Third Party Claims of Infringement. The
Company's ability to compete successfully and achieve future revenue growth will
depend, in part, on its ability to protect its proprietary technology and
operate without infringing upon the rights of others. Although there are no
pending lawsuits against the Company regarding its technology or notices that
the Company is infringing upon intellectual property rights of others, there can
be no assurance that litigation or infringement claims will not occur in the

future. Such litigation or claims could result in substantial costs, and
diversion of resources and could have a material adverse effect on the Company's
business, financial condition, and results of operations. The Company generally
enters into confidentiality and non-disclosure agreements with its employees and
limits access to and distribution of its proprietary information. However, there
can be no assurance that such measures will provide adequate protection for the
Company's trade secrets or other proprietary information, or that the Company's
trade secrets or proprietary technology will not otherwise become known or be
independently developed by competitors. The failure of the Company to protect
its proprietary technology could have a material adverse effect on its business,
financial condition and results of operations.

Presently, the Company has a patent application pending (No. 081508,163)
with respect to its Pre-Distortion and Pre-Distortion Linearization technology
used in its products (for which a notice of allowance has been issued by the
United States Patent and Trademark Office). Such proprietary technology, the
Company believes, is more effective in reducing distortion than other currently
available technology. No assurance can be made that the Company's patent
application will be fully granted or, if granted, will protect the Company's
technology. The Company believes that the success of its amplifier business,
however, depends more on its specifications, computer-aided engineering design,
modeling tools, technical processes and employee expertise than on patent
protection.

No Dividends. The Company has not paid any dividends on its Common Stock
since its inception and does not intend to pay dividends on its Common Stock in
the foreseeable future. Any earnings which the Company may realize in the
foreseeable future will be retained to finance the growth of the Company. See
'Dividend Policy.'

Governmental Regulations and Environmental Regulations. The Company's
customers must obtain regulatory approval to operate their base stations. The
United States Federal Communications Commission ('FCC') recently adopted new
regulations that impose more stringent RF and microwave emissions standards on
the telecommunications industry. There can be no assurance that the Company's
customers will comply with such regulations which could materially adversely
affect the Company's business, financial condition and results of operations.
The Company manufactures its products according to specifications provided by
its customers, which specifications are given to comply with applicable
regulations. The Company does not believe that costs involved with manufacturing
to meet specifications will have a material impact on its operations. There can
be no assurances that the adoption of future regulations would not have a
material adverse affect on the Company's business. See 'Business--Governmental
Regulations.'

The Company is subject to Federal, state and local governmental regulations
relating to the storage, discharge, handling, emissions, generation, manufacture
and disposal of toxic or other hazardous substances used to manufacture the
Company's products. The Company believes that it is currently in compliance in
all material respects with such regulations. Failure to comply with current or
future regulations could result in the imposition of substantial fines on the
Company, suspension of production, alteration of its manufacturing process,
cessation of operations or other actions which could materially and adversely
affect the Company's business, financial condition and results of operations.

See 'Business--Environmental Regulations.'

Nasdaq Listing and Continued Listing Requirements. Under prevailing rules
of the National Association of Securities Dealers, Inc. ('NASD'), in order to
qualify for initial quotation of securities on The Nasdaq Small Cap Market, a
company, among other things, must have at least $4,000,000 in total assets,
$2,000,000 in total capital and surplus, $1,000,000 in market value of public
float and a minimum bid price of $3.00 per share. Although the Company may upon
the completion of this Offering qualify for initial quotation of its securities
on The Nasdaq SmallCap Market, for continued listing on The Nasdaq SmallCap
Market, a company, among other

<PAGE>

things, must have $2,000,000 in total assets, $1,000,000 in total capital and
surplus, $1,000,000 in market value of public float and a minimum bid price of
$1.00 per share. If the Company is unable to satisfy the requirements for
quotation on The Nasdaq SmallCap Market, trading, if any, in the Common Stock
and Warrants offered hereby would be conducted in the over-the-counter market in
what are commonly referred to as the 'pink sheets' or on the NASD OTC Electronic
Bulletin Board. As a result, an investor may find it more difficult to dispose
of, or to obtain accurate quotations as to the price of, the securities offered
hereby. The above-described rules may materially adversely affect the liquidity
of the market for the Company's securities. See 'Underwriting.'

Penny Stock Regulations May Impose Certain Restrictions on Marketability of
Securities. The Securities and Exchange Commission (the 'Commission') has
adopted regulations which generally define a 'penny stock' to be any equity
security that has a market price (as defined) of less than $5.00 per share or an
exercise price of less than $5.00 per share, subject to certain exceptions.
Since it is intended that the shares of Common Stock and Warrants offered hereby
will be authorized for quotation on The Nasdaq SmallCap Market, such securities
will initially be exempt from the definition of 'penny stock.' If the shares of
Common Stock and Warrants offered hereby are removed from listing by The Nasdaq
SmallCap Market at any time following the Effective Date, the Company's Common
Stock and Warrants may become subject to rules that impose additional sales
practice requirements on broker-dealers who sell such securities to persons
other than established customers and accredited investors (generally those with
assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000
together with their spouse). For transactions covered by these rules, the
broker-dealer must make a special suitability determination for the purchase of
such securities and have received the purchaser's written consent to the
transaction prior to the purchase. Additionally, for any transaction involving a
penny stock, unless exempt, the rules require the delivery, prior to the
transaction, of a risk disclosure document mandated by the Commission relating
to the penny stock market. The broker-dealer must also disclose the commission
payable to both the broker-dealer and the registered representative, current
quotations for the securities and, if the broker-dealer is the sole market
maker, the broker-dealer must disclose this fact and the broker-dealer's
presumed control over the market. Finally, monthly statements must be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks. Consequently, the 'penny

stock' rules may restrict the ability of broker-dealers to sell the Company's
securities and may affect the ability of purchasers in this Offering to sell the
Company's securities in the secondary market and the price at which such
purchasers can sell any such securities.

Current Prospectus and State Blue Sky Registration Required to Exercise
Warrants. The Company will be able to issue shares of its Common Stock upon
exercise of the Warrants only if there is then a current prospectus relating to
such Common Stock and only if such Common Stock is qualified for sale or exempt
from qualification under applicable state securities laws of the jurisdictions
in which the various holders of the Warrants reside. The Company has undertaken
and intends to file and keep current a prospectus which will permit the purchase
and sale of the Common Stock underlying the Warrants, but there can be no
assurance that the Company will be able to do so. Although the Company intends
to seek to qualify for sale the shares of Common Stock underlying the Warrants
in those states in which the securities are to be offered, no assurance can be
given that such qualification will occur. The Warrants may be deprived of any
value and the market for the Warrants may be limited if a current prospectus
covering the Common Stock issuable upon the exercise of the Warrants is not kept
effective or if such Common Stock is not qualified or exempt from qualification
in the jurisdictions in which the holders of the Warrants then reside. See
'Underwriting.'

Potential Adverse Effect of Redemption of Warrants. The Warrants may be
redeemed by the Company at any time at a redemption price of $.01 per Warrant
upon not less than 30 days prior written notice if the average closing price or
bid price of the Common Stock as reported by the principal exchange on which the
Common Stock is traded, the Nasdaq SmallCap Market or the National Quotation
Bureau, Incorporated, as the case may be, equals or exceeds $9.00 per Share for
any twenty (20) consecutive trading days ending within five (5) days prior to
the date on which notice of redemption is given. Notice of redemption of the
Warrants could force the holders to exercise the Warrants and pay the exercise
price at a time when it may be disadvantageous for them to do so, to sell the
Warrants at the current market price when they might otherwise wish to hold the
Warrants, or to accept the redemption price which would be substantially less
than the market value of the Warrants at the time of redemption. See
'Description of Securities--Warrants.'

<PAGE>

Anti-Takeover Provisions. Pursuant to the Company's Certificate of
Incorporation, the Board of Directors may issue up to 1,000,000 shares of
Preferred Stock in the future with such preferences, limitations and relative
rights as the Board may determine without stockholder approval. The rights of
the holders of Common Stock will be subject to, and may be adversely affected
by, the rights of the holders of any Preferred Stock that may be issued in the
future. The issuance of Preferred Stock, while providing flexibility in
connection with possible acquisitions and other corporate purposes, could have
the effect of delaying or preventing a change in control of the Company without
further action by the stockholders. The Company has no present plans to issue
any shares of Preferred Stock. See 'Description of Securities--Preferred Stock.'
In addition, following this Offering the Company will become subject to the

anti-takeover provisions of Section 203 of the Delaware General Corporation Law,
which will prohibit the Company from engaging in a 'business combination' with
an 'interested stockholder' for a period of three years after the date of the
transaction in which the persons became an interested stockholder, unless the
business combination is approved in a prescribed manner. The application of
Section 203 also could have the effect of delaying or preventing a change of
control of the Company. See 'Description of Securities--Delaware Anti-Takeover
Law Provisions.'

Restrictions on Marketmaking Activities During Warrant Solicitation May
Affect Liquidity of Securities. Although they have no legal obligation to do so,
the Underwriters from time to time may act as market makers and may otherwise
effect and influence transactions in the Company's securities. However, there is
no assurance that the Underwriters will continue to effect and influence
transactions in the Company's securities. The prices and liquidity of the
Company's securities may be significantly affected by the degree, if any, of the
Underwriters' participation in the market. The Underwriters may voluntarily
discontinue such participation at any time. Further, the market for, and
liquidity of, the Company's securities may be adversely effected by the fact
that a significant amount of the securities may be sold to customers of the
Underwriters.

To the extent that the Underwriters solicit the exercise of Class A
Warrants, the Underwriters may be prohibited pursuant to the requirements of
Rule 10b-6 under the Exchange Act from engaging in marketmaking activities
during such solicitation and for a period of up to nine days preceding such
solicitation. As a result, the Underwriters may be unable to continue to provide
a market for the Company's securities during certain periods while the Class A
Warrants are exercisable. The Underwriters are not obligated to act as a
marketmaker. See 'Underwriting.'

Additional Authorized Shares of Common Stock and Preferred Stock Available
for Issuance May Adversely Affect the Market. The Company is authorized to
issue 25,000,000 shares of its Common Stock, $.0001 par value. If all of the
1,400,000 Units offered hereby are sold, there will be a total of 4,250,000
shares of Common Stock issued and outstanding. However, the total number of
shares of Common Stock issued and outstanding does not include the exercise of
up to 1,400,000 Warrants to purchase up to 1,400,000 shares of Common Stock,
210,000 Shares included in the Over-Allotment Option to purchase 210,000 shares
of Common Stock, 210,000 Warrants to purchase up to 210,000 shares of Common
Stock included in the Over-Allotment Option, the option granted to the
Representative to purchase up to 140,000 Shares and 140,000 Warrants to purchase
140,000 shares of Common Stock in connection with this offering, 550,000 shares
of Common Stock issuable upon exercise of the Selling Securityholder Options,
350,000 shares of Common Stock issuable upon exercise of the 701 Warrants,
187,500 shares of Common Stock issuable upon exercise of the Bridge Warrants,
189,000 shares of Common Stock issuable upon exercise of the Bridge II Warrants,
100,000 shares of Common Stock issuable upon exercise of the Bridge III
Warrants, 1,500,000 shares of Common Stock issuable upon exercise of options
granted pursuant to the Incentive Option Plan (1,267,000 of which have been
granted) and 30,000 shares of Common Stock issuable upon exercise of Key
Employee Options. After reserving a total of 5,006,500 shares of Common Stock
for issuance upon the exercise of all options and warrants, the Company will

have at least 15,743,500 shares of authorized but unissued Common Stock
available for issuance without further shareholder approval. As a result, any
issuance of additional shares of Common Stock may cause current shareholders of
the Company to suffer significant dilution which may adversely affect the
market. The Company has no present plans to issue any shares of Common Stock.
The Company has agreed with the Representative that it will not issue any of its
capital stock for a period of 18 months from the Effective Date without the
prior written consent of the Representative.

In addition to the above-referenced shares of Common Stock which may be
issued without shareholder approval, the Company has 1,000,000 shares of
authorized preferred stock, the terms of which may be fixed by the Board of
Directors. The Company presently has no issued and outstanding shares of
preferred stock and while

<PAGE>

it has no present plans to issue any shares of preferred stock, the Board of
Directors has the authority, without shareholder approval, to create and issue
one or more series of such preferred stock and to determine the voting, dividend
and other rights of holders of such preferred stock. The issuance of any of such
series of preferred stock could have an adverse effect on the holders of Common
Stock. See 'Description of Securities.'

Shares Eligible for Future Sale May Adversely Affect the Market.
Immediately prior to the Effective Date, the Company will have 2,850,000
shares of its Common Stock issued and outstanding all of which are 'restricted
securities' and all of which are subject to lock-up restrictions described
below. 2,000,000 of such Shares may be sold pursuant to Rule 144 as described
below commencing 90 days after the date of this Prospectus, subject to an
18-month restriction against transfer described below; 300,000 Shares may be
sold pursuant to Rule 144 commencing December 1997, subject to an 18-month
restriction against transfer; and the remaining 550,000 Shares, which were
issued in the Bridge Financings, may be sold pursuant to Rule 144 commencing
January 1998, subject to a 12-month restriction against transfer described
below. The President of the Company (who owns 2,000,000 of the 2,850,000
outstanding Shares) and the directors and/or 5% stockholders of the Company who
own 250,000 of the 300,000 above-referenced Shares have agreed not to sell,
assign or transfer any securities of the Company owned by them for a period of
eighteen (18) months from the date of this Prospectus without the prior consent
of the Representative. The entity that owns the remaining 50,000 of the above-
referenced 300,000 Shares has agreed not to sell, assign or transfer any of such
Shares for a period of eighteen (18) months from the date of this Prospectus,
without the prior consent of the Representative. The Selling Securityholders who
own the above-referenced 550,000 Shares have agreed not to sell, assign or
transfer any securities of the Company owned by them for a period of twelve (12)
months from the date of this Prospectus, which period is not subject to earlier
release.

Rule 144 provides, in essence, that a person holding 'restricted
securities' for a period of two years may sell only an amount every three months

equal to the greater of (a) one percent of the Company's issued and outstanding
shares, or (b) the average weekly volume of sales during the four calendar weeks
preceding the sale. The amount of 'restricted securities' which a person who is
not an affiliate of the Company may sell is not so limited, since non-affiliates
may sell without volume limitation their shares held for three years if there is
adequate current public information available concerning the Company. In such an
event, 'restricted securities' would be eligible for sale to the public at an
earlier date. The sale in the public market of such shares of Common Stock may
adversely affect prevailing market prices of the Common Stock.

Effect of Outstanding Options and Warrants. As of the date of this
Prospectus, there are outstanding stock options and warrants to purchase an
aggregate of 1,187,500 shares of Common Stock at an exercise price of $2.50 per
Share, an additional 189,000 shares of Common Stock at an exercise price of
$4.00 per share, and the Company has reserved 1,297,000 Shares of Common Stock
for issuance pursuant to outstanding Employee Options and Key Employee Options.
The 550,000 Shares underlying Selling Securityholders Options are being
registered for resale by the Selling Securityholders as part of the Registration
Statement of which this Prospectus forms a part, subject to a twelve (12) month
lock-up restriction. The 350,000 Shares underlying the 701 Warrants (which were
issued pursuant to Rule 701 of the Act) are available for sale in the public
market commencing 90 days after the date of the Prospectus pursuant to Rule 701,
subject to an eighteen (18) month lock-up. The 476,500 shares of Common Stock
underlying the Bridge Warrants, Bridge II Warrants and Bridge III Warrants are
exercisable for a period of three years commencing one year from the date of
this Prospectus. See 'Principal Stockholders,' 'Certain Transactions' and
'Description of Securities.' The exercise of such outstanding options and
warrants will dilute the percentage ownership of the Company's stockholders, and
any sales in the public market of shares of Common Stock underlying such
securities may adversely affect prevailing market prices for the Common Stock.
Moreover, the terms upon which the Company will be able to obtain additional
equity capital may be adversely affected since the holders of such outstanding
securities can be expected to exercise their respective rights therein at a time
when the Company would, in all likelihood, be able to obtain any needed capital
on terms more favorable to the Company than those provided in such securities.
See 'Management--Stock Option Plans and Agreements,' 'Certain Transaction,'
'Description of Securities' and 'Selling Securityholders.'

Limitation on Director Liability. As permitted by Delaware law, the
Company's Certificate of Incorporation limits the liability of directors to the
Company or its stockholders for monetary damages for breach of a director's
fiduciary duty except for liability in certain instances. As a result of the
Company's charter provision and Delaware law, stockholders may have limited
rights to recover against directors for breach of fiduciary duty. See
'Description of Securities.'

<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,400,000 shares of

Common Stock and 1,400,000 Warrants included in the Units offered hereby, are
estimated to be $5,911,800 ($6,843,570 assuming exercise of the Over-Allotment
Option in full). The Company will not receive any proceeds from the sale of
securities by the Selling Securityholders.

The Company intends to utilize such proceeds approximately as follows:

<TABLE>
<CAPTION>
APPROXIMATE APPROXIMATE
AMOUNT OF PERCENTAGE(%)
PROCEEDS OF NET PROCEEDS
----------- ---------------
<S> <C> <C>
Purchase of Test Equipment(1)............................................ $ 410,000 6.94%
Research, Engineering and Development(2)................................. 550,000 9.30
Purchase of Manufacturing Machinery(3)................................... 600,000 10.15
Repayment of Indebtedness(4)............................................. 1,804,000 30.52
Working Capital(5)....................................................... 2,547,800 43.10
----------- ------
Total.................................................................... $5,911,800 100%
</TABLE>

- ------------------
(1) Represents expenditures on test equipment which enables the Company to
adjust its products in order to meet customer specifications.

(2) Represents expenditures on software, computers and other material to further
develop the Company's products and to develop the Company's next generation
of products. See 'Business--Research and Development.'

(3) Represents expenditures on equipment necessary to manufacture the Company's
products and mechanically assemble components of the Company's products for
the establishment of the Company's fully automated manufacturing facility.

(4) Represents the repayment of indebtedness incurred in the Bridge Financings
consisting of promissory notes in the aggregate principal amount of $550,000
bearing interest at 8% per annum (or approximately $25,000 on the date of
this Prospectus) which is payable upon the earlier of (i) March 15, 1997 or
(ii) the closing of the Company's initial public offering. Also represents
the repayment of indebtedness incurred in September 1996 and December 1996
consisting of promissory notes in the aggregate principal amount of $664,000
bearing interest at 8% per annum (or approximately $5,000 on the date of
this Prospectus) which is payable upon the earlier of (i) March 15, 1997 or
(ii) the closing of the Company's initial public offering. The proceeds of
the Bridge Financings were used for working capital and as a source of funds
to pay expenses associated with this Offering. See 'Certain Transactions.'
Also includes payment to Devendar S. Bains, the Company's President, in the
amount of $350,000, which funds were loaned to the Company between January
1994 and June 1996. These loans were made interest free and are payable on
demand. Such funds were used for working capital purposes. See 'Certain
Transactions.' Also includes payment of $210,000 to Chemical Bank bearing
interest at 1% over such bank's prime rate, representing the amount

outstanding on the Company's line of credit as of the date of this
Prospectus. Such funds were used for working capital purposes. See Financial
Statements.

(5) Represents expenditure for general corporate purposes including accounts
payable, payroll, and the purchase of materials for purchase orders.

The foregoing represents the Company's best estimate of its allocation of
the net proceeds of this offering based upon the current state of its business,
operations and plans, current business conditions and the Company's evaluation
of its industry. Future events, including problems, delays, expenses and
complications which may be encountered, changes in economic or competitive
conditions and the results of the Company's sales and marketing activities may
make shifts in the allocation of funds necessary or desirable. Management will
have broad discretion to determine the use of proceeds.

The Company believes that the net proceeds of this Offering, together with
the cash generated from operations, will be sufficient to support the Company's
anticipated growth, expansion and marketing efforts for at

<PAGE>

least 12 months following the completion of this Offering. The Company may be
required to obtain additional equity or debt financing or otherwise fund its
operations after such 12-month period. There can be no assurances that the
Company will be able to obtain such financing on a timely basis, on acceptable
terms, or at all. In such event, the Company may be unable to complete its
current plans for expansion. If the Company requires such financing and is
unable to obtain it, the Company's operations will be materially adversely
effected. See 'Risk Factors--Need for Additional Financing.'

Pending application of the net proceeds for the purposes described above,
the Company intends to invest the net proceeds primarily in the United States
government securities, short-term certificates of deposit, money market funds or
other short-term, interest-bearing, investment grade securities. All funds
received through the exercise of warrants and options will be applied towards
working capital.

DILUTION

At September 30, 1996, the net tangible book value of the Company was
$(1,553,627) or $(.55) per share. Net tangible book value per share is
determined by dividing the net tangible book value of the Company (total
tangible assets less total liabilities) by the number of outstanding shares of
Common Stock. Assuming the sale of the Securities offered hereby of 1,400,000
Units (at assumed values of $5.00 per share and $.10 per Warrant) (less
underwriting discounts and commissions and estimated expenses of this Offering)
the net tangible book value of the Company at September 30, 1996 would have been
$4,498,173 or $1.06 per share, representing an immediate increase in net
tangible book value of $1.61 per share to the existing stockholders and an
immediate dilution of $3.94 per share (or 79%) to new investors.

The following table illustrates the foregoing information with respect to
dilution to new investors on a per share basis:

<TABLE>
<S> <C> <C>
Initial Public offering price per share............................................. $5.00
Net tangible book value deficit per share before Offering........................... (.55)
Increase per share attributable to new investors.................................... 1.61
As adjusted net tangible book value after Offering.................................. 1.06
Dilution to new investors........................................................... $3.94
</TABLE>

The following table sets forth, at September 30, 1996, with respect to the
Company's existing stockholders, including the Selling Securityholders, and new
investors, a comparison of the number of Shares of Common Stock acquired from
the Company and its former stockholders, the amount and percentage of total
consideration paid and the average price per share of Common Stock (at an
assumed value of $5.00 per share).

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
-------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ---------- -------- -------------
<S> <C> <C> <C> <C> <C>
Existing Stockholders.............................. 2,850,000 67.06 $1,275,000 15.41% $ .45
New Investors...................................... 1,400,000 32.94 7,000,000 84.59 5.00
--------- ------- ---------- -------- ------
Total.............................................. 4,250,000 100% $8,275,000 100%
--------- ------- ---------- --------
--------- ------- ---------- --------
</TABLE>

16
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company as of
September 30, 1996, on an as adjusted basis to give effect to the sale of
1,400,000 shares of Common Stock and 1,400,000 Warrants included in the Units
offered by the Company (at assumed values of $5.00 per share and $0.10 per
Warrant) in this Offering, and the application of the estimated net proceeds to
the Company from this Offering. This table should be read in conjunction with
the financial statements and notes thereto included elsewhere in this
Prospectus.

<TABLE>

<CAPTION>
SEPTEMBER 30, 1996
----------------------
AS
ACTUAL ADJUSTED(1)
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Debt:
Bank Line of Credit..................................................................... 210
Notes Payable........................................................................... 925
Stockholders' Loan...................................................................... 350
Stockholders' equity:
Preferred stock, no stated value, 1,000,000 shares authorized, no shares issued or
outstanding..........................................................................
Common stock, $.0001 par value, 25,000,000 shares authorized, 2,850,000 shares
outstanding actual and 4,250,000 shares outstanding, as adjusted.....................
Additional paid-in capital........................................................... 4,433 10,345
Accumulated deficit..................................................................... (5,847) (5,847)
Total stockholders' equity (deficit)...................................................... $(1,414) $ 4,498
------- ---------
Total capitalization...................................................................... $ 71 $ 4,498
------- ---------
------- ---------
</TABLE>

- ------------------

(1) Adjusted for the sale of 1,400,000 shares of common stock and 1,400,000
Warrants included in the Units and the application of the estimated net
proceeds therefrom as described under 'Use of Proceeds.'

DIVIDEND POLICY

Holders of the Company's Preferred Stock or Common Stock are entitled to
dividends when, as and if declared by the Board of Directors out of funds
legally available therefore. The Company has not in the past and does not
currently anticipate the declaration or payment of any dividends in the
foreseeable future. The Company intends to retain earnings, if any, to finance
the development and expansion of its business. Future dividend policy will be
subject to the discretion of the Board of Directors and will be contingent upon
future earnings, if any, the Company's financial condition, capital
requirements, general business conditions and other factors. Therefore, there
can be no assurance that any dividends of any kind will ever be paid.

<PAGE>

SELECTED FINANCIAL DATA

The selected financial data set forth below for the nine months ended
September 30, 1995 and 1996 are derived from the unaudited financial statements

of the Company, which include all adjustments which management of the Company
considers necessary for a fair presentation of the data for such periods. The
selected financial data set forth below for the years ended December 31, 1994
and 1995 are derived from the audited financial statements of the Company
appearing elsewhere in the Prospectus. The results for the nine months ended
September 30, 1996 are not necessarily indicative of the results to be expected
for the full year. The data presented below should be read in conjunction with
such financial statements, including the notes thereto, appearing elsewhere in
this Prospectus. See 'Experts.'

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
----------------- -----------------
1994 1995 1995 1996
------ ------- ------ -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................................................ $3,575 $ 1,810 $1,558 $ 1,957
Cost of goods sold....................................................... 2,713 1,756 1,332 1,889
Gross profit............................................................. 862 54 226 68
Selling, general and administrative...................................... 722 527 436 922
Research, engineering and development.................................... 333 372 122 701
Operating loss........................................................... (193) (845) (332) (1,555)
Stock compensation and financing costs................................... -- 1,180 -- 2,553
Loss before taxes........................................................ (193) (2,025) (332) (4,108)
Provision for income taxes............................................... (15) -- -- --
Net loss(1).............................................................. $ (178) $(2,025) $ (332) $(4,108)
------ ------- ------ -------
------ ------- ------ -------
Net loss per share....................................................... $ (.05) $ (.61) $ (.10) $ (1.23)
Shares outstanding (2)................................................... 3,346 3,346 3,346 3,346
------ ------- ------ -------
------ ------- ------ -------
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED AS ADJUSTED
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1996(3)
------------ ------------- -------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)............................................ $ (578) $(1,469) $ 4,443
Total assets......................................................... 722 1,467 5,869
Total liabilities.................................................... 1,276 2,881 1,371
Stockholders' equity (deficit)....................................... (554) (1,414) 4,498
</TABLE>

- ------------------
(1) Net loss for the year ended 1995 and nine months ended September 30, 1996

include non-cash stock compensation expenses of $1,180,000 and $2,553,125,
respectively.

(2) All shares, warrants and options issued or granted within the past twelve
months from the most current period presented are considered to be
outstanding for all periods presented.

(3) Adjusted for the sale of 1,400,000 Units at an assumed offering price of
$5.10 per Unit and the application of the estimated net proceeds therefrom
as described under 'Use of Proceeds.'

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION

RESULTS OF OPERATIONS

The following table sets forth certain operating data as percentage of
total revenue:

<TABLE>
<CAPTION>
PERCENTAGE OF
TOTAL NET SALES
YEARS ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
----------------- -----------------
1994 1995 1995 1996
----- ------ ----- ------
<S> <C> <C> <C> <C>
Net sales.................................................. 100.0% 100.0% 100.0% 100.0%
Cost of goods sold......................................... 75.9 97.0 85.5 96.5
Gross profit............................................... 24.1 3.0 14.5 3.5
Selling, general and administrative........................ 20.2 29.1 28.0 47.1
Research, engineering and development...................... 9.3 20.6 7.8 35.8
Total operating expenses................................... 29.5 49.7 35.8 82.9
Stock compensation and financing costs..................... -- 65.2 -- 130.4
Loss before income taxes................................... (5.4) (111.9) (21.3) (209.8)
Provision (credit) for income taxes........................ (0.4) -- -- --
Net loss................................................... (5.0)% (111.9)% (21.3)% (209.8)%
</TABLE>

RESULTS OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1995

Revenues for the first nine months of 1996 increased 26% compared to the
first nine months of 1995. The Company's principal business strategy since 1995

has been devoted to the engineering production of the linear power amplifiers
and Multicarrier Linear Power Amplifiers (MCLPA) prototypes for major
international OEM manufactures. As a result, the production of commercial
cellular amplifiers decreased significantly in 1995 replaced with minimal
revenues relating to the MCLPA. During the first nine months of 1996, the
Company's revenues relating to the MCLPA as compared to the same period in 1995
increased significantly as the MCLPA is further developed and nearing acceptance
by OEM manufacturers. During the first nine months of 1996, approximately 30% of
all product shipments were prototypes compared to about 7% for the same period
in 1995.

Cost of sales as a percentage of sales was 97% during the nine months ended
September 30, 1996, compared to 86% during the same period for 1995. This
increase can be attributed to the extensive engineering and direct labor costs
associated with the production of MCLPA prototypes.

Selling, general and administrative expenses increased in 1996 by $485,806
to $922,266 from $436,460 in 1995. Expressed as a percentage of sales, the
selling, general and administrative expenses were 47% in 1996 and 28% in 1995.
The principal factors contributing to the increase in selling, general and
administrative expenses relate to consulting and professional fees in 1996 that
did not exist in 1995 and increased rent expense due to the Company leasing a
new larger facility. In addition, interest expense was higher in the third
quarter of 1996 because of the outstanding bank debt and lease obligations.

Research, engineering and development expenses increased to 36% of net
sales in 1996 compared to 8% in 1995. For the first nine months of 1996, the
principal activity of the business related to the design and production of
product prototypes for OEM manufacturers. The research, engineering and
development expenses consist principally of salary costs for engineers and the
expenses of equipment purchased specifically for the design and testing of the
prototype products.

Stock compensation expense in 1996 of $2,553,125 relates mainly to the
March and April 1996 issuance of stock and options at prices substantially lower
than the contemplated initial public offering price.

As a result of the foregoing, the Company incurred net losses of
($4,108,342) or ($1.23) per share for the nine months ended September 30, 1996
compared with net losses of ($332,364) or ($.10) per share for the same period
in 1995.

<PAGE>

1995 COMPARED WITH 1994

In 1995 the Company began focusing its business on the MCLPA, a relatively
recent outgrowth in the market place. Since 1989 the Company had concentrated in
the commercial cellular amplifier business. The transition in the Company's
focus from a supplier of single channel amplifiers to the design of MCLPA

prototypes for large OEM wireless telecommunications manufacturers resulted in a
decrease in revenues of $1,764,910, or 49%, to $1,810,222 in 1995 from
$3,575,132 in 1994. Shipments of prototype products accounted for about 7% of
all shipments in 1994 whereas in 1995 they accounted for 21%. During 1995
approximately 61% of net sales were to four customers and (AllenTelecom--18%,
Kentrox Industries--17%, DSC Communications--15% and AT&T--11%) 30% of total
sales were export sales.

Cost of sales as a percentage of sales was 97% in 1995 compared to 76% in
1994. The increase is principally due to the change in the business. The
Company's focus on the MCLPA has required a substantial amount of direct labor
costs, principally engineering, to develop the MCLPA technology.

Selling, general and administrative expenses decreased in 1995 by $194,843
to $527,150 from $721,993 in 1994. Expressed as a percentage of sales, the
selling, general and administrative expenses were 29% in 1995 and 20% in 1994.
Selling, general and administrative expenses decreased as a result of lower
sales commissions, reduction in management bonuses and fewer staff. The
percentage increase in 1995 is attributed to fixed costs, such as rent, etc.,
representing a higher portion of net sales.

Research, engineering and development expenses as a percentage of net sales
increased to 21% in 1995 compared to 9% in 1994. This increase reflects the
changes in the business to design and production of prototypes for OEM
manufacturers. The research and development expenses consist principally of
salary costs for engineers and the expensing of equipment purchases acquired
specifically for the design and testing of the prototype products.

Stock compensation and financing costs of $1,180,000 in 1995 relates to the
assignment of stock from the principal stockholder to a director and a law firm.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 1996, the Company had a current ratio of 0.40 to 1. The
bank line of credit outstanding totaled $210,000 in addition to stockholders
loans of $350,000. The funds from the credit line and stockholder's loan have
been used for working capital purposes. Additional loans totaling $925,000 were
incurred during the first nine months of 1996 as a result of the Bridge
Financings. The loans bear interest at 8% and are payable on the earlier of
March 1997 or the completion of the contemplated initial public offering. The
Company intends to use a portion of the proceeds from this Offering to repay all
of the stockholder loans outstanding and the aggregate amount outstanding under
the bank line of credit. See 'Use of Proceeds.'

The Company has several lease obligations for certain research, engineering
and development equipment used in the production processes requiring minimum
monthly payments of $19,444 through 1999.

The Company believes that the net proceeds of this Offering will permit it
to repay the outstanding short-term debt, to continue to meet its working
capital obligations and fund the further development of its business for the
next 12 months. There can be no assurance that any additional financing will be
available to the Company on acceptable terms, or at all. If adequate funds are
not available, the Company may be required to delay, scale back or eliminate its

research, engineering and development or manufacturing programs or obtain funds
through arrangements with partners or others that may require the Company to
relinquish rights to certain of its technologies or potential products or other
assets. Accordingly, the inability to obtain such financing could have a
material adverse effect on the Company's business, financial condition and
results of operations.

A substantial amount of the proceeds from this Offering will be used to
purchase manufacturing and test equipment ($1,010,000) and research, engineering
and development related expenditures ($550,000).

<PAGE>

BUSINESS

Amplidyne designs, manufactures and sells ultra linear power amplifiers and
related subsystems to the worldwide wireless, local loop and satellite uplink
telecommunications market. These power amplifiers, which are a key component in
cellular base stations, increase the power of radio frequency ('RF') and
microwave signals with low distortion, enabling the user to significantly
increase the quality and quantity of calls processed by new and existing
cellular base stations. The Company's wireless telecommunications products
consist of solid-state, RF and microwave, single and multicarrier power
amplifiers that support a broad range of analog and digital transmission
protocols including advanced mobile phone services ('AMPS'), code division
multiple access ('CDMA'), time division multiple access ('TDMA'), total access
communication systems ('TACS'), extended total access communication systems
('ETACS'), nordic mobile telephone ('NMT'), global system for mobile
communications ('GSM') and digital communication service at 1800 MHz
('DCS-1800'). The products are marketed to the cellular, wireless local loop and
personal communication systems ('PCS') segments of the wireless
telecommunications industry. The PCS segment of the market is one of the fastest
growing segments and the Company has devoted significant resources in 1996 to
develop products for this market. The Company's largest wireless
telecommunications customers are AT&T, DSC Communications, Samsung and Goldstar,
each of which is an OEM.

one unit, eliminating the need for numerous single carrier amplifiers and the
corresponding unnecessary space occupied by the cavity filters encasing the
amplifiers. Management believes that with its (i) proprietary technology (which
effectively reduces distortion), (ii) technological expertise and (iii)
established product line consisting of ultra linear single channel power
amplifiers, the Company can achieve similar performance with its MCLPAs. The
Company's linear power amplifiers and MCLPAs utilizes the Company's patent
pending predistortion and proprietary feed forward technology which amplifies
many channels with minimal distortion at the same time with one product.

The Company intends to capitalize on its vast management experience
developing power amplifiers for worldwide markets by introducing more
sophisticated amplifiers for commercial applications. Amplidyne believes that
its core technological expertise should continue to enhance its ability to
introduce new products for the wireless telecommunications industry.

INDUSTRY BACKGROUND

The market for wireless communication services has grown substantially
during the past decade. Cellular service has been one of the fastest growing
segments of the wireless telecommunications market. The worldwide wireless
revolution exploded in 1994, adding 24 million new subscribers bringing the
total global subscriber count in 1995 to approximately 55 million, a growth rate
of more than 70%. However, this represents a worldwide penetration of only
1.35%. Industry officials project a worldwide market penetration of 8% going
into the next century, a 50% compounded annual growth rate ('CAGR'). The growth
in cellular communications has required, and will continue to require,
substantial investment by cellular service providers in wireless infrastructure
equipment. Moreover, management believes that intensified competition among
cellular service providers is resulting in declining costs to end-users as well
as new types of service offerings. This demand, coupled with unprecedented
growth, will require new infrastructure equipment and technology that will allow
better coverage for higher-density networks. Carriers also need to have the
flexibility to place cell sites anywhere, provide speedier deployment without
regard to frequency allocation or planning with lower installation,

<PAGE>

maintenance and operational costs. In order for carriers to meet their demands,
new technologies and base station equipment must be deployed.

The PCS market is also one of the fastest growing segments in the wireless
telecommunications market. Recently major OEMs such as AT&T have announced
digital PCS services nationwide; such service is expected to begin in early
1997. PCS service providers are attracting more subcribers than analysts had
projected. The attraction to consumers is lower prices than cellular and as well
as the fact that PCS phones use more powerful digital technology, which improves
call quality compared with cellular service. This result is due to the fact that
PCS transmits at a higher radio frequency. It is also easier to program PCS
phones for advanced features (i.e., sending electronic mail and news headlines).
Amplidyne has developed PCS linear amplifiers and PCS MCLPAs. Management
believes that these products will produce significant sales for the Company

during the next few years.

A cellular system consists of a number of cell sites which are networked to
form a cellular system operator's geographic coverage area. Each cell site has a
base station which houses the equipment that transmits and receives telephone
calls between the cellular subscriber within the cell and the switching office
of the local wireline telephone system. Such base station equipment includes an
antenna and a series of transceivers, power amplifiers and cavity filters. Large
cell sites, which generally cover a geographic area of up to five miles in
radius, are commonly referred to as 'macrocells.'

Cellular system operators in densely populated areas are able to expand the
capacity of their existing cellular systems by incorporating smaller cells,
commonly referred to as 'microcells,' that divide macrocells into several
smaller cell sites, typically one to three miles in radius. The base stations
for microcells are substantially smaller physically than base stations for
macrocells. Microcells require less expensive equipment at each base station,
but require greater numbers of these smaller base stations to maintain service
quality and system capacity.

The ability of cellular system operators to increase system capacity
through the use of microcells is largely dependent on their ability to broadcast
multiple signals with acceptable levels of interference and distortion. In
cellular systems, the amplifier is generally the greatest source of signal
interference and distortion, particularly with multi carrier high power
amplifiers. Consequently, obtaining amplifiers which can transmit and receive
multiple signals with low distortion or interference from adjacent signals
('high spectral purity') is critical to a cellular system operator's ability to
increase system capacity. Substantial resources and technical expertise are
required to design and manufacture multi carrier power amplifiers with high
spectral purity. To achieve high spectral purity, multi carrier amplifier
systems must have high interference cancellation properties.

In addition to cellular/PCS system operators' need for base station
equipment, in many developing countries, where access to the public switch
telephone network ('PSTN') by the general population is significantly less than
in developed countries, the Company believes that wireless telecommunications
systems are the most economic means to provide basic telephone service. The
expense, difficulty and time requirements of building and maintaining a cellular
or PCS network is generally less than the cost of building and maintaining a
comparable wireline network. Thus, in many less developed countries, wireless
service may provide the primary service platform for both mobile and fixed
telecommunications applications. In a wireless local loop system, use is made of
wireless radio systems instead of wireline networks to connect telephone
subscribers to the PSTN. The Company believes that the potential opportunities
for wireless communication services in countries without reliable or extensive
wireline systems may be even greater than in countries with developed
telecommunication systems.

The Company's satellite amplifier products are used to amplify the signal
which is being transmitted from the ground up to the satellite. The
manufacturers of satellite communications equipment operate in commercial
markets such as television broadcast services and commercial military
communications. Amplidyne has also provided amplifiers for terrestrial radio

systems which are used for television and audio signal transmission.

<PAGE>

COMPANY STRATEGY

Utilizing its proprietary, patent-pending technology and experience in
interference cancellation, the Company is pursuing a strategy, focused on the
need of cellular, wireless local loop and PCS system operators, to develop
technologically advanced amplifier based products. The Company has recently
developed products which address the technical issues faced by such system
operators as a result of the rapid growth in wireless telephone use (cellular,
PCS and wireless local loop) and the resulting need to increase systems
capacity.

Since early 1995 the Company has been involved in research, design and
development of linear power amplifiers and MCLPAs for the wireless
communications industry and most recently for the emerging PCS industry. The
Company has a patent pending (for which a notice of allowance has been issued by
the United States Patent and Trademark Office) on its predistortion technology
which has enabled the Company to provide ultra linear amplifiers with its
proprietary feed forward technology. Since early 1996 the Company has allocated
substantial engineering resources to develop linear power amplifiers and MCLPAs
for the emerging PCS market. The Company has focused on establishing working
relationships with major OEMs to develop products for the PCS market, which is
projected to show significant growth in 1997.

Management believes that with its predistortion technology and the
linearity capability of its core amplifier technology, the Company can achieve
similar performance from a multicarrier amplifier which others achieve by using
dual feed forward loops; this results in much higher component count within the
amplifier unit and may result in poor reliability for such products, compared to
predistortion based feed forward amplifiers which use fewer components and
thereby have a high reliability.

The Company's business strategy focuses primarily on the wireless
communication market and consists of the following elements:

Increase Penetration of Wireless Equipment Manufacturers. Since 1991, the
Company has positioned itself as a supplier of amplifier products to large
wireless telecommunications OEMs, such as AT&T, DSC Communications, Samsung and
Goldstar. Amplidyne seeks to capitalize on its existing customer relationships
and become a more significant source of its customers' amplifiers by working
closelywith OEM customers to offer innovative solutions to technical
requirements and problems. Based on the performance characteristics and
functionality of its products, Amplidyne believes it will be able to more
rapidly penetrate the infrastructure equipment market by initially focusing its
marketing efforts on large OEMs rather than system operators.

telecommunications industry particularly the PCS and cellular segments.
Management believes that its linear power amplifiers and MCLPAs will assist
these equipment manufacturers in providing high capacity, low distortion low
cost per channel products and has already begun to sell amplifiers to several
emerging wireless equipment manufacturers.

Develop Products for Multiple Protocols. The Company intends to continue
to invest resources in the research and development of new products for various
protocols. For cellular systems, the Company currently supports the AMPS and
TACS analog protocols, and the CDMA, TDMA, E-TACS, NMT and GSM digital
protocols. For PCS systems, Amplidyne currently supports CDMA, TDMA, DCS-1800
and PCS-1900 digital protocols. Amplidyne is continuing to develop products that
incorporate protocols which it believes will address the needs of established
and emerging wireless systems. Management believes the development of products
for multiple protocols will enable Amplidyne to benefit from the continuing
growth of existing wireless systems and other emerging wireless
telecommunications markets while reducing the risks associated with relying on
the success of one or a limited number of existing or emerging industry
protocols.

Maintain a Technology Leadership Position. In management's belief the
Company, with its innovative products, has been addressing the needs of its
customers for products that solve significant technical problems. The Company
believes its interference cancellation technologies are among the most advanced
that are commercially available in the industry, both in performance and
diversity of methodology. The Company utilizes proprietary and patent-pending
predistortion technology and proprietary feed forward interference cancellation
technology in its linear power amplifiers and MCLPAs to enable the user to
significantly increase the quality and quantity of calls processed by new and
existing cellular base stations. The Company intends to continue to invest

<PAGE>

substantial resources in research and development associated with its
interference cancellation technologies. See 'Technology'. The Company has
emphasized research and development on PCS products during 1996 which management
believes will be a major growth area for the Company during 1997.

Develop Innovative Proprietary Products. To date, the Company has focused
its efforts in the development of amplifier products which are highly innovative
and are not the standard 'commodity' type product. In addition, the Company
believes that it has compiled an extensive design library in the solid-state,
high power amplifier industry utilizing its proprietary and patent-pending
technology and expertise in interference cancellation. The Company has developed
and intends to continue to develop products which combine basic components in
unique and high performance configuration to command higher prices in the
wireless communications market. In addition, the Company also plans to adopt
this expertise for new commercial market applications and product requirements
and develop products for the emerging DCS-1800 and PCS-1900 markets. The Company
has developed amplifier products during 1996 which can be used in PCS repeater
subsystems. Management believes that this segment of the business will show
substantial growth.

Provide Support from Product Design through Installation and
Operation. The Company works with its customers throughout the design process
to assist them in refining and developing their amplifier specifications. Once
the specifications have been met and the product delivered, Amplidyne continues
to provide technical support to facilitate system integration, start-up and
continued operation. By providing customer support services from the product
design phase through installation and operation, management believes it fosters
increased levels of customer loyalty and satisfaction. In addition, through this
process, the Company believes it will develop new product definitions and
implementations to further enhance the strategic position of the Company in the
wireless market.

Maintain Control of the Manufacturing Process. As part of the transition
to becoming a leading amplifier supplier to the wireless telecommunications
market, Amplidyne is in the process of implementing in-house automated
manufacturing in order to control its production schedule. In certain instances,
Amplidyne has made the strategic decisions to select single or limited source
suppliers in order to obtain lower pricing, receive more timely delivery and
maintain quality control.

THE AMPLIDYNE ADVANTAGE

The Company believes that its products, particularly the ultra linear power
amplifiers and MCLPAs have several features which differentiate them from those
of its competitors, such as:

The Predistortion Solution. Utilizing its proprietary technology the
Company can obtain significant distortion reduction in its core amplifiers. This
enables the predistorted amplifier to have feed forward correction (which is
described below, see 'Business--Technology') applied to it to achieve distortion
cancellation. The Company believes that its competitors are only able to obtain
this level of distortion cancellation by use of complex and component intensive
'Dual Feed Forward Loops' resulting in the use of more components within the
amplifier unit. In general, the fewer components that an amplifier uses, the
better its reliability.

Superior Distortion and Spurious Cancellation Resulting in Ultra Linear
High Power Amplifiers. The Company believes the use of MCLPAs is critical in
the implementation of new cellular systems and upgrade of older analog systems.
Cellular systems need to cover large areas with minimum hardware in order to
minimize cost per subscriber. Reduction of the distortion and spurious signals
from the amplifiers is a key enabling technology. Amplidyne has developed
proprietary interference cancellation technology using multiple methods to
achieve high suppression of spurious output and distortion typically associated
with higher power amplifiers.

By utilizing its proprietary and patent-pending predistortion technology
and its proprietary feed forward technology, the MCLPAs amplification capacity
of the Company's amplifiers are, in management's belief, among the best in the
industry. Standard MCLPAs currently support 25 channels with approximately 25
watts composite power, resulting in approximate 1 watt per channel. The
Company's MCLPAs support up to 25 channels at 4 watts per channel, an
approximate 400% increase over industry standard MCLPAs.

High Quality and Reliability. Amplidyne believes that it has consistently
provided high quality, reliable products to its customers. The Company has many
thousands of its amplifiers in the field. Management believes

<PAGE>

that its reputation for quality and reliability will enable Amplidyne to attract
new customers and maintain existing customers for all its products.

Linearity, Low Distortion and High Amplification. Wireless service
providers' ability to manage scarce spectrum resources more effectively and
accommodate a larger number of subscribers is largely dependent on their ability
to broadcast signals with high linearity, which pertains to the ability of a
component to amplify a wave form without altering its characteristics in
undesirable ways. Linear amplifiers allow signals to be amplified without
introducing spurious emissions that might interfere with adjacent channels.
Higher linearity increases the capacity of cellular systems by enabling a more
efficient use of digital transmission technologies, microcellular architectures
and adaptive channel allocation. In current cellular systems, the power
amplifier is generally the source of the greatest amount of signal distortion.
Consequently, obtaining power amplifiers with high linearity and low distortion
is critical to wireless service providers' ability to improve spectrum
efficiency.

The Company has several products with a patent pending (for which a notice
of allowance has been issued by the United States Patent and Trademark Office)
which it believes gives it a significant advantage over its competitors. These
features for Pre-distortion and Pre-distortion Linearization designs
significantly reduces distortion below that which is currently available in the
marketplace.

Multicarrier Designs. Multicarrier amplification, in which all channels
are amplified together by a MCLPA, rather than each channel using a separate
amplifier, allows for instantaneous electronic channel allocation. Functionally,
it combines multiple single channel power amplifiers, typically 16, into a
single unit, thereby eliminating the single channel power amplifiers and the
corresponding tunable cavity filters. MCLPAs require significantly higher
linearity compared to single channel designs.

By virtue of the Company's high linearity products which incorporates
pre-distortion and feed forward technology achieving, in management's belief,
the lowest distortion in the industry, the MCLPA amplified signal remains within
their prescribed band and spectrum with low interference of adjacent channels
thus providing flexibility to accommodate any frequency plan. Management
believes that its technology in MCLPAs will enable Amplidyne to attract new
customers.

Low Noise Amplifier. Since 1991, the Company has been manufacturing low
noise amplifiers (LNA) which are used in the receiver section of the base
station (digital and analogue). With this technology, the Company has the
ability to offer 'booster amplifiers' to the wireless industry which incorporate

LNAs, MCLPAs and receive/transmit filters. Management believes that there is a
significant market for 'booster amplifiers' which it intends to pursue. The
Company has recently received orders for small quantities of its low noise PCS
products. Management believes that this line of products have tremendous growth
potential.

High Quality, Reliability and Customer Support. The Company believes that
the power amplifier in cell sites historically has been the single most common
point of equipment failure in wireless telecommunications networks. Increasingly
reliable power amplifiers, therefore, will improve the level of service offered
by wireless service providers, while reducing their operating costs. In
addition, MCLPAs eliminate the need for high-maintenance, tunable cavity filters
which should further reduce costs.

The Company works closely with its customers throughout the design process
in refining and developing their amplifier specifications. The Company uses the
latest equipment and computer aided design and modeling, solid state device
physics, advanced digital signal processing ('DSP') and digital control systems,
in the development of its products in their specialized engineering and research
departments. The integration of the Company's design and production is a factor
in the Company's ability to provide its customers with high reliability, low
distortion and low maintenance amplifiers.

TECHNOLOGY

Wireless Transmit Technology. A typical cellular communications system
comprises a geographic region containing a number of cells, each with a base
station, which are networked to form a cellular service provider's coverage
area. Each base station or cell site houses the equipment that transmits and
receives telephone calls to and from the cellular subscriber within the cell and
the switching office of the local wireline telephone system. Such equipment
includes a series of transceivers, power amplifiers, tunable cavity filters and
an antenna. In a single channel system, each channel requires a separate
transceiver, power amplifier and tunable cavity filter. The

<PAGE>

power amplifier within the base station receives a relatively weak signal from
the transceiver and significantly boosts the power of the outgoing wireless
signal so that it can be broadcast throughout the cell. The radio power levels
necessary to transmit the signal over the required range must be achieved
without distorting the modulation characteristics of the signal. The signal must
also be amplified with linearity in order to remain in the assigned channel with
low distortion or interference with adjacent channels.

Because cellular operators are allocated a small RF spectrum and certain
channels, it is necessary to make efficient use of the spectrum to enable
optimum system capacity. By amplifying all channels with minimum distortion at
the same time, rather than inefficient use of single channel amplification, one
obtains better system capacity. A MCLPA combines the performance capabilities of
up to 25 single carrier amplifiers into one unit, eliminating the need for
numerous single carrier amplifiers and their corresponding tunable cavity

filters. These MCLPAs require less space than multiple single channel amplifiers
and their corresponding tunable cavity filters which reduce the size and cost of
a base station. See Figure 1 below.

[Figure 1]

MCLPAs create distortion products which can cause adjacent channel
interference. The minimization of these distortion products requires
sophisticated technology. This is accomplished through interference cancellation
techniques such as 'predistortion' and 'feed forward' accompanied by highly
advanced control and processing technology. The Company has developed certain
proprietary technology and methods to achieve minimal distortion in its
amplifiers, technically called predistortion and feed forward correction. The
Company uses three distinct technologies (A) Linear class A and AB amplifiers,
(B) Predistorted class A and AB amplifiers and (C) Predistortion feed forward
amplifiers. The Company's proprietary leading edge products contain patent
pending predistortion and proprietary feed forward technology combined in a
proprietary automatic correction technique.

<PAGE>

All amplifiers create distortion when they are run at a high power level.
For example, Figure 2 below shows two calls being processed through a linear
class A/AB amplifier. In an ideal case the output of the amplifier would
faithfully reproduce the input signal without any distortion.

[Figure 2]

In real life, however, distortion characteristics are produced. See Figure
3 below.

[Figure 3]

These distortion products can cause interference with another caller's
channel which in turn produces poor call quality. By using a simple, patent
pending technology, Amplidyne recreates the distortion for the amplifier in such
a manner to cancel the interference signals. See Figure 4 below.

[Figure 4]

Amplidyne believes that this cancellation technique is superior to any
other predistortion technology available at present. See Figure 5. Feed forward
cancellation involves taking the distortion created by the amplifier and
processing it in such a way that when it is added back into the amplifier having
been pre-distorted and combined with the feed forward technology, distortion
cancellation occurs. The Company believes that its patent pending technology has
the most unique and potent technology for distortion cancellation. Furthermore,

<PAGE>

Amplidyne has selected linear class AB technology for its base amplifier which
it believes also has superior distortion characteristics compared to other
competitors because it is easier to pre-distort. Thus the three key ingredients
(a) Linear class A and AB amplifiers, (b) Predistortion technology and (c) Feed
forward technology enables Amplidyne to produce MCLPAs with what it believes to
be the best distortion cancellation available on the market. See Figure 6 below.

[Figure 5]

[Figure 6]

Analog v. Digital Technology. Cellular system operators are increasing
their system capacity by transitioning from analog to digital technology.
Cellular systems based on analog technology are capable of carrying only one
call per channel. Current analog standards and formats include AMPS and TACS.
Digital systems allow a given channel of spectrum to carry multiple calls
simultaneously thereby increasing system capacity. Conversion to digital
transmission is expected to allow three to eight times as many voice
conversations to occupy the same frequency bands. Current digital standards and
formats include TDMA and CDMA in North

<PAGE>

America and GSM and DCS-1800 in Europe. An additional cellular system operating
in the specialized mobile radio ('SMR') spectrum is in the early stages of
deployment in the United States. This system uses digital techniques that
include Frequency Hopping Multiple Access ('FHMA').

Wireless Receive Technology. The receiving section of a cellular base
station frequently uses two antennas for efficient spectrum usage. The
deployment of complex circuitry and techniques, including the use of GaAsFET
(Gallium Arsenide Field Effect Transistors) enhances the systems performance,
enabling the weak 'noisy' signal to be amplified with a significant reduction in

the level of noise. Amplidyne has been manufacturing low noise amplifiers since
1991, with thousands currently in service.

MARKETS

The market for wireless communications services has grown substantially
during the past decade as cellular wireless local loop, SMR and other new and
emerging applications (such as PCS) have become increasingly accessible and
affordable to growing numbers of consumers. The growth of these markets has
increased the demand for the Company's products, although the Company cannot
predict trends in these markets.

Cellular Market. The market for cellular communications is currently the
largest of the wireless services. See 'Industry Background.' Cellular system
operators have expanded the capacity of their existing cellular systems by
splitting macrocells into smaller microcells. The Company believes that the
relatively small size, high power and performance characteristics of its
microcell MCLPAs will be particularly attractive to companies like AT&T, DSC
Communications, Samsung, Goldstar as well as emerging wireless
telecommunications infrastructure equipment providers when providing
infrastructure equipment for such new cell sites.

Wireless Local Loop and SMR Markets. Wireless local loop systems are
increasingly being adopted in developing markets to more quickly implement
telephone communication services. In certain developing countries, such as
Indonesia and Brazil, wireless local loop systems provide an attractive
alternative to copper and fiber optic cable based systems, with the potential to
be implemented more quickly and at lower cost than wireline telephone systems.
The Company designs, manufactures and markets MCLPAs for infrastructure
equipment systems in the wireless local loop market.

SMR, like cellular communications, is a two-way service for both speech and
data. SMR originally was designed as a private network for closed groups
communicating between a base station and a large number of users, mainly for
dispatching taxis, delivery and public safety vehicles. SMR system operators are
subject to certain limitations which make the use of SMR frequencies more
appropriate for short dispatch messages. The success of SMR as a new type of
wireless service will depend in part on whether infrastructure manufacturers and
service providers can reduce costs so as to gain greater market penetration than
cellular service providers.

Custom Communications and Other Markets. The custom communications market
consists of small niche segments within the larger communications market:
long-haul radio communications, land mobile communications, surveillance
communications, ground-to-air communications, microwave communications,
broadband communications and telemetry tracking. The Company sells custom
amplifiers and related products to these segments. See 'Customers, Sales and
Marketing.'

PCS and Other Potential Markets. The Company believes that new types of
wireless systems will be introduced in the near future. For example, in 1994 and
1995, the FCC auctioned RF spectrum in the 1.85 to 1.99 gigahertz range for the
provision of PCS. The Company has recently obtained purchase orders for PCS
products indicating rapid growth in this area. Like SMR, the success of PCS will

depend in part on whether manufacturers and service providers can reduce system
manufacturing and service costs sufficiently. The Company believes that
cellular, SMR and PCS will share future markets with PCS capturing the most
significant portion of this market. See 'Business--Industry Background.' The
Company is currently developing products for the PCS market, has shipped
prototype products for the PCS market and has recently received purchase orders
for PCS linear power amplifiers.

<PAGE>

PRODUCTS

The Company designs and sells multicarrier transmit amplifiers and low
noise receive amplifiers for the cellular communications market, as well as the
PCS, wireless local loop and special mobile radio (SMR) segments of the wireless
communications industry. The Company also provides a large number of catalog and
custom amplifiers to OEMs and to other customers in the communications market in
general.

o Multicarrier Linear Power Amplifiers (MCLPAs). When a cellular or PCS
user places a call, the call is processed through a base station, amplified, and
then transmitted on to the person receiving the call. Therefore, all base
stations require amplifiers (MCLPAs) whether they are being used for cellular,
PCS or local loop applications. Amplidyne manufactures these amplifiers. The
objective is to provide a quality product at a good price and to have exemplary
reliability. Management believes that Amplidyne's products with its patent
pending predistortion technology (for which a notice of allowance has been
issued by the United States Patent and Trademark Office), core linear amplifier
technology and proprietary feed forward technology achieve all of the above
mentioned objectives. Amplidyne's MCLPAs are a unique line of ultra linear
devices which utilize a proprietary predistortion and phase locked feed forward
architecture. MCLPAs typically amplify up to 25 carriers at 4 watts of output
power.

AMPLIDYNE'S MULTICARRIER LINEAR POWER AMPLIFIER

[PICTURE No. 1]

<PAGE>

The following table provides certain information regarding the Company's
MCLPAs. The key item in this table is the IMD specification, which management
believes is among the best available in the industry.

AMPLIDYNE'S MCLPA PRODUCT SUMMARY

addressed by these products.

o Receive Multi-Coupler Amplifiers. Amplidyne supplies dual receiver
multi-carriers for cellular and PCS bands. Management believes that this
product line offers high performance and reliability. Receive multi-coupler
amplifiers consist of low noise amplifiers, as described above, filters and
other components used as a receiving subsystem within the base station.
Management believes by offering this product line, Amplidyne has more value
added to its low noise amplifiers and at the same time can satisfy the
requirements of its customers.

The Company has used its technological expertise to improve the linearity
of its amplifiers by introducing pre-distortion and compensation techniques.
Several of the Company's single-channel amplifiers include linearity correction
and compensation networks. These techniques are combined with automatic error
correction circuits to enhance the linearity and performance of the Company's
feed-forward amplifiers. Amplidyne has also used its

<PAGE>

technological expertise to design and manufacture new products, such as the

first 200 watt average power multi-channel pre-distortion amplifier, and a PCS
single-channel CDMA amplifier being used in an overseas CDMA base station
evaluation.

The Company's wireless telecommunications amplifiers can be configured as
modules, separate plug-in amplifier units or integrated subsystems. The
Company's products are integrated into systems by OEM customers, and therefore
must be engineered to be compatible with industry standards and with certain
customer specifications, such as frequency, power, linearity and built-in test
(BIT) for automatic fault diagnostics. The Company intends to utilize a portion
of the net proceeds of this Offering ($410,000) for the purchase of test
equipment which enables the Company to adjust its products in order to meet
customer specifications. See 'Use of Proceeds.'

PRODUCT WARRANTY

The Company warrants new products against defects in materials and
workmanship for a period of one (1) year from the date of shipment. To date, the
Company has not experienced a material line of warranty claims.

BACKLOG

As of December 31, 1994 and 1995 the Company has a backlog of $1.1 million
and $3.5 million, respectively. As of October 31, 1996, the Company had a
multi-year delivery backlog of approximately $103,000,000. It is anticipated
that this backlog and any orders received by December 31, 1996 will be filled
with continuing production during fiscal years 1997-1999. The Company cannot
predict whether or not all of such backlog will be delivered inasmuch as
purchase orders are subject to changes and/or cancellation particularly since
the wireless communications industry is extremely characterized by rapid
technological change, new product development, product obsolescence and evolving
industry standards. In addition, as technology changes, corporations are
frequently requested to update and provide new prototypes in accordance with new
specifications if products become obsolete or inferior. 'See Risk Factors--Rapid
Technological Change and Intense Competition.'

CUSTOMERS, SALES & MARKETING

Customers. The Company markets its products worldwide generally to wireless
communications manufacturers (OEMs) and communications system operators. The
table below indicates net revenues derived from customers in the Company's
markets since 1994.

NET REVENUES BY MARKET CATEGORIES
(IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
--------------- ---------------
MARKETS 1994 1995 1995 1996
- ----------------------------------------------------------------------------- ------ ------ ------ ------

<S> <C> <C> <C> <C>
Cellular Analog.............................................................. $2,780 $ 308 $ 340 $ 74
Cellular Digital............................................................. 143 591 401 452
Wireless Telephony........................................................... 187 435 401 707
Satellite Communications, Custom and other Products.......................... 465 476 416 145
Digital PCS Products......................................................... -- -- -- 579
------ ------ ------ ------
Total................................................................... $3,575 $1,810 $1,558 $1,957
</TABLE>

Historically, the Company has derived a substantial percentage of its net
revenues from single customers during certain fiscal periods and until fiscal
1994 the Company derived substantially all of its net revenues from cellular
analog products. However, since 1995 the Company has focused primarily on
digital cellular and wireless telephony and therefore the sales in those areas
have substantially increased. The Company expects that for future sales the
Company will have substantial market share in the cellular digital, wireless
telephony and digital PCS products.

o Cellular Analog and Digital. Since 1989 the Company has been working closely
with AT&T Bell Labs to develop products for analog base stations primarily in
the AMPS Band. These products consist primarily of high linearity pre-amp
amplifiers and low noise amplifiers for the receive section of the base
station. In subsequent years the Company shipped thousands of the amplifiers
to its OEM customers. However, with the

<PAGE>

transition of digital technology the sales of the products decreased
substantially in 1995 and the Company concentrated its efforts in developing
MCLPAs. In February 1995 the Company received prototype orders for its
wireless MCLPAs. Sales to the analog and digital cellular industry have
decreased from 82% in 1994 to approximately 50% of total sales in 1995. For
the first nine months of 1996 sales in this area are approximately 27% of
total revenues.

o Wireless Telephony. As a result of the shift in the Company's research,
engineering and development and marketing efforts, sales to the wireless
telephone segments of the wireless communications industry have increased
from approximately 5% of total revenues for fiscal year end 1994 to 36% of
total revenue for the nine months ended September 30, 1996.

o Digital PCS. The Company has shipped prototype amplifiers to its OEM
customers as of April 1996 accounting for 30% of sales in the period ended
September 1996 and recently received purchase orders for its PCS products.
Management expects this sector of the market to show substantial growth
during fiscal 1997. The Company believes it is one of the pioneers for low
noise, and single channel high power MCLPAs for the worldwide OEM and system
operators.

o International Sales. Sales of wireless products outside the United States
(primarily to Western Europe and the Far East) represented approximately 8%,

30% and 72% of net sales during fiscal 1994, fiscal 1995 and the nine month
period ended September 30, 1996, respectively. The Company believes that
cellular, PCS and wireless telephony growth worldwide is going to far exceed
growth rate experienced in the U.S. The Company is positioning itself with
strategic alliances with key OEM's overseas to be a prime source of base
station, low noise and multi carrier power amplifiers.

o Sales and Marketing. The Company's executive officers are involved in all
aspects of the Company's relationships with its major OEM and system operator
customers. The Company employs a direct sales approach focused on providing
its wireless industry customers with unique solutions to satisfy their
transmit and receive amplification needs. Sales of the Company's products to
OEM and system operators requires close technical liaison with customer
engineers and purchasing managers. The Company has entered into technical
sales representative agreements for the territories of Maryland, Virginia,
Pennsylvania, Washington, D.C., Delaware, New Jersey, Korea, England and
parts of Western Europe. By having sales representatives in selected areas
the Company can better serve its key customers in these areas and continue to
have good relationships with them by providing technical support as well as
strong individual based customer service.

The Company intends to utilize a portion of the net proceeds of this
Offering ($410,000) for the purchase of test equipment which enables the Company
to adjust its products in order to meet customer specifications. See 'Use of
Proceeds.'

COMPETITION

The ability of the Company to compete successfully and sustain
profitability depends in part upon the rate of which OEM customers incorporate
the Company's products into their systems. The Company believes that a
substantial majority of the present worldwide production of power amplifiers is
captive within the manufacturing operations of a small number of wireless
telecommunications OEMs and offered for sale as part of their wireless
telecommunications systems. The Company's future success is dependent upon the
extent to which these OEMs elect to purchase from outside sources rather than
manufacture their own amplification products. There can be no assurance that OEM
customers will incorporate the Company's products into their systems or that in
general OEM customers will continue to rely, or expand their reliance, on
external sources of supply for their power amplification products. Since each
OEM product involves a separate proposal by the amplifier supplier, there can be
no assurance that the Company's current OEM customers will not rely upon
internal production capabilities or a non-captive competitor for future
amplifier product needs. The Company's OEM customers continuously evaluate
whether to manufacture their own amplification products or purchase them from
outside sources. These OEM customers are large manufacturers of wireless
telecommunications equipment who could elect to enter the non-captive market and
compete directly with the Company. Such increased competition could materially
adversely affect the Company's business, financial condition and results of
operations. See 'Risk Factors-- Rapid Technological Change and Intense
Competition.'

Certain of the Company's competitors have substantially greater technical,
financial, sales and marketing, distribution and other resources than the

Company and have greater name recognition and market acceptance of

<PAGE>

their products and technologies. In addition, certain of these competitors are
already established in the wireless amplification market, but the Company
believes it can compete with them effectively. No assurance can be given that
the Company's competitors will not develop new technologies or enhancements to
existing products or introduce new products that will offer superior price or
performance features. To the extent that OEMs increase their reliance on
external sources for their power amplification needs more competitors could be
attracted to the market.

The Company expects its competitors to offer new and existing products at
prices necessary to gain or retain market share. The Company expects to
experience significant price competition, which could have a materially adverse
effect on gross margins. Certain of the Company's competitors have substantial
financial resources which may enable them to withstand sustained price
competition or downturns in the power amplification market. Currently, the
Company competes primarily with non-captive suppliers of power amplification
products. The Company believes that its competition, and ultimately the success
of the Company, will be based primarily upon service, pricing, reputation and
the ability to meet the delivery schedules of its customers.

There is no present potential that the Company may acquire or merge with a
business or company in which the Company's mangement or their affiliates or
associates directly or indirectly have an ownership interest. If such potential
arises, transactions between the Company and such persons will be on terms no
less favorable to the Company than can be obtained from unaffiliated parties.
Any such transactions will be subject to the approval of a majority of the
disinterested members of the Board of Directors. Management is not aware of any
circumstances under which this policy may be changed.

MANUFACTURING

The Company assembles, tests, packages, and ships its products at its
manufacturing facilities located in Somerset, New Jersey. This facility includes
a separate assembly and test facility for various custom products.

Manufacturing Process. The Company's manufacturing process consists of
purchasing components, assembling and testing components and subassemblies,
integrating the subassemblies into a final product and testing the product. The
Company's amplifiers consist of a variety of subassemblies and components
designed or specified by the Company including housings, harnesses, cables,
packaged RF power transistors, integrated circuits and printed circuit boards.
Most of these components are manufactured by others and are shipped to the
Company for final assembly. Each of the Company's products receives extensive in
process and final quality inspections and tests.

The Company's devices, components and other electrical and mechanical
subcomponents are generally purchased from multiple suppliers. The Company does

not have any written agreement with any of its suppliers. The Company has
followed a general policy of multiple sourcing for most of its suppliers in
order to assure a continuous flow of such supplies. However, the Company does
purchase certain transistors produced by a single manufacturer because of the
high quality of its components. The Company believes it is unlikely that such
transistors would become unavailable, however, if that were to occur, there are
multiple manufacturers of generally comparable transistors. The Company would
require a period of time to 'return' its products to function properly with the
replacement transistors. The Company believes that the distributors of such
transistors maintain adequate inventory levels, which would mitigate any adverse
effect on the Company's production in the event unavailability or shortage of
such transistors. If for any reason the Company could not obtain comparable
replacement transistors or could not return its products to operate with the
replacement transistors, the Company's business, financial condition and results
of operations could be adversely affected.

The Company currently utilizes discrete circuit technology on printed
circuit boards which are designed by the Company and provided by suppliers to
the Company's specifications. All transistors and other semiconductor devices
are purchased in sealed packages ready for assembly and testing. Other
components such as resistors, capacitors, connectors or mechanical supported
subassemblies are also manufactured by others. Components are ordered from
suppliers under master purchase orders with deliveries timed to meet the
Company's production schedules. As a result, the Company maintains a low
inventory of components, which could result in delay in production in the event
of delays in such deliveries.

The Company is in the process of integrating automated equipment to place
surface mount components on printed circuit boards.

<PAGE>

Microwave Integrated Circuit Manufacturing Facility. The Company is
planning to install a facility to support assembly and testing of custom RF and
microwave amplifiers and other passive components for which miniaturization is
particularly important. Handling of all components, assembly and testing is
undertaken in environmentally controlled surroundings. The Company believes
that this approach may be used as a core technology for PCS products in the
future and the Company may use its capability and technology in
conceptualization and implementation of PCS amplifiers and related products.
However, the Company to date has not manufactured PCS products utilizing the
approach and no assurance can be made that the Company will be able to make
such products utilizing the approach. There currently are adequate and readily
available sources for all components used in the Company's custom products.

In connection with the Company's transition to an automated manufacturing
process, the Company intends to introduce computerized surface-mount machinery
and related process equipment to support automated assemblies. The Company
anticipates the transition to commence in the second quarter of 1997. See 'Risk
Factors--Need to Implement Automated Manufacturing Processes; Dependence on
Contract Manufacturers; Limited Number of Suppliers.'

The Company intends to utilize a portion of the net proceeds of this
Offering ($600,000) for the purchase of manufacturing equipment necessary to
manufacture the Company's products and mechanically assemble components of the
Company's products. See 'Use of Proceeds.'

RESEARCH, ENGINEERING AND DEVELOPMENT

The Company's research, engineering and development efforts are focused on
the design of amplifiers for new protocols, the improvement of existing product
performance, cost reductions and improvements in the manufacturability of
existing products.

The Company has historically devoted a significant portion of its resources
to research, engineering and development programs and expects to continue to
allocate significant resources to these efforts. The Company's research,
engineering and development expenses in fiscal 1994 and 1995 were approximately
$330,000 and $370,000, respectively, and represented approximately 9% and 21%,
respectively, of net revenues. The Company's research, engineering and
development expenses for the nine months ended September 30, 1996 were
approximately $701,000 representing 36% of net revenues. These efforts were
primarily dedicated to the development of the linear feed forward, high power,
low distortion amplifiers, resulting in the Company's models for AMPS, TACS,
NMT-450 and PCS-1900. The Company intends to utilize a portion of the net
proceeds of this Offering ($550,000) for research, engineering and development
to further develop the Company's products and to develop the Company's next
generation of products. See 'Use of Proceeds.'

The Company uses the latest equipment and computer aided design and
modeling, solid state device physics, advanced digital signal processing ('DSP')
and digital control systems, in the development of its products in the
specialized engineering and research departments.

The Company uses a CAD environment employing networked work stations to
model and test new circuits. This design environment, together with the
Company's experience in interference cancellation technology and modular product
architecture, allows the Company to rapidly define, develop and deliver new and
enhanced products and subsystems sought by its customers.

The markets in which the Company and OEM customers compete are
characterized by rapidly changing technology, evolving industry standards and
continuous improvements in products and services. See 'Risk Factors--Rapid
Technological Change and Intense Competition.'

PATENTS PENDING, PROPRIETARY TECHNOLOGY AND OTHER INTELLECTUAL PROPERTY

The Company's ability to compete successfully and achieve future revenue
growth will depend, in part, on its ability to protect its proprietary
technology and operate without infringing the rights of others. The Company has
a policy of seeking patents, when appropriate, on inventions resulting from its
ongoing research and development and manufacturing activities.

Presently, the Company has a patent application pending (No. 08/508,163)
(for which a notice of allowance has been issued by the United States Patent and
Trademark Office) with respect to its Pre-Distortion and Pre-Distortion

Linearization technology which, the Company believes, is more effective in
reducing distortion then other currently available technology. There can be no
assurance that the Company's pending patent application will be allowed or
issued or that issued or pending patents will not be challenged or circumvented
by competitors.

<PAGE>

Notwithstanding the Company's active pursuit of patent protection, the
Company believes that the success of its amplifier business depends more on its
specifications, CAE/CAD design and modeling tools, technical processes and
employee expertise than on patent protection. The Company generally enters into
confidentiality and non-disclosure agreements with its employees and limits
access to and distribution of its proprietary technology. The Company may in
the future be notified that it is infringing certain patent and/or other
intellectual property rights of others. Although there are no such pending
lawsuits against the Company or unresolved notices that the Company is
infringing intellectual property rights of others, there can be no assurance
that litigation or infringement claims will not occur in the future. See 'Risk
Factors--Proprietary Technology; Risk of Third Party Claims of Infringement.'

GOVERNMENTAL REGULATIONS

The Company's customers must obtain regulatory approval to operate their
base stations. The United States Federal Communications Commission ('FCC')
recently adopted new regulations that impose more stringent RF and microwave
emissions standards on the telecommunications industry. There can be no
assurance that the Company's customers will comply with such regulations which
could materially adversely affect the Company's business, financial condition
and results of operations. The Company manufactures its products according to
specifications provided by its customers, which specifications are given to
comply with applicable regulations. The Company does not believe that costs
involved with manufacturing to meet specifications will have a material impact
on its operations. There can be no assurances that the adoption of future
regulations would not have a material adverse affect on the Company's business.

EMPLOYEES

As of September 30, 1996, the Company had a total of 46 employees,
including 26 in operations, 14 in engineering, 2 in sales and marketing, 2 in
quality assurance and 2 in administration. The Company believes its future
performance will depend in large part on its ability to attract and retain
highly skilled employees. None of the Company's employees is represented by a
labor union and the Company has not experienced any work stoppages. The Company
considers its employee relations to be good.

FACILITIES

The Company leases (from an unaffiliated party) approximately 21,000 square
feet at 144 Belmont Drive, Somerset, New Jersey 08873 which serves as the
Company's executive offices and manufacturing facility. The lease term commenced

on May l, 1996 and expires on April 30, 1999. The annual rental is $168,000. The
Company has the option to extend the term of the lease for a three (3) year
period so long as it exercises the option for the entire building (36,405 square
feet) less space leased to third parties. Management believes that such lease
contains fair and reasonable terms.

The Company leases (from an unaffiliated party) approximately 6,000 square
feet at Building 7, Unit 9, Ilene Court, Belle Mead, New Jersey 08502 which
until April 1996 served as the Company's executive offices and now are utilized
as its mechanical operations. The lease term expires on October 31, 1997. The
annual rental increases to a maximum of $40,500. Total rental expenses for the
years ended December 31, 1994 and 1995 were $34,295 and $37,000, respectively.
Management believes that such lease contains fair and reasonable terms.

ENVIRONMENTAL REGULATIONS

LEGAL PROCEEDINGS

The Company is not a party to any material litigation or governmental
proceeding that management believes would result in judgments or fines that
would have a material adverse effect on the Company.

<PAGE>

MANAGEMENT

The following persons are the directors and the executive officers of the
Company. All Directors are elected annually by the stockholders to serve until
the next annual meeting of the stockholders and until their successors are duly
elected and qualified. Officers are elected annually by the Board of Directors
to serve at the pleasure of the Board.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------------ --- ------------------------------------------------
<S> <C> <C>
Devendar S. Bains*.............................. 45 Chairman of the Board, President, Chief
Executive Officer, Treasurer and Director
Tarlochan Bains*................................ 47 Vice President-Sales & Marketing and Director
Nirmal Bains.................................... 39 Secretary
Robert S. Benou*................................ 60 Director

William A. Suter................................ 45 RF Design Manager
Harris Freedman................................. 61 Vice President--Strategic Alliances
Sharon Will..................................... 36 Vice President--Corporate Communications and
Investor Relations
</TABLE>

- ------------------
* Member of the Compensation Committee and Audit Committee.

Devendar S. Bains has been Chairman of the Board, President, Chief
Executive Officer, Treasurer and a director of the Company since its inception
in 1988. From 1983 to 1988 Mr. Bains was Group Project Leader of Amplifier
division of Microwave Semiconductor Corporation. Previously, Mr. Bains was
employed at G.E.C. in Coventry, England. Mr. Bains received a Bachelor's Degree
in Electronic Engineering from Sheffield University, England, and a Masters
Degree from the University of Leeds and Sheffield, England. Mr. Bains is the
brother of Tarlochan Bains and the husband of Nirmal Bains.

Tarlochan Bains has been Vice President of Sales and Marketing since 1991.
Previously, Mr. Bains was Technical Manager at Land Rover in Solihull, England.
He has a Masters Degree in Mechanical Engineering from Hatfield Polytechnic,
England. Mr. Bains is the brother of Devendar S. Bains and the brother-in-law of
Nirmal Bains.

Nirmal Bains has been Secretary of the Company since 1989. She has a degree
in Computer Programming from Cittone Institute in New Jersey. Mrs. Bains is the
wife of Devendar S. Bains and the sister-in-law of Tarlochan Bains.

Robert S. Benou has been a Director of the Company since December 1995.
Since 1968 Mr. Benou has been the Chairman of the Board, President and Chief
Executive Officer of Conolog Corporation, a publicly traded company on Nasdaq.
Conolog is engaged in the design, manufacture and distribution of electronic and
electromagnetic components and subassemblies for use in telephones, radio and
microwave transmission and reception and communication. Mr. Benou is a graduate
of Victoria College and has a Bachelor of Science from Kingston College, England
and a Bachelor of Science in Electronic Engineering from Newark College of
Engineering.

William A. Suter is the RF Design Manager of the Company responsible for
the design and development of the Company's products. Previously he was Senior
Design Engineer for Amplifonix, Inc. from August 1993 to November 1995, Plessey
SA from November 1989 to June 1993, BH Electronics from February 1989 to October
1989, and Communication Techniques, Inc. from February 1986 to February 1987.
Mr. Suter has published various articles on amplification methods and technology
in several industry publications. Mr. Suter has a Bachelors of Science in
Electronic Engineering from the University of Cape Town, South Africa.

Harris Freedman has served as Vice President--Strategic Alliances of the
Company since July 1996. Since August 1994 he has been Vice President of
Hemispherx Biopharma, Inc., a publicly traded company listed on Nasdaq. He is
the Secretary of SMACS Holdings Corp. a private company which provides
strategic-alliance services to emerging technology companies in the private and
public markets. His business experience has encompassed developing significant
business contacts and acting as an officer of several companies in the

pharmaceutical, health care and entertainment fields. Mr. Freedman was Vice
President of U.S. Alcohol Testing

<PAGE>

of America, Inc., from August 1990 to February 1991. Additionally, he was Vice
President--East Coast Marketing for MusicSource U.S.A., Inc from October 1992 to
January 1994. Mr. Freedman attended New York University from 1951 to 1954.

Sharon Will has been Vice President--Corporate Communications and Investor
Relations of the Company since July 1996. Since November 1994 she has been Vice
President of Hemispherx Biopharma, Inc., a publicly traded company listed on
Nasdaq. She was a registered sales representative and Senior Vice President for
Institutional Sales at Westfield Financial Corporation from September 1994 to
October 1994. She was a registered sales representative with Marsh Block
Corporation from July 1994 to September 1994. From October 1993 to July 1994 she
served as a registered sale representative at Seaboard Securities Corp. From
October 1991 to present, Ms. Will has been President of Worldwide Marketing Inc.
a manufacturers' representative of various companies selling to the retail trade
markets. Ms. Will was the National Sales Manager of Innovo, Inc., a domestic
manufacturer of textiles, from October 1989 to November 1991. She attended
Baylor College as an undergraduate for two years with a primary focus on
chemistry.

The Company has established a compensation committee and an audit
committee. The compensation committee reviews executive salaries, administers
any bonus, incentive compensation and stock option plans of the Company,
including the Amplidyne, Inc. 1996 Incentive Stock Option and Stock Appreciation
Rights Plan, and approves the salaries and other benefits of the executive
officers of the Company. In addition, the compensation committee consults with
the Company's management regarding pension and other benefit plans, and
compensation policies and practices of the Company.

The audit committee reviews the professional services provided by the
Company's independent auditors, the independence of such auditors from
management of the Company, the annual financial statements of the Company and
the Company's system of internal accounting controls. The audit committee also
reviews such other matters with respect to the accounting, auditing and
financial reporting practices and procedures of the Company as it may find
appropriate or as may be brought to its attention.

EXECUTIVE COMPENSATION

The following table sets forth the aggregate compensation paid by the
Company for the years ended December 31, 1994, 1995 and 1996 to its Chief
Executive Officer. No other employee received compensation in excess of
$100,000. Each director of the Company is entitled to receive reasonable
out-of-pocket expenses incurred in attending meetings of the Board of Directors
of the Company but are not compensated for services provided in their capacities
as directors.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------- ------------ SECURITIES ----------------------
NAME OF INDIVIDUAL OTHER ANNUAL RESTRICTED UNDERLYING LTIP ALL OTHER
AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION STOCK AWARDS OPTIONS/SARS PAYOUTS COMPENSATION
- ----------------------------- ---- ------ ------- ------------ ------------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Devendar S. Bains, Chairman, 1996 80,000 -- 20,000(1) -- 1,000,000 -- --
Chief Executive Officer, 1995 85,000 -- 20,000(1) -- -- -- --
President and Treasurer...... 1994 85,000 200,000 10,000(1) -- -- -- --
</TABLE>

- ------------------
(1) Represents payment for health insurance and automobile lease payments on
behalf of such individual.

Set forth below is information relating to stock options granted to the
officers and directors in fiscal 1996.

OPTION/SAR GRANTS IN FISCAL 1996

<TABLE>
<CAPTION>
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTION/SARS
UNDERLYING GRANTED TO
OPTION/SARS EMPLOYEES IN EXERCISE
NAME GRANTED FISCAL 1996 PRICE ($/SH) EXPIRATION DATE
- ----------------------------------------------- ----------- ---------------- ------------ -----------------
<S> <C> <C> <C> <C>
Devendar S. Bains.............................. 1,000,000 77.10% $ 4.00 December 31, 2000
Nirmal Bains................................... 50,000 3.86% $ 4.00 December 31, 2000
Tarlochan Bains................................ 100,000 7.71% $ 4.00 December 31, 2000
</TABLE>

<PAGE>

AGGREGATED OPTION/SAR EXERCISES DURING FISCAL 1996
AND YEAR END OPTION/SAR VALUES

<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS/SARS
OPTIONS/SARS AT FY-END AT FY-END(1)
SHARES ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE

- ------------------------------- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Devendar S. Bains.............. -- -- -- 1,000,000 -- $ 1,000,000
Nirmal Bains................... -- -- -- 50,000 -- $ 50,000
Tarlochan Bains................ -- -- -- 100,000 -- $ 100,000
</TABLE>

- ------------------
(1) Represents the value of options assuming the initial public offering price
per Share set forth on the cover page of this Prospectus.

EMPLOYMENT AGREEMENTS

The Company has entered into five-year employment agreements commencing May
1, 1996 with each of Devendar Bains (Chairman, Chief Executive Officer,
President and Treasurer), Tarlochan Bains (Vice President--Sales & Marketing),
and Nirmal Bains (Secretary). The employment agreements provide for annual base
salaries of $162,000, $100,000 and $50,000 with respect to Devendar Bains,
Tarlochan Bains and Nirmal Bains, respectively. The employment agreements
provide for discretionary bonuses to be determined in the sole discretion of the
Board of Directors and contain covenants not to compete with the Company for a
two year period following termination of employment.

The Company has entered into a two-year agreement commencing December 1995
and ending December 1997 with Robert Benou. Mr. Benou is to provide the Company
with such services as requested by the Company. Under such agreement, Mr. Benou
will receive compensation of $30,000 per year for a minimum of two years.

In December 1995 the Company entered into three-year employment agreements
with each of Harris Freedman and Sharon Will, Vice President for Strategic
Alliances and Vice President for Corporate Communications and Investor
Relations, respectively. Under the terms of each agreement they are to be paid
$60,000 per annum through December 1998.

STOCK OPTION PLANS AND AGREEMENTS

Incentive Option Plan--In May 1996, the Directors of the Company adopted
and the stockholders of the Company approved the adoption of the Company's 1996
Incentive Stock Option Plan (' Incentive Option Plan'). The purpose of the
Incentive Option Plan is to enable the Company to encourage key employees and
Directors to contribute to the success of the Company by granting such employees
and Directors incentive stock options ('ISOs').

The Incentive Option Plan will be administered by the Board of Directors or
a committee appointed by the Board of Directors (the 'Committee') which will
determine, in its discretion, among other things, the recipients of grants,
whether a grant will consist of ISOs or a combination thereof, and the number of
shares to be subject to such options.

The Incentive Option Plan provides for the granting of ISOs to purchase
Common Stock at an exercise price to be determined by the Board of Directors or
the Committee not less than the fair market value of the Common Stock on the
date the option is granted.

The total number of shares with respect to which options may be granted
under the Incentive Option Plan is 1,500,000. ISOs may not be granted to an
individual to the extent that in the calendar year in which such ISOs first
become exercisable the shares subject to such ISOs have a fair market value on
the date of grant in excess of $100,000. No option may be granted under the
Incentive Option Plan after May 2006 and no option may be outstanding for more
than ten years after its grant. Additionally, no option can be granted for more
than five (5) years to a stockholder owning 10% or more of the Company's
outstanding Common Stock and such options must have an exercise price of not
less than 110% of the fair market value on the date of grant.

<PAGE>

Upon the exercise of an option, the holder must make payment of the full
exercise price. Such payment may be made in cash or in shares of Common Stock,
or in a combination of both. The Company may lend to the holder of an option
funds sufficient to pay the exercise price, subject to certain limitations.

The Incentive Option Plan may be terminated or amended at any time by the
Board of Directors, except that, without stockholder approval, the Incentive
Option Plan may not be amended to increase the number of shares subject to the
Incentive Option Plan, change the class of persons eligible to receive options
under the Incentive Option Plan or materially increase the benefits of
participants.

In May 1996, 1,267,000 options to purchase Common Stock under the Incentive
Option Plan were granted to 40 employees ('Employee Options'), including Dave
Bains (1,000,000 options), Tarlochan Bains (100,000 options) and Nirmal Bains
(50,000 options), the Company's Chief Executive Officer, Vice President-Sales
and Marketing and Secretary, respectively. See 'Principal Stockholders.' No
determinations have been made regarding the persons to whom options will be
granted in the future, the number of shares which will be subject to such
options or the exercise prices to be fixed with respect to any option. The
Employee Options are exercisable at $4.00 which will vest, as to 33.33%, one
year from the date of grant (May 1997) and, as to the remainder, ratably over
the following two-year period (33.33% in May 1998 and 33.33% in May 1999).

In addition, in May 1996, 30,000 options were granted to 1 employee ('Key
Employee Options') which are exercisable at $1.00 which will vest, as to 33.33%,
one year from the date of grant (May 1997) and, as to the remainder, ratably
over the following two-year period (33.33% in May 1998 and 33.33% in May 1999).

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding shares of
Common Stock beneficially owned as of the date of this Prospectus by (i) each
person, known by the Company to be the beneficial owner of five percent (5%) or
more of the outstanding shares of Common Stock, (ii) each of the Company's
directors and (iii) all of the Company's officers and directors as a group.

PERCENTAGE OWNERSHIP
NAME OF BENEFICIAL NUMBER OF SHARES(1) PRIOR TO THE PERCENTAGE OWNERSHIP
OWNER* OF COMMON STOCK OFFERING AFTER OFFERING(2)
- ------------------------------------------------ ------------------- -------------------- --------------------
<S> <C> <C> <C>
Devendar S. Bains(2)............................ 2,000,000 70.18 47.06
Tarlochan Bains(3).............................. -- -- --
Nirmal Bains(2)(4).............................. 2,000,000 70.18 47.06
Robert S. Benou................................. 50,000 1.75 1.18
Harris Freedman(5).............................. 151,667 5.21 3.57
Sharon Will(6).................................. 165,000 5.68 3.88
All Officers and Directors as a group
(6 persons)................................... 2,366,667 79.76 55.69
</TABLE>

- ------------------
* Unless otherwise indicated, the address of all persons listed in this
section is c/o Amplidyne, Inc., 144 Belmont Drive, Somerset, NJ 08873.

(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date of this Prospectus upon
the exercise of options. Each beneficial owner's percentage ownership is
determined by assuming those options that are held by such person and that
are exercisable within 60 days from the date of the Prospectus have been
exercised.

(2) Mr. Devendar Bains is the husband of Mrs. Nirmal Bains and the brother of
Mr. Tarlochan Bains. Mr. Devendar Bains is the record holder of such Shares.
Does not include 1,000,000 Employee Options. See 'Management--Stock Option
Plans and Agreements.'

(3) Does not include 100,000 Employee Options. See 'Management--Stock Option
Plans and Agreements.'

(4) Does not include 50,000 Employee Options. See 'Management--Stock Option
Plans and Agreements.'

(5) The address for such person is 1241 Gulf of Mexico Drive, Longboat Key,
Florida 34228. Mr. Freedman is the Vice President--Strategic Alliances of
the Company. Includes 90,000 shares of Common Stock and 61,667 warrants to
purchase Common Stock at $2.50 per share. Does not include an additional
123,333 of such warrants. See 'Management' and 'Description of Securities.'

(6) The address for such person is RRI Box 132, Millerton, New York 12546. Ms.
Will is the Vice President--Corporate Communications and Investor Relations
of the Company. Includes 110,000 shares of Common Stock and 55,000 warrants
to purchase Common Stock at $2.50 per share. Does not include an additional
110,000 of such warrants. See 'Management' and 'Description of Securities.'

<PAGE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

All of the sales of securities prior to the date hereof were made in
reliance upon Section 4(2) of the 1933 Act, which provides exemption for
transactions not involving a public offering.

Between January 1994 and April 1996, Devendar S. Bains, the Company's
President and Chief Executive Officer, loaned the Company an aggregate of
$350,000 without interest, payable on demand, all of which will be repaid at the
closing of this Offering. See 'Use of Proceeds.'

The Company intends to indemnify its officers and directors to the full
extent permitted by Delaware law. Under Delaware law, a corporation may
indemnify its agents for expenses and amounts paid in third party actions and,
upon court approval in derivative actions, if the agents acted in good faith and
with reasonable care. A majority vote of the Board of Directors, approval of the
stockholder or court approval is required to effectuate indemnification.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to officers, directors or persons
controlling the Company, the Company has been advised that, in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in such Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by an officer, director or
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such officer, director or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in such Act and will
be governed by the final adjudication of such issue.

Transactions between the Company and its officers, directors, employees and
affiliates will be on terms no less favorable to the Company than can be
obtained from unaffiliated parties. Any such transactions will be subject to the
approval of a majority of the disinterested members of the Board of Directors.

DESCRIPTION OF SECURITIES

GENERAL

The Company is authorized to issue up to 25,000,000 shares of Common Stock,
$.0001 par value per share, of which 2,850,000 Shares were issued and
outstanding as of the date of this Prospectus (which were held by 33 persons).
After giving effect to this Offering, 4,250,000 shares of Common Stock and
1,400,000 Warrants will be issued and outstanding. The Company's Certificate of
Incorporation authorizes 1,000,000 shares of 'blank check' Preferred Stock, none
of which are outstanding.

COMMON STOCK

Subject to the rights of holders of Preferred Stock, if any, holders of
shares of Common Stock of the Company are entitled to share equally on a per
share basis in such dividends as may be declared by the Board of Directors out
of funds legally available therefor. There are presently no plans to pay
dividends with respect to the shares of Common Stock. See 'Dividend Policy.'
Upon liquidation, dissolution or winding up of the Company, after payment of
creditors and the holders of any senior securities of the Company, including
Preferred Stock, if any, the assets of the Company will be divided pro rata on a
per share basis among the holders of the shares of Common Stock. The Common
Stock is not subject to any liability for further assessments. There are no
conversion or redemption privileges nor any sinking fund provisions with respect
to the Common Stock and the Common Stock is not subject to call. The holders of
Common Stock do not have any pre-emptive or other subscription rights.

<PAGE>

Holders of shares of Common Stock are entitled to cast one vote for each
share held at all stockholders' meetings including the Annual Meeting, for all
purposes, including the election of directors. The Common Stock does not have
cumulative voting rights.

All of the issued and outstanding shares of Common Stock are and the shares
of Common Stock offered hereby when issued against the consideration set forth
in this Prospectus, will be, fully paid, validly issued and non-assessable. The
Company has agreed with the Representative that it will not issue any shares of
Common Stock for a period of 18 months from the Effective Date without the
written consent of the Representative.

PREFERRED STOCK

None of the 1,000,000 'blank check' preferred shares are currently
outstanding. The Board of Directors of the Company have the authority, without
further action by the holders of the outstanding Common Stock, to issue shares
of Preferred Stock from time to time in one or more classes or series, to fix
the number of shares constituting any class or series and the stated value
thereof, if different from the par value, and to fix the terms of any such
series or class, including dividend rights, dividend rates, conversion or
exchange rights, voting rights, rights and terms of redemption (including
sinking fund provisions), the redemption price and the liquidation preference of
such class or series. The Company has agreed with the Representative that it
will not issue any shares of Preferred Stock for a period of 18 months from the
Effective Date without the written consent of the Representative.

WARRANTS

Each Warrant will entitle the registered holder to purchase one share of
the Company's Common Stock at an exercise price of $6.00 per share during the
four year period commencing one year from the date of this Prospectus. No
fractional shares of Common Stock will be issued in connection with the exercise

of Warrants. Upon exercise, the Company will pay the holder the value of any
such fractional shares in cash, based upon the market value of the Common Stock
at such time.

Unless extended by the Company at its discretion, the Warrants will expire
at 5:00 p.m., New York time, on the fifth anniversary of the date of this
Prospectus. In the event a holder of Warrants fails to exercise the Warrants
prior to their expiration, the Warrants will expire and the holder thereof will
have no further rights with respect to the Warrants.

The Company may redeem the Warrants at a price of $.01 per Warrant, at any
time once they become exercisable upon not less than 30 days prior to written
notice if the average closing price or bid price of the Common Stock as reported
by the principal exchange on which the Common Stock is traded, the Nasdaq
SmallCap Market or the National Quotation Bureau, Incorporated, as the case may
be, equals or exceeds $9.00 per Share for any twenty (20) consecutive trading
days ending within five (5) days prior to the date on which notice of redemption
is given.

No Warrants will be exercisable unless at the time of exercise there is a
current prospectus covering the shares of Common Stock issuable upon exercise of
such Warrants under an effective registration statement filed with the
Commission and such shares have been qualified for sale or are exempt from
qualification under the securities laws of the state or residence of the holder
of such Warrants. Although the Company intends to have all shares so qualified
for sale in those states where the Securities are being offered and to maintain
a current prospectus relating thereto until the expiration of the Warrants,
subject to the terms of the Warrant Agreement there can be no assurance that it
will be able to do so.

A holder of Warrants will not have any rights, privileges or liabilities as
a shareholder of the Company prior to exercise of the Warrants. The Company is
required to keep available a sufficient number of authorized shares of Common
Stock to permit exercise of the Warrants.

The exercise price of the Warrants and the number of shares issuable upon
exercise of the Warrants will be subject to adjustment to protect against
dilution in the event of stock dividends, stock splits, combinations,
subdivisions and reclassifications. No assurance can be given that the market
price of the Company's Common Stock will exceed the exercise price of the
Warrants at any time during the exercise period.

<PAGE>

In connection with this Offering, the Company will issue to Patterson
Travis, Inc. a Representative's Purchase Option to purchase 140,000 shares of
Common Stock ('Representative's Common Stock') and warrants to purchase an
additional 140,000 shares of Common Stock ('Representative's Warrants'). The
Representative's Common Stock and Representative's Warrant are being registered
under the Registration Statement to which this Prospectus is a part.

701 WARRANTS

In December 1995, the Company issued 701 Warrants to purchase 350,000
Shares at $2.50 per share pursuant to Rule 701 under the Act to Harris Freedman
and Sharon Will, the Company's Vice President for Strategic Alliances and Vice
President for Corporate Communications and Investor Relations, respectively, of
the Company. See 'Management' and 'Principal Stockholders.' The 701 Warrants
vest in one-third increments (commencing June 1996) over a three (3) year period
and are exercisable until June 30, 1999.

OPTIONS AND WARRANTS

Between January and February 1996 the Company sold an aggregate of 250,000
shares of Common Stock. None of such sales were made to officers, directors or
affiliates of the Company. The sales of these shares of Common Stock were in
connection with a $500,000 private financing in which the Company issued
promissory notes in the aggregate amount of $250,000, 250,000 shares of Common
Stock and 250,000 options to purchase Common Stock at $2.50 per share. The
promissory notes accrue interest at 8% per annum. The principal and accrued
interest are payable on the earlier of (i) March 15, 1997 or (ii) the closing of
this Offering. See 'Use of Proceeds.' The options are immediately exercisable
until December 31, 1998. The shares of Common Stock underlying the options are
being registered hereunder. See 'Selling Securityholders.'

In April 1996 the Company sold an aggregate of 300,000 shares of Common
Stock. None of such sales were made to officers, directors or affiliates of the
Company. The sales of these shares of Common Stock were in connection with a
$600,000 private financing in which the Company issued promissory notes in the
aggregate amount of $300,000, 300,000 shares of Common Stock and 300,000 options
to purchase Common Stock at $2.50 share. The promissory notes accrue interest at
8% per annum. The principal and accrued interest are payable on the earlier of
(i) March 15, 1997 or (ii) the closing of this Offering. See 'Use of Proceeds.'
The options are immediately exercisable until December 31, 1998. The shares of
Common Stock underlying the options are being registered hereunder. See 'Selling
Securityholders.'

In connection with a $189,000 bridge financing in December 1996 in which
the Company issued promissory notes in the aggregate of $189,000, the Company
issued, for no additional consideration, 189,000 Bridge II Warrants to purchase
Common Stock at $4.00 per share. None of such sales were made to officers,
directors or affiliates of the Company. The Bridge II Warrants are exercisable
for a three year period commencing one year from the date of this Prospectus.
The promissory notes accrue interest at 8% per annum. The principal and accrued
interest are payable on the earlier of (i) March 15, 1997 or (ii) the closing of
this Offering. See 'Use of Proceeds.'

In connection with a $100,000 bridge financing in December 1996 in which
the Company issued promissory notes in the aggregate of $100,000, the Company
issued, for no additional consideration, 100,000 Bridge III Warrants to purchase
Common Stock at $2.50 per share. None of such sales were made to officers,
directors or affiliates of the Company. The Bridge III Warrants are exercisable
for a three year period commencing one year from the date of this Prospectus.
The promissory notes accrue interest at 8% per annum. The principal and accrued
interest are payable on the earlier of (i) March 15, 1997 or (ii) the closing of
this Offering. See 'Use of Proceeds.'

<PAGE>

DELAWARE ANTI-TAKEOVER LAW PROVISIONS

As a Delaware corporation, the Company is subject to Section 203 of the
General Corporation Law. In general, Section 203 prevents an 'interested
stockholder' (defined generally as a person owing 15% or more of a Delaware
corporation's outstanding voting stock) from engaging in a 'business
combination' (as defined) with such Delaware corporation for three years
following the date such person became an interested stockholder unless (i)
before such person became an interested stockholder, the board of directors of
the corporation approved the transaction in which the interested stockholder
became an interested stockholder or approved the business combination, (ii) upon
consummation of the transaction that resulted in the interested stockholder's
becoming an interested stockholder, the interested stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding stock held by the directors who are also
officers of the corporation and by certain employee stock plans), or (iii)
following the transaction in which such person became an interested stockholder,
the business combination is approved by the board of directors of the
corporation and authorized at a meeting of stockholders by the affirmative vote
of the holders of two-thirds of the outstanding voting stock of the corporation
not owned by the interested stockholder. Under section 203, the restrictions
described above also do not apply to certain business combinations proposed by
an interested stockholder following the public announcement or notification of
one of certain extraordinary transactions involving the corporation and a person
who had not been an interested stockholder during the previous three years or
who became an interested stockholder with the approval of the corporation's
board of directors and if such business combination is approved by a majority of
the board members who were directors prior to any person's becoming an
interested stockholder. The provisions of Section 203 requiring a super-majority
vote to approve certain corporate transactions could have the effect of
discouraging, delaying or preventing hostile takeovers, including those that
might result in the payment of a premium over market price or changes in control
or management of the Company.

LIMITATION ON LIABILITY OF DIRECTORS

The Company's Certificate of Incorporation provides that a director of the
Company will not be personally liable to the Company or its stockholders for
monetary damages for breach of the fiduciary duty of care as a director,

including breaches which constitute gross negligence. By its terms and in
accordance with the Delaware General Corporation Law, however, this provision
does not eliminate or limit the liability of a director of the Company (i) for
breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve international
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, (relating to unlawful payments or dividends or
unlawful stock repurchases or redemptions), (iv) for any improper benefit or (v)
for breaches of a director's responsibilities under the Federal Securities laws.

TRANSFER AGENT & REGISTRAR

The transfer agent and registrar for the Company's securities is American
Stock Transfer and Trust Company, 40 Wall Street, New York, NY 10005.

SHARES ELIGIBLE FOR FUTURE SALE

Upon the consummation of this Offering, the Company will have 4,250,000
shares of Common Stock outstanding. Only those sold in this Offering (1,400,000
shares of Common Stock included in the Units) will be freely tradeable without
restriction or further registration under the Securities Act of 1933, as
amended, except for any shares purchased by an 'affiliate' of the Company (in
general, a person who has a control relationship with the Company) which will be
subject to the limitations of Rule 144 adopted under the Securities Act of 1933,
as amended. All of the remaining 2,850,000 shares are deemed to be 'restricted
securities', as that term is defined under Rule 144 promulgated under the
Securities Act of 1933, as amended, in that such shares were issued and sold by
the Company in private transactions not involving a public offering, all of
which are subject to lock-up restrictions described below. 2,000,000 of such
Shares may be sold pursuant to Rule 144 as defined below, commencing 90 days
after the date of this Prospectus, subject to an 18-month restriction against
transfer described below; 300,000 Shares may be sold pursuant to Rule 144
commencing December 1997 subject to an 18-month restriction against transfer;
and the remaining 550,000 Shares which were issued in the Bridge

<PAGE>

Financings may be sold pursuant to Rule 144 commencing January 1998, subject to
a 12-month restriction against transfer. The President of the Company (who owns
2,000,000 of the 2,850,000 outstanding Shares) and the directors and/or 5%
stockholders of the Company who own 250,000 of the 300,000 above-referenced
Shares have agreed not to sell, assign or transfer any securities of the Company
owned by them for a period of eighteen (18) months from the date of this
Prospectus without the prior consent of the Representative. The entity that owns
the remaining 50,000 of the above-referenced 300,000 Shares has agreed not to
sell, assign or transfer any of such Shares for a period of eighteen (18) months
from the date of this Prospectus, without the prior consent of the
Representative. The Selling Securityholders who own the above-referenced 550,000
Shares have agreed not to sell, assign or transfer any securities of the Company
owned by them for a period of twelve (12) months from the date of this

Prospectus, which period is not subject to earlier release.

All of the Company's outstanding options and warrants and the Shares
reserved for issuance upon exercise of such convertible securities are subject
to restrictions against transfer. See 'Risk Factors--Shares Eligible For Future
Sale May Adversely Affect The Market' and 'Effect of Outstanding Options and
Warrants.'

In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
the Company (or other persons whose shares are aggregated), who has owned
restricted shares of Common Stock beneficially for at least two years is
entitled to sell, within any three month period, a number of shares that does
not exceed the greater of one percent of the total number of outstanding shares
of the same class or the average weekly trading volume during the four calendar
weeks preceding the sale. A person who has not been an affiliate of the Company
for at least the three months immediately preceding the sale and who has
beneficially owned shares of Common Stock for at least three years is entitled
to sell such shares under Rule 144 without regard to any of the limitations
described above.

Prior to this Offering, there has been no market for the Common Stock and
no prediction can be made as to the effect, if any, that market sales of shares
of Common Stock or the availability of such shares for sale will have on the
market prices prevailing from time to time. Nevertheless, the possibility that
substantial amounts of Common Stock may be sold in the public market may
adversely affect prevailing market prices for the Common Stock and could impair
the Company's ability to raise capital through the sale of its equity
securities.

SELLING SECURITYHOLDERS

The registration statement of which this Prospectus forms a part also
covers the registration and sale of 550,000 shares of Common Stock underlying
550,000 options issued to certain stockholders (the 'Selling Securityholders')
in connection with the Company's Bridge Financings. See 'Certain Relationships
and Related Transactions' and 'Description of Securities.' The Company will not
receive any of the proceeds from the sale of the securities by the Selling
Securityholders. The securities held by the Selling Securityholders may not be
sold until twelve (12) months from the date of this Prospectus, which period is
not subject to earlier release. The resale of the securities of the Selling
Securityholders are subject to Prospectus delivery and other requirements of the
Securities Act of 1933, as amended (the 'Act'). Sales of such securities or the
potential of such sales at any time may have an adverse effect on the market
prices of the securities offered hereby. See 'Risk Factors--Effect of
Outstanding Options and Warrants.'

The securities offered may be sold from time to time directly by the
Selling Securityholders. Alternatively, the Selling Securityholders may from
time to time offer such securities through underwriters (including the
Representative) dealers or agents. The distribution of securities by the Selling
Securityholders may be effected in one or more transactions that may take place
on the over-the-counter market, including ordinary broker's transactions,
privately-negotiated transactions or through sales to one or more broker-dealers

for resale of such shares as principals, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at negotiated
prices. Usual and customary or specifically negotiated brokerage fees or
commissions may be paid by the Selling Securityholders in connection with such
sales of securities. The securities offered by the Selling Securityholders may
be sold by one or more of the following methods, without limitations: (a) a
block trade in which a broker or dealer so engaged will attempt to sell the
shares as agent but may position and resell a portion of the block as principal
to facilitate the transaction; (b) purchases by a broker or dealer as principal
and resale by such broker or dealer for its account pursuant to this Prospectus;
(c) ordinary brokerage transactions and transactions in which the broker
solicits purchasers, and (d) face-to-face transactions between sellers and

<PAGE>

purchasers without a broker-dealer. In effecting sales, brokers or dealers
engaged by the Selling Securityholders may arrange for other brokers or dealers
to participate. The Selling Securityholders and intermediaries through whom such
securities are sold may be deemed 'underwriters' within the meaning of the Act
with respect to the securities offered, and any profits realized or commissions
received may be deemed underwriting compensation.

At the time a particular offer of securities is made by or on behalf of a
Selling Securityholder, to the extent required, a Prospectus will be distributed
which will set forth the number of shares being offered and the terms of the
Offering, including the name or names of any underwriters, dealers or agents, if
any, the purchase price paid by any underwriter for sales purchased from the
Selling Securityholders and any discounts, commissions or concessions allowed or
reallowed or paid to dealers and the proposed selling price to the public.

Sales of securities by the Selling Securityholders or even the potential of
such sales would likely have an adverse effect on the market prices of the
securities offered hereby.

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement between
the Company and the Underwriters ('Underwriting Agreement') the Underwriters
have agreed to purchase from the Company and the Company has agreed to sell to
the Underwriters, 1,400,000 Units, consisting of 1,400,000 shares of Common
Stock and 1,400,000 Warrants (collectively the 'Securities') offered hereby on a
'firm commitment' basis, if any are purchased. The Underwriters have agreed to
purchase the number of Units set forth opposite their names in the table below:

<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF UNITS
- ------------------------------------------------------------------------------
<S> <C>

Patterson Travis, Inc......................................
---------------
Total...................................................... 1,400,000
---------------
---------------
</TABLE>

The Units offered hereby is being offered by the several Underwriters named
herein subject to prior sale, when, as and if delivered to and accepted by the
Underwriters and subject to certain other conditions. The Underwriters reserve
the right to withdraw, cancel or modify the offer and to reject any order in
whole or in part.

The Underwriters have advised the Company that they propose to offer the
Units to the public at the initial public offering price as set forth on the
cover page of this Prospectus and that they may allow to certain dealers who are
NASD members concessions not to exceed $ per Unit, of which not in excess of
$ per Unit may be reallowed to other dealers who are members of the NASD.
After the Offering, the public offering price, concession and reallowance may be
changed by the Representative.

The Company has granted an option to the Representative, exercisable during
the thirty (30) day period from the date of this Prospectus, to purchase up to a
maximum of 210,000 additional Units at the Offering price, less the underwriting
discount, to cover over-allotments, if any.

The Underwriting Agreement provides for reciprocal indemnification between
the Company and the Underwriters against certain liabilities in connection with
the Registration Statement, including liabilities arising under the Act. Insofar
as indemnification for liabilities arising under the Act may be provided to
officers, directors or persons controlling the Company, the Company has been
informed that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy and is therefore unenforceable.

The Company has agreed to pay to the Representative a non-accountable
expense allowance of three percent (3%) of the gross proceeds derived from the
sale of the Units offered hereby (less $43,000 for costs and expenses incurred
by another underwriter), including any Units purchased pursuant to the
Over-Allotment Option.

The Company has agreed to sell to the Representative, and to its designees,
for an aggregate purchase price of $140, an option (the 'Representative's
Purchase Option') to purchase up to an aggregate of 140,000 Shares and 140,000
Warrants. The Representative's Purchase Option shall be exercisable during a
four (4) year period

<PAGE>

commencing one (1) year from the Effective Date of this Prospectus. The
Representative's Purchase Option may not be assigned, transferred, sold or
hypothecated by the Representative until twelve (12) months after the Effective
Date of this Prospectus, except to officers of the Representative or to officers
and partners of the selling group members in this Offering. The Representative's
Purchase Option grant to the holders thereof certain piggyback and demand
registration rights. The Shares and Warrants included in the Representative's
Purchase Option are exercisable at one hundred fifty percent (150%) ($7.50 per
Share and $.15 per Warrant) of the value of each Share and Warrant included in
the Units. The Warrants underlying the Representative's Purchase Option are
exercisable at $9.00 per share. The exercise of the Representative's Purchase
Option and the number of Securities covered thereby are subject to adjustment in
certain events to prevent dilution.

The Company has engaged the Representative, on a non-exclusive basis, as
its agent for the solicitation of the exercise of the Warrants. Additionally,
other NASD members may be engaged by the Representative in its solicitation
efforts. To the extent not inconsistent with the guidelines of the NASD and the
rules and regulations of the Commission, the Company has agreed, subsequent to
one year from the date of this Prospectus, to pay the Representative for bona
fide services rendered a commission equal to 8% of the exercise price for each
Warrant exercised if the exercise was solicited by the Representative. In
addition to soliciting, either orally or in writing, the exercise of the
Warrants, such services may also include disseminating information, either
orally or in writing, to warrantholders about the Company or the market for the
Company's securities, and assisting in the processing of the exercise of
Warrants. No compensation will be paid to the Representative in connection with
the exercise of the Warrants if the market price of the underlying shares of
Common Stock is lower than the exercise price, the Warrants are held in a
discretionary account, the Warrants are exercised in an unsolicited transaction,
the warrantholder has not confirmed in writing that the Representative solicited
such exercise or the arrangement to pay the commission is not disclosed in the
prospectus provided to warrantholders at the time of exercise. In addition,
unless granted an exemption by the Commission from Rule 10b-6 under the Exchange
Act, while it is soliciting exercise of the Warrants, the Representative will be
prohibited from engaging in any market activities or solicited brokerage
activities with regard to the Company's securities unless the Representative has
waived its right to receive a fee for the exercise of the Warrants.

Prior to the date of this Prospectus, all of the officers, directors and
principal stockholders of the Company's Common Stock have agreed in writing not
to sell, assign or transfer any of their shares of the Company's securities
without the Representative's prior written consent for a period of eighteen (18)
months from the Effective Date. The remaining stockholders have agreed to a
twelve (12) month restriction which is not subject to earlier release.

The Representative may designate a non-director observer to attend meetings

of the Company's Board of Directors for a three (3) year period commencing on
the Effective Date.

The Representative has informed the Company that no sales will be made to
any account over which the Underwriters exercise discretionary authority.

The foregoing is a summary of certain provisions of the Underwriting
Agreement and Representative's Purchase Option which have been filed as exhibits
hereto.

DETERMINATION OF PUBLIC OFFERING PRICE

Prior to this Offering, there has been no public market for the Securities.
The initial public offering price for the Units has been determined by
negotiations between the Company and the Representative. Among the factors
considered in the negotiations were the market price of the Company's Common
Stock, an analysis of the areas of activity in which the Company is engaged, the
present state of the Company's business, the Company's financial condition, the
Company's prospects, an assessment of management, and the general condition of
the securities market at the time of this Offering. The public offering price of
the Units does not necessarily bear any relationship to assets, earnings, book
value or other criteria of value applicable to the Company.

The Company anticipates that the Common Stock and Warrants will be listed
for quotation on The Nasdaq Small Cap Market under the symbols 'AMPD' and
'AMPDW', respectively, but there can be no assurances that an active trading
market will develop, even if the securities are accepted for quotation. The
Representative intends to make a market in all of the publicly-traded securities
of the Company.

<PAGE>

EXPERTS

The financial statements of the Company appearing in this Prospectus and
Registration Statement at December 31, 1995 and December 31, 1994 and for the
years then ended have been audited by Grant Thornton LLP, Independent Certified
Public Accountants, as set forth in its report thereon appearing elsewhere
herein and in the Registration Statement, and is included in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.

LEGAL MATTERS

The validity of the Securities being offered hereby will be passed upon for
the Company by Bernstein & Wasserman, LLP, 950 Third Avenue, New York, NY 10022.
Bernstein & Wasserman, LLP, is the record owner of 50,000 shares of Common
Stock. Bernstein & Wasserman, LLP, has served, and continues to serve, as
counsel to the Representative in matters unrelated to this Offering. Legal
matters for the Representative will be passed upon by Gerald A. Kaufman, Esq.,
33 Walt Whitman Road, Suite 233, Huntington, NY 11746.

<PAGE>

GLOSSARY OF TERMS

<TABLE>
<S> <C>
AMPS: Advanced Mobile Phone Services. AMPS is the current cellular Air
Interface standard in the U.S., and pillar of analog cellular
network.

Analog transmission protocols: Transmission of information using analog modulation of signals.

CAD: Computer Aided Design.

CAE: Computer Aided Engineering.

CAGR: Compounded Annual Growth Rate.

Cavity Filters: Large metallic structures which filter out unwanted signals, but
allow the required signal to be transmitted.

CDMA: Code Division Multiple Access. A relatively new generation of Digital
Cellular Systems; offers more captivity than the AMPS System.

Communication Amplifiers: Amplifier used in telecommunication systems.

DCS-1800: Digital Communication Service at 1800 Mhz.

Digital Control Systems: Control system based on a microprocessor which uses digital signals
to achieve control.

Digital Signal Processing (DSP): A means of processing information in a digital format.

Distortion Cancellation: A means of canceling distortion by using pre-distortion, feed forward
or both.

Dual Feed Forward Loops: Consists of two feed forward loops to minimize distortion.

ETACS: Extended Total Access Communications Systems.

Feed Forward: A means of canceling distortion in an amplifier.

FHMA: Frequency Hopping Multiple Access. A transmission reducer in which
the frequency of transmission frequently changes.

GaAsFET: Galium Arsenide Field Effect Transistors.

Gigahertz (Ghz): Transmission frequency at the rate of 1,000,000,000 cycles per
second.

GSM: Global System for Mobile Communications.

High Power Linear Amplifier: Amplifiers used for single channel linear amplification.

IMD: Measure of Intermodulation Distortion below carrier level.

Interference Cancellation: A means of canceling interference in an amplifier by using pre-
distortion or feed forward or both.

Linear Class A Amplifiers: Classical design for minimal distortion.

Linear Class AB Amplifiers: Amplifiers designed for better efficiency; the linearity performance
is not as good as Class A.

Linearity: A measure of linear performance of an amplifier (ie., the more linear
an amplifier the better the quality of the signal amplified through
it).

Local Loop: Interconnection of phone lines (ie., such as an apartment complex to
a public switched network).
</TABLE>

<PAGE>

<TABLE>
<S> <C>
Low Noise Amplifier (LNA): An amplifier used in the receive section of a base station which
amplifies a weak, noisy signal with minimal additional noise.

Megahertz (Mhz): A unit of frequency equal to 1,000,000 cycles per second.

Mini Cell Amplifier: Small base station used in highly urbanized areas requiring
physically small amplifiers called 'Mini Cell Amplifiers.'

Multicarrier Linear Power Amplifier
(MCLPA): Amplifier that will transmit multiple signals with minimal
distortion.

NMT: Nordic Mobile Telephone. System widely used in Denmark, Finland,
Norway, & Sweden.

OEM: Original Equipment Manufacturer.

PCS: Personal Communications Systems.

PCS Band: Personal Communications Systems, which use transmit and receive
frequency bands as allocated by the FCC.

Pre-distortion: A means of reducing distortion in an amplifier.

Pre-distortion Feed Forward Amplifiers: Amplifiers used to minimize distortion by the use of pre-distortion
and feed forward.

Pre-distortion Linearization: A means of linearizing an amplifier by the use of pre-distortion.

PSTN: Public Switch Telephone Network.

RF: Radio Frequency.

Silicon Bipolar FET: Type of transistor based on silicon technology.

Single Channel Power Amplifier: Amplifier that amplifies one channel or one signal without creating
excessive distortion.

SMR: Specialized Mobile Radio, widely expected to be used by Cab Services.

TACS: Total Access Communications Systems, widely used in the United
Kingdom.

TDMA: Time Division Multiple Access. System which allows transmissions by
allocated time slots.

Terrestrial Radio Systems: Radio systems consisting of tower mounted antennas at distances in
excess of 10 miles, used to transmit radio signals.

Transceiver: Equipment that transmits and receives information simultaneously.

Transistor: A small electronic semiconductor device used extensively in the
electronic industry.

Ultra Linear Power Amplifiers: Amplifiers used to transmit multicarrier signals with minimal
distortion.

Wave Form: All signals transmitted by an amplifier can be analyzed by looking at
the shape of the waves and its output. This composite signal is
called a wave form.

Watt: A metric unit of power equal to the work done at the rate of one
joule per second or to the power produced by a current of one ampere
across a potential difference of one volt.
</TABLE>

<PAGE>

AMPLIDYNE, INC.
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
--------

<S> <C>
Report of Independent Certified Public Accountants................................................... F-2

Financial Statements:

Balance Sheets..................................................................................... F-3

Statements of Operations........................................................................... F-4

Statement of Stockholders' Equity.................................................................. F-5

Statements of Cash Flows........................................................................... F-6

Notes to Financial Statements...................................................................... F-7--
F-13
</TABLE>

F-1

<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
Amplidyne, Inc.

We have audited the accompanying balance sheets of Amplidyne, Inc. as of
December 31, 1995 and 1994, and the related statements of operations,
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Amplidyne, Inc., as of December
31, 1995 and 1994, and the results of its operations and its cash flows for the
years then ended, in conformity with generally accepted accounting principles.

GRANT THORNTON LLP

Parsippany, New Jersey
May 17, 1996

F-2

<PAGE>

AMPLIDYNE, INC.
BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ SEPTEMBER 30,
1994 1995 1996
--------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash................................................................ $ 3,337 $ 153,747 $ 113,583
Accounts receivable, net of allowance for doubtful accounts of
$61,065 in 1996 and $10,000 in 1995.............................. 408,835 165,702 376,022
Inventory........................................................... 285,366 281,078 465,756
Refundable income taxes............................................. 19,479 28,235 5,665
--------- ----------- -------------
Total current assets............................................. 717,017 628,762 961,026
Property And Equipment:
Machinery and equipment............................................. 99,697 132,067 389,244
Furniture and fixtures.............................................. 9,444 13,144 42,806
Autos and trucks.................................................... 19,923 19,923 19,923
Leasehold improvements.............................................. 16,070 21,220 25,383
--------- ----------- -------------
145,134 186,354 477,356
Less accumulated depreciation and amortization...................... 73,940 103,951 146,364
--------- ----------- -------------
71,194 82,403 330,992
Deferred Registration Costs........................................... -- -- 140,000
Other Assets.......................................................... 26,245 11,100 35,000
--------- ----------- -------------
$ 814,456 $ 722,265 $ 1,467,018
--------- ----------- -------------
--------- ----------- -------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Bank line of credit................................................. -- $ 230,000 $ 210,000
Notes payable....................................................... -- -- 925,000
Current maturities of lease obligations............................. $ 9,425 78,365 164,587
Accounts payable.................................................... 196,010 287,498 627,744
Accrued expenses.................................................... 150,928 184,429 152,874
Customer advances................................................... 35,980 155,932 --
Stockholders' loan.................................................. 120,716 270,716 350,000
--------- ----------- -------------
Total current liabilities........................................ 513,059 1,206,940 2,430,205
Long-term Liabilities:
Lease obligations................................................... 9,846 69,451 450,440
Stockholders' Equity:
Preferred stock--authorized, 1,000,000 shares of no stated value; no

shares issued and outstanding.................................... -- -- --
Common stock--authorized, 25,000,000 shares of $.0001 par value;
2,850,000 shares issued and outstanding at September 30, 1996 and
2,100,000 shares issued and outstanding at December 31, 1995 and
1994............................................................. 210 210 285
Additional paid-in capital.......................................... 4,790 1,184,790 4,433,556
Retained earnings (accumulated deficit)............................. 286,551 (1,739,126) (5,847,468)
--------- ----------- -------------
291,551 (554,126) (1,413,627)
--------- ----------- -------------
$ 814,456 $ 722,265 $ 1,467,018
--------- ----------- -------------
--------- ----------- -------------
</TABLE>

The accompanying notes are an integral part of these statements.

F-3

<PAGE>

AMPLIDYNE, INC.
STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
--------------------------- ---------------------------
1994 1995 1995 1996
---------- ----------- ---------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net sales.................................. $3,575,132 $ 1,810,222 $1,558,216 $ 1,957,694
Cost of goods sold......................... 2,712,960 1,756,365 1,332,145 1,889,436
---------- ----------- ---------- -----------
Gross profit.......................... 862,172 53,857 226,071 68,258

Operating expenses:
Selling, general and administrative...... 721,993 527,150 436,460 922,266
Research, engineering and development.... 333,306 372,334 121,975 701,209
---------- ----------- ---------- -----------
Operating loss........................ (193,127) (845,627) (332,364) (1,555,217)

Other nonoperating expense:
Stock compensation and financing costs... -- 1,180,000 -- 2,553,125
---------- ----------- ---------- -----------
Loss before income taxes.............. (193,127) (2,025,627) (332,364) (4,108,342)
Provision for income taxes (benefit)..... (15,260) 50 -- --
---------- ----------- ---------- -----------
Net Loss................................. $ (177,867) $(2,025,677) $ (332,364) $(4,108,342)
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
Net loss per share....................... $ (.05) $ (.61) $ (.10) $ (1.23)
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
Weighted average number of shares
outstanding........................... 3,345,612 3,345,612 3,345,612 3,345,612
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
</TABLE>

The accompanying notes are an integral part of these statements.

F-4

<PAGE>

AMPLIDYNE, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1994 AND 1995

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL RETAINED
---------------------- PAID-IN EARNINGS
SHARES PAR VALUE CAPITAL (DEFICIT) TOTAL
--------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1993................. 2,100,000 $ 210 $ 4,790 $ 464,418 $ 469,418
Net loss for 1994.......................... -- -- -- (177,867) (177,867)
--------- --------- ---------- ----------- -----------

Balance at December 31, 1994................. 2,100,000 210 4,790 286,551 291,551
Net loss for 1995.......................... -- -- -- (2,025,677) (2,025,677)
Assignment of common stock................. -- -- 400,000 -- 400,000
Stock-related compensation expense......... -- -- 780,000 -- 780,000
--------- --------- ---------- ----------- -----------

Balance at December 31, 1995................. 2,100,000 210 1,184,790 (1,739,126) (554,126)
Net loss for the period (unaudited)........ -- -- -- (4,108,342) (4,108,342)
Private placement.......................... 550,000 55 549,945 -- 550,000
Financing expense.......................... -- -- 2,553,125 -- 2,553,125
Contributed capital........................ -- -- 125,716 -- 125,716
Exercise of options........................ 200,000 20 19,980 -- 20,000
--------- --------- ---------- ----------- -----------

Balance at September 30, 1996 (unaudited).... 2,850,000 $ 285 $4,433,556 $(5,847,468) $(1,413,627)
--------- --------- ---------- ----------- -----------
--------- --------- ---------- ----------- -----------
</TABLE>

The accompanying notes are an integral part of this statement.

F-5

<PAGE>

AMPLIDYNE, INC.
STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------ --------------------------
1994 1995 1995 1996
--------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net loss................................................ $(177,867) $(2,025,677) $ (332,364) $(4,108,342)
--------- ----------- ----------- -----------
Adjustments to reconcile net loss to net cash (used
in) provided by operating activities Depreciation
and amortization................................... 22,676 30,011 21,255 42,413
Bad debt expense................................... 10,000 51,065
Stock compensation expense......................... 1,180,000 2,553,125
Changes in assets and liabilities
Accounts receivable................................ (14,247) 243,133 215,484 (261,385)
Inventories........................................ 45,914 4,288 (17,456) (184,678)
Prepaid expenses and other assets.................. (18,633) 6,389 26,245 (141,330)
Accounts payable and accrued expenses.............. 97,674 124,989 102,866 308,691
Income taxes payable............................... (8,259) (8,705)
Customer advances.................................. 35,980 119,952 (35,980) (155,932)
--------- ----------- ----------- -----------
Total adjustments.................................... 161,105 1,708,762 313,709 2,211,969
--------- ----------- ----------- -----------
Net cash (used in) provided by operating activities....... (16,762) (316,915) (18,655) (1,896,373)
--------- ----------- ----------- -----------
Cash flows from investing activities
Purchase of fixed assets................................ (40,443) (41,220) (24,160) (92,892)
--------- ----------- ----------- -----------
Cash flows from financing activities
Proceeds from (repayment of) bank line of credit........ -- 230,000 115,000 (20,000)
Proceeds from notes payable............................. 925,000
Lease obligations....................................... 19,271 128,545 (6,140) 269,101
Proceeds from (repayment to) stockholder................ (14,700) 150,000 205,000
Stock issuance.......................................... -- -- -- 570,000
--------- ----------- ----------- -----------
Net cash provided by (used in) financing activities....... 4,571 508,545 108,860 1,949,101
--------- ----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents...... (52,634) 150,410 66,045 (40,164)
Cash and cash equivalents at beginning of year............ 55,971 3,337 3,337 153,747
--------- ----------- ----------- -----------
Cash and cash equivalents at end of year.................. $ 3,337 $ 153,747 $ 69,382 $ 113,583
--------- ----------- ----------- -----------
--------- ----------- ----------- -----------
Supplemental disclosures of cash flow information:
Cash paid during the year for

Interest............................................. $ 229 $ 11,426 $ 2,214 $ 29,748
Income taxes......................................... 14,479 9,496 9,496 --
</TABLE>

The accompanying notes are an integral part of these statements.

F-6

<PAGE>

AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1994 AND 1995
(AMOUNTS AND INFORMATION APPLICABLE TO SEPTEMBER 30, 1995 AND 1996 ARE
UNAUDITED)

NOTE A--REORGANIZATION AND NATURE OF BUSINESS

Amplidyne, Inc. (the 'Company') was originally incorporated on October 24,
1988 as a New Jersey corporation. Its principal line of business is the custom
manufacturing of amplifiers for wireless communication products. Many of its
customers are large, international telecommunications original equipment
manufacturers ('OEM') for which products are manufactured to their
specifications.

On December 14, 1995, Amplidyne, Inc. was incorporated as a Delaware
corporation and authorized to issue 25,000,000 shares of common stock with a par
value of $.0001, and 1,000,000 shares of preferred stock with no stated value.

On December 22, 1995, Amplidyne, Inc. (the predecessor company) was merged
into Amplidyne, Inc., the Delaware corporation. Each share of the predecessor
company, 100 shares outstanding, was exchanged for 21,000 shares of the new
entity. As a result, the sole shareholder of the predecessor owned 2,100,000
shares of the new entity after the merger.

On December 22, 1995, the Company's principal shareholder entered into
stock assignment agreements with an individual and a law firm, which assigned
without cost 50,000 shares each for services previously rendered to the Company.
For financial reporting purposes, the difference between the cost to the
assignees (zero) and $4.00 (the estimated fair market value per share), which
aggregates $400,000, is considered to be a contribution to capital by the
principal stockholder and consulting expense charged to operations in 1995.

In December 1995, the Company entered into employment agreements with its
Vice-President of Corporate Communications and Investor Relations and its
Vice-President of Strategic Alliances. Under the terms of each agreement, the
officers will be paid $60,000 per year (paid monthly) each for thirty-six months
beginning in January 1996. The aggregate compensation will be charged ratably to
operations beginning in January 1996. In addition, the officers were given the
opportunity to purchase an aggregate of 200,000 shares at $.10 per share upon
execution of the agreements and purchased such shares in April 1996. For
financial reporting purposes, the difference between the $.10 per share and
$4.00 (the estimated fair market value per share) is considered to be
compensation ($780,000), which was charged to operations in December 1995 with a
corresponding amount credited to paid-in capital.

Also in December 31, 1995, the Company granted warrants to the officers
whereby they have the option to purchase up to 350,000 shares of stock at $2.50
per share. The warrants are exercisable one-third after June 30, 1996,
two-thirds after June 30, 1997 and 100% on June 30, 1998. For financial
reporting purposes, the difference between the $2.50 per share and $4 (the

estimated fair market value per share) aggregates $525,000 and will be charged
to operations ratably over the period from July 1, 1996 to June 30, 1998. The
corresponding credit will be to paid-in capital.

NOTE B--SUMMARY OF ACCOUNTING POLICIES

A summary of the significant accounting policies consistently applied in
the preparation of the accompanying financial statements follows.

F-7

<PAGE>

AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1994 AND 1995
(AMOUNTS AND INFORMATION APPLICABLE TO SEPTEMBER 30, 1995 AND 1996 ARE
UNAUDITED)

1. REVENUE RECOGNITION

Revenue is recognized upon shipment of products to customers.

2. INVENTORIES

Inventories are stated at the lower of cost or market; cost is determined
using the first-in, first-out method.

3. PROPERTY, PLANT AND EQUIPMENT

Depreciation and amortization are provided for in amounts sufficient to
relate the cost of depreciable assets to operations over their estimated service
lives which range from three to seven years. Leasehold improvements are
amortized over the lives of the respective leases or the service lives of the
improvements, whichever is shorter. The straight-line method of depreciation is
followed for substantially all assets for financial reporting purposes, but
accelerated methods are used for tax purposes.

4. INCOME TAXES

The Company accounts for income taxes under SFAS No. 109. This statement
requires, among other things, an asset and liability approach for financial
accounting and reporting for deferred income taxes. In addition, the deferred
tax liabilities and assets are required to be adjusted for the effect of any
future changes in the tax laws or rates. Deferred income taxes arise from
temporary differences resulting in the basis of assets and liabilities for
financial reporting and income tax purposes.

5. CONCENTRATIONS OF CREDIT RISK AND ECONOMIC DEPENDENCY

Statement of Financial Accounting Standards No. 105 ('SFAS No. 105')
requires the disclosure of significant concentrations of credit risk, regardless
of the degree of such risk. Financial instruments, as defined by SFAS No. 105,

which potentially subject the Company to concentrations of credit risk, consist
principally of cash and accounts receivable.

The Company's customers are generally large, international, original
equipment manufacturers (OEMs). A relatively few customers account for a
substantial portion of the Company's revenues and accounts receivable.

During 1994, one customer accounted for approximately 66% of net sales,
whereas in 1995 four customers accounted for 61% of net sales (18%, 17%, 15% and
11%). Export sales in 1995 accounted for approximately 30% of net sales and were
primarily to the United Kingdom and Spain. In 1994, export sales were less than
10%. For the nine months ended September 30, 1996, three customers accounted for
70% of net sales (36%, 21% and 13%). Export sales for the same period were 72%.

In addition, the Company is dependent on a limited number of suppliers for
key components used in the Company's products (primarily power transistors). If
the Company is unable to obtain sufficient quantities of these components, it
could have a materially adverse effect on the Company's business, financial
condition, results of operations and ability to fulfill customer orders.

6. ACCOUNTING ESTIMATES

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

F-8

<PAGE>

AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1994 AND 1995
(AMOUNTS AND INFORMATION APPLICABLE TO SEPTEMBER 30, 1995 AND 1996 ARE
UNAUDITED)

7. ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED

SFAS No. 121, 'Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of,' is required to be implemented in 1996.
SFAS No. 121 requires that long-lived assets and certain identifiable
intangibles held and used by the entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. If the sum of the expected future cash flows
(undiscounted and without interest) is less than the carrying amount of the
asset, an impairment loss is recognized. Measurement of that loss would be based
on the fair value of the asset. The Company believes that implementation of this
statement will not have any material effect on its financial position.

SFAS No. 123, 'Accounting for Stock-Based Compensation,' is also required

to be implemented in 1996 and introduces a choice of the method of accounting
used for stock-based compensation. Entities may use the 'intrinsic value' method
currently based on APB No. 25 or the new 'fair value' method contained in SFAS
No. 123. The Company has selected the intrinsic value method.

8. UNAUDITED INTERIM FINANCIAL DATA

The accompanying unaudited financial statements as of September 30, 1996
and 1995 have been prepared in accordance with generally accepted accounting
principles for interim financial information. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. The results for interim periods are not
necessarily indicative of results to be expected for the year.

9. DEFERRED REGISTRATION COSTS

Deferred registration costs represent certain direct fees incurred in
connection with this public offering. Such amounts will be accounted for as a
reduction of proceeds. In the event the offering is not completed, these amounts
will be charged to operations.

NOTE C--PUBLIC OFFERING AND RESERVED SHARES

The Company intends to sell 1,400,000 shares of common stock at a proposed
public offering price of $5.00 per share and 1,400,000 warrants at a proposed
public offering price of $.10 per warrant. The final offering price will be set
immediately prior to the signing of an Underwriter Agreement with Patterson
Travis, Inc. Patterson Travis will have the option to purchase up to 180,000
additional shares to cover overallotments.

In addition, the Company intends to issue to the Underwriter warrants to
purchase an aggregate 10% of the amount of common stock and warrants offered to
the public, exclusive of exercise of any portion of the overallotment option
(the 'Underwriter's Warrants'). The Underwriter's Warrants entitle the holder
thereof to purchase one share and one warrant at prices per share and per
warrant equal to 120% of the public offering prices of the common stock and
warrants and shall be exercisable for a period of four years commencing one year
after the effective date of the contemplated registration statement.

The Company also issued 250,000 options and 300,000 options in March and
April 1996, respectively, to noteholders (Note D) whereby each option entitles
the holder to purchase one share of common stock at $2.50, exercisable until
December 31, 1998.

During September 1996 and December 1996, the Company raised additional
funds in the aggregate amount of $664,000 by issuance of 8% per annum promissory
notes. Such notes are payable upon the earlier of March 15, 1997 or the closing
of the Company's initial public offering. In addition, warrants were granted for
the purchase of 287,500 and 189,000 shares of common stock at $2.50 and $4.00,
respectively, per share. The proceeds were used for working capital needs.

F-9

<PAGE>

AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1994 AND 1995
(AMOUNTS AND INFORMATION APPLICABLE TO SEPTEMBER 30, 1995 AND 1996 ARE
UNAUDITED)

NOTE C--PUBLIC OFFERING AND RESERVED SHARES--(CONTINUED)

An incentive option plan and stock appreciation rights ('SARs') were
authorized prior to the public offering whereby options could be granted to
purchase no more than 1,500,000 shares of common stock at exercise prices no
less than fair market value as of date of grant. In May 1996, 267,000 options
were granted to approximately forty employees of the Company. The options are
exercisable at $4.00 per share (estimated fair market value). In June 1996,
1,000,000 options were granted to the principal shareholder. The options are
exercisable at $4.00 per share (estimated fair market value).

In May 1996, 30,000 options were granted to a key employee of the Company.
The options are exercisable at $1 per share and vest ratably over a three-year
period. Approximately $90,000 of compensation expense will be charged to
operations over the three-year period of vesting.

Also, in December 1995, the Company granted to two officers options to
purchase an aggregate 200,000 shares at $.10 per share (Note A). The options
were exercised in full in April 1996. The Company also granted warrants to these
officers in December 1995 to purchase 350,000 shares at $2.50 per share,
exercisable over a two-year period from July 1, 1996 to June 30, 1998.

The following table summarizes shares of common stock reserved for issuance
(assuming the overallotment option is not exercised):

<TABLE>
<CAPTION>
NUMBER
OF SHARES
RESERVED FOR ISSUABLE
- ----------------------------------------------------------- -----------
<S> <C>
Underwriters' warrants..................................... 280,000
Options to noteholders (March)............................. 250,000
Options to noteholders (April)............................. 300,000
Shares reserved for stock option and SARs plan............. 1,500,000
Warrants to officers....................................... 350,000
Options to employees (May)................................. 30,000
Warrants to noteholders (September and December)........... 476,500
-----------
3,186,500
-----------
-----------
</TABLE>

NOTE D--PRIVATE PLACEMENT

In March 1996, the Company issued, in a private placement, ten units at
$50,000 per unit, resulting in proceeds of $480,000, which is net of expenses of
$20,000. Each unit consists of 25,000 shares of common stock, par value $.0001
per share, 25,000 options each to purchase one share of common stock at a price
equal to $2.50 per share, exercisable until December 31, 1998, and an 8%
promissory note in the principal amount of $25,000 due on the earlier of (i)
March 15, 1997 or (ii) the closing of the Company's initial public offering.

In April 1996, the Company issued an additional twelve units at $50,000 per
unit, resulting in proceeds of $600,000. Each unit consists of 25,000 shares of
common stock at $1 per share, par value of $.0001 per share, 25,000 options each
to purchase one share of common stock at a price equal to $2.50 per share,
exercisable until December 31, 1998, and an 8% promissory note in the principal
amount of $25,000 due on the earlier of: (i) March 15, 1997 or (ii) the closing
of the Company's initial public offering.

The difference between the $1.00 per share purchase price and the fair
market value price of $4.00 per share ($3.00 per share) aggregating $1,650,000
for the March and April private placements has been charged to operations over
the expected term of the debt (to September 30, 1996) with a corresponding
credit to paid-in capital.

F-10

<PAGE>

AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1994 AND 1995
(AMOUNTS AND INFORMATION APPLICABLE TO SEPTEMBER 30, 1995 AND 1996 ARE
UNAUDITED)

NOTE D--PRIVATE PLACEMENT--(CONTINUED)

The difference between the option price of $2.50 per share and the fair
market value price of $4.00 per share ($1.50 per share) aggregates $825,000 for
the March and April private placements and has been charged to operations over
the expected term of the debt (to September 30, 1996) with a corresponding
credit to paid-in capital.

The total financing cost resulting from the above stock transaction is
$2,475,000 ($1,125,000 relating to March and $1,350,000 relating to April),
which has been charged in the first quarter, ($281,250) second and third
quarters ($1,096,875 each in the second and third quarters) of 1996.

NOTE E--INCOME TAXES

The Company filed its Federal income tax and New Jersey corporation
business tax returns on the basis of a September 30 year-end. The Company
intends to change its tax year and to conform to its financial reporting
year-end.

The provision (benefit) for income taxes consists of:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1994 1995
----------- --------------
<S> <C> <C>
Federal........................................................ $ (19,403)
State.......................................................... 4,143 $ 50
----------- --------------
$ (15,260) $ 50
----------- --------------
----------- --------------
</TABLE>

The 1994 Federal benefit results from carryback of net operating losses to
prior tax years. New Jersey tax law does not allow a carryback of net operating
losses. The 1994 New Jersey tax expense relates to tax on income reported in tax
year-end September 30, 1994.

The principal components of the Company's Federal and state deferred tax
assets relate to net operating loss carryovers. At December 31, 1995, the
Company's Federal net operating loss carryovers is approximately $814,000, the
New Jersey net operating loss carryover is approximately $984,000.

Because of uncertainty in the Company's ability to utilize the net
operating loss carryovers, a full valuation allowance has been provided.
Approximately $400,000 of such net operating losses arise from deductions
relating to stock and options. If and to the extent tax benefits relating to
stock and options are realized, such benefits will be credited to operations to
the extent of amounts previously charged to operations.

Internal Revenue Code Section 382 places a limitation on the utilization of
Federal net operating loss and other credit carryforwards when an ownership
change, as defined by the tax law, occurs. Generally, this occurs when a greater
than 50 percentage point change in ownership occurs. Accordingly, the actual
utilization of the net operating loss carryforwards and other deferred tax
assets for tax purposes may be limited annually under Code Section 382 to a
percentage (about 6%) of the fair market value of the Company at the time of any
such ownership change.

The Company's tax provision (benefit) differs from the expected statutory
rate principally due to the impact of state income and minimum taxes, increases
in valuation allowance and impact of surtax exemptions.

NOTE F--LEASE OBLIGATIONS

The Company has capital leases for certain equipment for use in its
research and development activities. Since the equipment is deemed to have no
alternative future use or economic value, the discounted present value

F-11

<PAGE>

AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1994 AND 1995
(AMOUNTS AND INFORMATION APPLICABLE TO SEPTEMBER 30, 1995 AND 1996 ARE
UNAUDITED)

NOTE F--LEASE OBLIGATIONS--(CONTINUED)

of such leases has been expensed to research, engineering and development at
lease inception. The total amount expensed relating to research and development
was $143,000 and $20,000 for the years ended December 31, 1995 and 1994,
respectively, and $327,000 for the nine months ended September 30, 1996. At
September 30, 1996, $188,212 of lease obligations related to other office
equipment not related to research, engineering and development activities.

Future minimum lease payments on these leases are as follows:

<TABLE>
<CAPTION>
DECEMBER
31, SEPTEMBER 30,
1995 1996
-------- --------------
(UNAUDITED)
<S> <C> <C>
1996.............................................................. $ 90,360 $200,553
1997.............................................................. 73,169 285,412
1998.............................................................. -- 147,887
1999.............................................................. -- 64,012
2000.............................................................. -- 6,781
Thereafter........................................................ -- 525
-------- --------------
163,529 705,170
Less amount representing interest................................. (15,713) (90,143)
-------- --------------
Present value of minimum lease payments........................... $147,816 $615,027
-------- --------------
-------- --------------
</TABLE>

NOTE G--COMMITMENTS AND CONTINGENCIES

1. OPERATING LEASES

The Company leases office and manufacturing space and various equipment
under operating leases expiring through 2000.

The following is a schedule, by calendar year, of future minimum lease
payments under operating leases having remaining terms in excess of one year as
of December 31, 1995:

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
- --------------------------------------------------------------
<S> <C>
1996.......................................................... $179,888
1997.......................................................... 216,138
1998.......................................................... 177,592
1999.......................................................... 42,000
--------
$615,618
--------
--------
</TABLE>

Total expenses for all operating leases was $168,000 and $129,000 for the
years ended December 31, 1994 and 1995, respectively, and $168,000 for the nine
months ended September 30, 1996.

During March 1996, the Company entered into a lease agreement for
approximately 21,000 square feet of additional office and manufacturing space.
The lease term commenced May 1, 1996 and is for a three-year period ending April
30, 1999. The annual rental is $168,000 plus the Company's share of real estate
taxes, utilities and other occupancy costs. The Company has the option to renew
the lease for another three-year term so long as it exercises its option to
lease the entire building (36,405 square feet).

F-12

<PAGE>

AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1994 AND 1995
(AMOUNTS AND INFORMATION APPLICABLE TO SEPTEMBER 30, 1995 AND 1996 ARE
UNAUDITED)

The Company is still obligated, until October 31, 1997, under its lease for
its previous 6,000 square-foot office location. This location may be utilized by
the Company as its mechanical workshop or it may be sublet. The total remaining
commitment is approximately $73,000, which includes estimated real estate and
other occupancy cost.

2. BANK LINE OF CREDIT

During May 1995, the Company obtained a bank line of credit of $250,000 to
meet short-term liquidity requirements. The line expired January 31, 1996 but
was extended to July 31, 1996. At December 31, 1995, $230,000 was outstanding.
Interest is payable at 1% above prime (9.5% at December 31, 1995) and the loan
is collateralized by accounts receivable, inventory and equipment.

3. EMPLOYMENT AGREEMENTS

Commencing May 1, 1996, the Company entered into three five-year employment
agreements with its Chairman, its Vice President of Sales and Marketing and its
Secretary. The agreements call for aggregate annual base salaries of $312,000,
plus certain employee benefits.

NOTE H--LOSS PER SHARE

All shares, warrants and options issued or granted within the past twelve
months at prices lower than the initial public offering price ($5 per share) are
considered, for purposes of calculating loss per share, to be outstanding for
all periods presented. Accordingly, loss per share amounts are based upon the
weighted average number of shares outstanding (2,850,000 shares) for each period
presented plus the effect of below market warrants and options calculated based
on the treasury stock approach (495,612 shares for each period presented). The
total shares outstanding for purposes of loss per share calculations is
3,345,612.

NOTE I--STOCKHOLDER LOAN

During 1994, 1995 and 1996, the Company's president and principal
shareholder advanced funds to the Company for operating needs. Amounts so
advanced were without interest and are expected to be repaid in full from the
proceeds of the contemplated initial public offering.

Effective March 31, 1996, $125,716 of stockholder loans was forgiven and
contributed to capital.

NOTE J--SUPPLEMENTAL CASH FLOW DISCLOSURES

The Company acquired equipment under capital lease obligations totalling
$198,110 during the nine months ended September 30, 1996.

F-13

<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES
OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY PERSON IN ANY
JURISDICTION IN WHICH SUCH AN OFFER WOULD BE UNLAWFUL.

------------------------

TABLE OF CONTENTS

PAGE
----
Available Information.......................... 2
Prospectus Summary............................. 3
The Company.................................... 3
The Offering................................... 5
Summary Financial Information.................. 6
Risk Factors................................... 7
Use of Proceeds................................ 15
Dilution....................................... 16
Capitalization................................. 17
Dividend Policy................................ 17
Selected Financial Data........................ 18
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 19
Business....................................... 21
Management..................................... 38
Principal Stockholders......................... 41
Certain Relationships
& Related Transactions....................... 42
Description of Securities...................... 42
Selling Securityholders........................ 46
Underwriting................................... 47
Experts........................................ 49
Legal Matters.................................. 49
Glossary of Terms.............................. 50
Financial Statements........................... F-1

------------------------

THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

1,400,000 UNITS, EACH UNIT CONSISTING OF
ONE SHARE OF COMMON STOCK
AND ONE REDEEMABLE COMMON STOCK
PURCHASE WARRANT

AMPLIDYNE, INC.

------------------------

PROSPECTUS

------------------------

PATTERSON TRAVIS, INC.

, 1997

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<PAGE>

SUBJECT TO COMPLETION, DATED JANUARY 14, 1997

SELLING
SECURITYHOLDERS
PROSPECTUS

AMPLIDYNE, INC.

550,000 SHARES OF COMMON STOCK

------------------------

This Prospectus relates to the sale of 550,000 shares of common stock,
$.0001 par value per share ('Common Stock' or 'Shares') of Amplidyne, Inc. (the
'Company' or 'Amplidyne') underlying options granted to certain stockholders,
hereinafter collectively referred to as the 'Selling Securityholders.' The
Company will not receive any of the proceeds on the sale of the securities by
the Selling Securityholders. The securities held by the Selling Securityholders
may not be sold until twelve (12) months from the date of this Prospectus, which
period is not subject to earlier release. The resale of the securities of the
Selling Securityholders are subject to Prospectus delivery and other
requirements of the Securities Act of 1933, as amended (the 'Act'). Sales of
such securities or the potential of such sales at any time may have an adverse
effect on the market prices of the securities offered hereby. See 'Selling
Securityholders' and 'Risk Factors--Shares Eligible for Future Sale May
Adversely Affect the Market.'

The Company has applied for inclusion of its Common Stock and Redeemable
Common Stock Purchase Warrants ('Warrants') on The Nasdaq Small Cap Market,
although there can be no assurances that an active trading market will develop
even if the securities are accepted for quotation or that the Company will
maintain certain minimum criteria established by Nasdaq for continued quotation.
See 'Risk Factors--No Prior Public Market; Potential Limited Trading Market;
Possible Volatility of Stock Price.'

The securities offered by this Prospectus may be sold from time to time by
the Selling Securityholders, or by their transferees. No underwriting
arrangements have been entered into by the Selling Securityholders. The
distribution of the securities by the Selling Securityholders may be effected in
one or more transactions that may take place on the over-the-counter market
including ordinary broker's transactions, privately-negotiated transactions or
through sales to one or more dealers for resale of such shares as principals at

market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Securityholders in connection with sales of such securities.

The Selling Securityholders and intermediaries through whom such securities
may be sold may be deemed 'underwriters' within the meaning of the Securities
Act of 1933, as amended (the 'Act'), with respect to the securities offered and
any profits realized or commissions received may be deemed underwriting
compensation. The Company has agreed to indemnify the Selling Securityholders
against certain liabilities, including liabilities under the Act.

All costs incurred in the registration of the securities of the Selling
Securityholders are being borne by the Company. See 'Selling Securityholders.'

On the date hereof the Company commenced a public offering of 1,400,000
Units, each Unit consisting of one (1) share of Common Stock and one (1) Warrant
which was underwritten by Patterson Travis, Inc., as representative (the
'Representative') of the several underwriters of this Offering (the
'Underwriters'). See 'Company Offering.'

------------------------

AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK AND IMMEDIATE SUBSTANTIAL DILUTION. SEE 'RISK FACTORS' WHICH BEGIN ON PAGE
7 AND 'DILUTION.'

------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

THE DATE OF THIS PROSPECTUS IS , 1997

<PAGE>

THE OFFERING

<TABLE>
<S> <C>
Securities Offered(1)................................... 550,000 shares of Common Stock, $.0001 par value. See
Description of Securities.

Securities Outstanding Prior to Company Offering........ 2,850,000 Shares

Securities Outstanding Subsequent to
Company Offering...................................... 4,250,000 Shares

1,400,000 Warrants

Use of Proceeds......................................... The Company will not receive any of the proceeds of the
offering of the securities offered hereby by the Selling
Securityholders.

Risk Factors............................................ The securities are subject to a high degree of risk and
substantial dilution. See 'Risk Factors' and 'Dilution'.

Proposed Nasdaq SmallCap Market Symbols(3).............. Common Stock--AMPD; Warrants--AMPDW
</TABLE>

- ------------------

(1) Concurrently with this Offering, the Company is offering 1,400,000 shares of
Common Stock and 1,400,000 Warrants included in 1,400,000 Units. See
'Company Offering.'

Alt-2

<PAGE>

ALTERNATE

COMPANY OFFERING

On the date of this Prospectus, a Registration Statement under the Act with
respect to an underwritten public offering (the 'Offering') of 1,400,000 shares
of Common Stock and 1,400,000 Warrants (included in 1,400,000 Units) by the
Company was declared effective by the Securities and Exchange Commission
('SEC'), and the Company commenced the sale of Shares offered thereby. Sales of
securities under this Prospectus by the Selling Securityholders or even the
potential of such sales may have an adverse effect on the market price of the
Company's securities.

SELLING SECURITYHOLDERS

The registration statement of which this Prospectus forms a part covers the
registration and sale of 550,000 shares of Common Stock underlying options

granted to certain stockholders of the Company, hereinafter collectively
referred to as the 'Selling Securityholders.' The Company will not receive any
of the proceeds on the sale of the securities by the Selling Securityholders.
The securities held by the Selling Securityholders may not be sold until twelve
(12) months from the date of this Prospectus, which period is not subject to
earlier release. The resale of the securities by the Selling Securityholders is
subject to Prospectus delivery and other requirements of the Act.

The following table sets forth the holders of the shares of Common Stock
which are being offered by the Selling Securityholders, the number of shares
owned before the Offering, the number of shares being offered and the number of
shares and the percentage of the class to be owned after the Offering is
complete.

<TABLE>
<CAPTION>
SHARES OF SHARES OF
COMMON STOCK SHARES OF COMMON STOCK PERCENTAGE OF
OWNED BEFORE COMMON STOCK OWNED AFTER CLASS AFTER
NAME OFFERING(1) OFFERED HEREBY OFFERING OFFERING(2)
- --------------------------------------------------- ------------ -------------- ------------ -------------
<S> <C> <C> <C> <C>
Robert Karsten..................................... 25,000 12,500 12,500 .26
Ronny Doran........................................ 12,500 6,250 6,250 .13
Joseph Giamanco.................................... 50,000 25,000 25,000 .52
Marvin Ginsberg.................................... 25,000 12,500 12,500 .26
Gerald Kay......................................... 50,000 25,000 25,000 .52
Jerome Belson...................................... 50,000 25,000 25,000 .52
Robert Wax......................................... 25,000 12,500 12,500 .26
Bernice Brauser.................................... 50,000 25,000 25,000 .52
Milton Greiss...................................... 18,750 9,375 9,375 .20
Evan Stern......................................... 18,750 9,375 9,375 .20
Bircherest Industries.............................. 50,000 25,000 25,000 .52
Celestial Dreams Corporation, N.V.................. 112,500 56,250 56,250 .92
Carol Shiller...................................... 50,000 25,000 25,000 .52
Chana Sasha Foundation............................. 50,000 25,000 25,000 .52
Katherine Gaston................................... 12,500 6,250 6,250 .13
Phil Lifschitz..................................... 50,000 25,000 25,000 .52
</TABLE>

Alt-3
<PAGE>
<TABLE>
<CAPTION>
SHARES OF SHARES OF
COMMON STOCK SHARES OF COMMON STOCK PERCENTAGE OF
OWNED BEFORE COMMON STOCK OWNED AFTER CLASS AFTER
NAME OFFERING(1) OFFERED HEREBY OFFERING OFFERING(2)
- --------------------------------------------------- ------------ -------------- ------------ -------------
<S> <C> <C> <C> <C>
Alan Grodko........................................ 25,000 12,500 12,500 .26
Israel Cohen....................................... 25,000 12,500 12,500 .26
Jeffrey Grodko..................................... 25,000 12,500 12,500 .26
Generation Capital Associates...................... 50,000 25,000 25,000 .52

Quad Capital Partners.............................. 50,000 25,000 25,000 .52
ATM Partners....................................... 25,000 12,500 12,500 .26
Alan Cohen......................................... 25,000 12,500 12,500 .26
Raymond Agoglia.................................... 25,000 12,500 12,500 .26
Isaac Dweck........................................ 100,000 50,000 50,000 1.04
Universal Partners, L.P............................ 50,000 25,000 25,000 .26
Michael Rubin...................................... 25,000 12,500 12,500 .26
Diane Weiser....................................... 25,000 12,500 12,500 .26
------------ -------------- ------------ ------
Total......................................... 1,100,000 550,000 550,000 11.46
------------ -------------- ------------ ------
------------ -------------- ------------ ------
</TABLE>

- ------------------
(1) Includes shares of Common Stock underlying the 550,000 options.

(2) Assumes the exercise of the 550,000 options, the sale of the Common Stock
issuable upon exercise thereof and the sale of the 1,400,000 shares of
Common Stock included in the Units offered by the Company.

PLAN OF DISTRIBUTION

The securities offered hereby may be sold from time to time directly by the
Selling Securityholders. Alternatively, the Selling Securityholders may from
time to time offer such securities through underwriters (including the
Representative) dealers or agents. The distribution of securities by the Selling
Securityholders may be effected in one or more transactions that may take place
on the over-the-counter market, including ordinary broker's transactions,
privately-negotiated transactions or through sales to one or more broker-dealers
for resale of such shares as principals, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at negotiated
prices. Usual and customary or specifically negotiated brokerage fees or
commissions may be paid by the Selling Securityholders in connection with such
sales of securities. The securities offered by the Selling Securityholders may
be sold by one or more of the following methods, without limitations: (a) a
block trade in which a broker or dealer so engaged will attempt to sell the
shares as agent but may position and resell a portion of the block as principal
to facilitate the transaction; (b) purchases by a broker or dealer as principal
and resale by such broker or dealer for its account pursuant to this Prospectus;
(c) ordinary brokerage transactions and transactions in which the broker
solicits purchasers, and (d) face-to-face transactions between sellers and
purchasers without a broker-dealer. In effecting sales, brokers or dealers
engaged by the Selling Securityholders may arrange for other brokers or dealers
to participate. The Selling Securityholders and intermediaries through whom such
securities are sold may be deemed 'underwriters' within the meaning of the Act
with respect to the securities offered, and any profits realized or commissions
received may be deemed underwriting compensation.

Sales of securities by the Selling Securityholders or even the potential of
such sales would likely have an adverse effect on the market prices of the
securities offered hereby. See 'Company Offering.'

Alt-4

<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF
ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH AN OFFER WOULD BE UNLAWFUL.

------------------------

TABLE OF CONTENTS

PAGE
----
Available Information.......................... 2
Prospectus Summary............................. 3
The Company.................................... 3
The Offering................................... 5
Summary Financial Information.................. 6
Risk Factors................................... 7
Use of Proceeds of Company Offering............ 15
Dilution....................................... 16
Capitalization................................. 17
Dividend Policy................................ 17
Selected Financial Data........................ 18
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 19
Business....................................... 21
Management..................................... 38
Principal Stockholders......................... 41
Certain Relationships
& Related Transactions....................... 42
Description of Securities...................... 42
Company Offering............................... 46
Selling Securityholders........................ 46
Plan of Distribution........................... 47
Experts........................................ 49
Legal Matters.................................. 49
Glossary of Terms.............................. 50
Financial Statements........................... F-1

------------------------

UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

AMPLIDYNE, INC.

------------------------
PROSPECTUS
------------------------

, 1997

<PAGE>

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

In connection with the Offering, the Underwriter agreed to indemnify the
Company, its directors, and each person who controls it within the meaning of
Section 15 of the Act with respect to any statement in or omission from the
registration statement or the Prospectus or any amendment or supplement thereto
if such statement or omission was made in reliance upon information furnished in
writing to the Company by the Underwriter specifically for or in connection with
the preparation of the registration statement, the prospectus, or any such
amendment or supplement thereto.

Section 145 of the Delaware General Corporation Law empowers a corporation
to indemnify its directors and officers and to purchase insurance with respect
to liability arising out of the performance of their duties as directors and
officers.

The Delaware General Corporation Law provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any other
rights to which the directors and officers may be entitled under the
corporation's by-laws, any agreement, vote of Stockholders or otherwise.

Article Ninth of the Company's Certificate of Incorporation eliminates the
personal liability of directors to the fullest extent permitted by Section 102
of the Delaware General Corporation Law and Article Tenth provides for
indemnification of officers and directors.

The effect of the foregoing is to require the Company to the extent
permitted by law to indemnify the officers and directors of the Company for any
claim arising against such persons in their official capacities if such person
acted in good faith and in a manner that he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Company pursuant to the foregoing provisions, the Company has been informed
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.

The Company does not currently have any liability insurance coverage for
its officers and directors.

ITEMS 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The estimated expenses in connection with this Offering are as follows:

<TABLE>
<S> <C>
SEC filing fee............................................. $ 7,769.08

The Nasdaq SmallCap Market filing fee...................... 10,000.00
NASD filing fee............................................ 2,452.25
Accounting fees and expenses*.............................. 75,000.00
Legal fees and expenses*................................... 90,000.00
Blue Sky fees and expenses*................................ 45,000.00
Printing and engraving*.................................... 40,000.00
Transfer Agent's and Registrar's fees*..................... 3,500.00
Miscellaneous expenses*.................................... 26,278.67
-----------
Total.................................................... $300,000.00
-----------
-----------
</TABLE>

- ------------------
* Estimated

II-1

<PAGE>

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

The following information sets forth all securities of the Company sold by
it since inception, which securities were not registered under the Securities
Act of 1933, as amended. There were no underwriting discounts and commissions
paid in connection with the issuance of any shares of Common Stock prior to the
date of this Registration Statement.

All of the sales of securities prior to the date hereof were made in
reliance upon Section 4(2) of the 1933 Act, which provides exemption for
transactions not involving a public offering. All certificates are 'restricted
securities' and bear a restrictive legend. See 'Description of
Securities--Shares Eligible for Future Sale.'

The Company was incorporated on December 14, 1995 pursuant to the laws of
the State of Delaware as the successor to Amplidyne, Inc., a New Jersey
corporation ('Amplidyne-NJ'), which was incorporated in October 1988. The
Company was organized to effectuate a reincorporation of Amplidyne-NJ with and
into the Company on December 22, 1995. In connection with the merger, each share
of Amplidyne-NJ common stock (a total of 100) was converted into 21,000 shares
of the Company's Common Stock, resulting in the issuance of 2,100,000 shares of
Common Stock.

In December 1995, the Company offered for sale an aggregate of 200,000
shares of its Common Stock to two officers (Harris Freedman and Sharon Will) at
a purchase price of $.10 per share (an aggregate purchase price of $20,000).
Such shares were purchased in April 1996.

Between January and February 1996 the Company sold an aggregate of 250,000
shares of Common Stock to the following persons: Robert Karsten (12,500), Ronny
Doran (6,250), Joseph Giamanco (25,000), Marvin Ginsberg (12,500), Gerald Kay
(25,000), Jerome Belson (25,000), Robert Wax (12,500), Bernice Brauser (25,000)
Milton Greiss (9,375), Evan Stern (9,375), Birchcrest Industries (25,000),

Wellington Corporation, N.V. (6,250), Jaminsville Corporation, N.V. (6,250),
Carol Shiller (25,000) and Chana Sasha Foundation (25,000). The sales of these
shares of Common Stock were in connection with a $500,000 private financing in
which the Company issued promissory notes in the aggregate amount of $250,000,
250,000 shares of Common Stock and 250,000 options to purchase Common Stock at
$2.50 per share. The promissory notes accrue interest at 8% per annum. The
principal and accrued interest are payable on the earlier of (i) March 15, 1997
or (ii) the closing of this Offering. See 'Use of Proceeds.' The options are
immediately exercisable until December 31, 1998. The shares of Common Stock
underlying the options are being registered hereunder. See 'Selling
Securityholders.'

In April 1996 the Company sold an aggregate of 300,000 shares of Common
Stock to the following persons: Katherine Gaston (6,250), Phil Lifschitz
(25,000), Alan Grodko (12,500), Israel Cohen (12,500), Jeffrey Grodko (12,500),
Generation Capital Associates (25,000), Quad Capital Partners (25,000), ATM
Partners (12,500), Jaminsville Corporation, N.V. (9,375), The Bridge Fund, N.V.
(9,375), Alan Cohen (12,500) Raymond Agoglia (12,500), Isaac Dweck (50,000),
Universal Partners, L.P. (25,000) Michael Rubin (12,500), Tissere Overseas Fund,
N.V. (25,000) and Diane Weiser (12,500). The sales of these shares of Common
Stock were in connection with a $600,000 private financing in which the Company
issued promissory notes in the aggregate amount of $300,000, 300,000 shares of
Common Stock and 300,000 options to purchase Common Stock at $2.50 per share.
The promissory notes accrue interest at 8% per annum. The principal and accrued
interest are payable on the earlier of (i) March 15, 1997 or (ii) the closing of
this Offering. See 'Use of Proceeds.' The options are immediately exercisable
until December 31, 1998. The shares of Common Stock underlying the options are
being registered hereunder. See 'Selling Securityholders.'

In connection with a $375,000 bridge financing in September 1996 in which
the Company issued promissory notes in the aggregate of $375,000, the Company
issued, for no additional consideration, 187,500 Bridge Warrants to purchase
Common Stock at $2.50 per share. The Bridge Warrants are exercisable for a three
year period commencing one year from the date of this Prospectus. The promissory
notes accrue interest at 8% per annum. The principal and accrued interest are
payable on the earlier of (i) March 15, 1997 or (ii) the closing of this
Offering. The Bridge Warrants were issued as follows: Gerald Brauser (12,500),
New Amsterdam Investment Trust (12,500), Jaminsville Corporation, N.V. (12,500),
Stanley Snyder (12,500), Jerome Belson (25,000), Robert Karsten (12,500),
Millyridge Corporation, N.V. (12,500), Mary Martire (10,000), Joseph Paresi
(5,000), Susan Brauser (20,000), Generation Capital Associates (25,000), Bellaty
Corporation, N.V. (12,500), Laurissa Martire (5,000), Jennifer Martire (5,000)
and Lisa Martire (5,000).

II-2

<PAGE>

romissory notes accrue interest at 8% per annum. The principal and accrued
interest are payable on the earlier of (i) March 15, 1997 or (ii) the closing of
this Offering. The Bridge II Warrants were issued as follows: Jerome Belson
(25,000), Joseph Giamanco (10,000), Robert Wax (6,000), Milton Greiss (4,000),
Marvin Ginsberg (5,000), Robert Karsten (5,000), Raymond Agoglia (10,000),
Bernice Brauser (10,000), The Bridge Fund, N.V. (8,333), Millyridge Corporation,
N.V. (11,111), Wellington Corporation, N.V. (5,556), New Amsterdam Investment
Trust (5,000), Ekistics, Inc. (50,000), Stanley Snyder (5,000), Evan Stern
(4,000) and Jaminsville Corporation, N.V. (25,000).

In connection with a $100,000 bridge financing in December 1996 in which
the Company issued promissory notes in the aggregate of $100,000, the Company
issued, for no additional consideration, 100,000 Bridge III Warrants to purchase
Common Stock at $2.50 per share. The Bridge III Warrants are exercisable for a
three year period commencing one year from the date of this Prospectus. The
promissory notes accrue interest at 8% per annum. The principal and accrued
interest are payable on the earlier of (i) March 15, 1997 or (ii) the closing of
this Offering. The Bridge III Warrants were issued as follows: Stephanie Rubin
(75,000) and Brad Marsh (25,000).

ITEM 27. EXHIBITS.

<TABLE>
<S> <C> <C>
1.1 -- Form of Underwriting Agreement
1.2 -- Form of Selected Dealer Agreement
1.3 -- Form of Agreement Among Underwriters
3.1 -- Certificate of Incorporation of the Company
3.2 -- Certificate of Merger (Delaware)
3.3 -- Certificate of Merger (New Jersey)
3.4 -- Agreement and Plan of Merger
3.5 -- By-Laws of the Company
4.1 -- Specimen Certificate for shares of Common Stock
4.2 -- Specimen Certificate for Warrants
4.3 -- Form of Underwriter's Purchase Option
4.4 -- Form of Warrant Agreement
5.1 -- Opinion of Bernstein & Wasserman, LLP, counsel to the Company
10.1 -- 1996 Incentive Stock Option Plan
10.2 -- Employment Agreement between the Company and Devendar S. Bains
10.3 -- Employment Agreement between the Company and Tarlochan Bains
10.4 -- Employment Agreement between the Company and Nirmal Bains
10.5 -- Agreement of Lease for Premises located at 144 Belmont Drive, Somerset, New Jersey 08873
10.6 -- Agreement of Lease for Premises located at Unit 9, Building 7, Ilene Court, Belle Mead, New Jersey
08502
10.7 -- Agreement between the Company and Electronic Marketing Associates, Inc.
10.8 -- Agreement between the Company and Link Microtek Limited.
10.9 -- Agreement between the Company and ENS Engineering.
10.10 -- Employment Agreement between the Company and Harris Freedman.
10.11 -- Employment Agreement between the Company and Sharon Will.
10.12 -- Form of Lockup Agreement with Officers, Directors and 5% or Greater Shareholders.
10.13 -- Form of Lockup Agreement with Selling Securityholders.
23.1 -- Consent of Bernstein & Wasserman, LLP (included in Exhibit 5.1)
23.2 -- Consent of Grant Thornton, LLP, Independent Certified Public Accountants.*
</TABLE>

- ------------------
* Filed herewith.

II-3

<PAGE>

ITEM 28. UNDERTAKINGS.

(a) Rule 415 Offering

The undersigned Registrant will:

1. File, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to:

(i) Include any prospectus required by Section 10(a)(3) of the Act;

(ii) Reflect in the prospectus any facts or events which, individually or
in the aggregate, represent a fundamental change in the information set forth in
the registration statement;

(iii) Include any additional or changed material information on the plan of
distribution.

2. For determining liability under the Act, treat each such post-effective
amendment as a new registration statement of the securities offered, and the
Offering of such securities at that time shall be deemed to be the initial bona
fide offering.

3. File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the Offering.

(b) Equity Offerings of Nonreporting Small Business Issuers

The undersigned Registrant will provide to the Underwriter at the closing
specified in the underwriting agreement certificates in such denominations and
registered in such names as required by the Underwriter to permit prompt
delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers or controlling persons of the Registrant
pursuant to the provisions referred to in Item 24 of this Registration Statement
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless

in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

(d) Rule 430A

The undersigned Registrant will:

1. For determining any liability under the Act, treat the information
omitted from the form of Prospectus filed as part of this Registration Statement
in reliance upon Rule 430A and contained in the form of a prospectus filed by
the small business issuer under Rule 424(b)(1) or (4) or 497(h) under the Act as
part of this Registration Statement as of the time the Commission declared it
effective.

2. For any liability under the Act, treat each post-effective amendment
that contains a form of prospectus as a new registration statement for the
securities offered in the Registration Statement, and that the Offering of the
securities at that time as the initial bona fide Offering of those securities.

II-4

<PAGE>

SIGNATURES

IN ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED, THE REGISTRANT, CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE
THAT IT MEETS ALL THE REQUIREMENTS FOR FILING ON FORM SB-2 AND AUTHORIZED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, IN NEW
YORK, NEW YORK ON JANUARY 14, 1997.

AMPLIDYNE, INC.

By: /s/ DEVENDAR S. BAINS
----------------------------------
Devendar S. Bains
Chief Executive Officer, President,
Treasurer, Principal Accounting
Officer and Director

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT OR AMENDMENTS THERETO HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------------------------- -----------------
<S> <C> <C>
/s/ DEVENDAR S. BAINS Chief Executive Officer, President, Treasurer, January 14, 1997
- ------------------------------------------ Principal Accounting Officer and Director
Devendar S. Bains

/s/ TARLOCHAN BAINS Vice President and Director January 14, 1997
- ------------------------------------------
Tarlochan Bains

/s/ NIRMAL BAINS Secretary January 14, 1997
- ------------------------------------------
Nirmal Bains

/s/ ROBERT S. BENOU Director January 14, 1997
- ------------------------------------------
Robert S. Benou
</TABLE>

II-5

<PAGE>

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We have issued our report dated May 17, 1996, accompanying the financial
statements of Amplidyne, Inc. contained in the Registration Statement and
Prospectus. We consent to the use of the aforementioned report in the
Registration Statement and Prospectus and to the use of our name as it appears
under the caption 'Experts.'

GRANT THORNTON LLP

Parsippany, New Jersey
January 7, 1997