<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934.
FOR THE TRANSITION PERIOD FROM ____________ TO _____________
Commission File Number 0-21931
AMPLIDYNE, INC.
---------------
(Exact name of small business issuer as specified in its charter)
DELAWARE 22-3440510
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
144 Belmont Drive
Somerset, New Jersey 08873
--------------------------
(Address of principal executive offices)
(908) 271-8473
--------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days.
Yes X No
----- -----
The number of shares outstanding of the Issuer's Common Stock, $.0001 Par
Value, as of May 15, 1997 was 4,460,000.
<PAGE>
AMPLIDYNE, INC.
FORM 10-QSB
THREE MONTHS ENDED MARCH 31, 1997
TABLE OF CONTENTS
PART 1 - FINANCIAL INFORMATION
Item 1 Financial Statements (Unaudited):
Balance Sheets.................................................1-2
Statements of Operations.........................................3
Statement of Changes in Stockholder's Equity.....................4
Statement of Cash Flows..........................................5
Notes to Financial Statements..................................6-8
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations.........................9-10
PART II - OTHER INFORMATION
Signatures..................................................................11
Exhibit 27- Financial Data Schedule.........................................12
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
AMPLIDYNE, INC.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31, March 31,
1996 * 1997
---------- ----------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 104,310 $4,317,011
Accounts receivable, net of allowance
for doubtful accounts of $119,000 207,339 374,792
Inventories 402,696 280,702
Deferred financing costs 324,540 --
Private placement costs 55,000 --
Prepaid expenses and other current assets 5,665 5,365
---------- ----------
Total current assets 1,099,550 4,977,870
PROPERTY AND EQUIPMENT - AT COST
Machinery and equipment 389,433 453,713
Furniture and fixtures 42,806 42,806
Autos and trucks 19,923 19,923
Leasehold improvements 4,162 4,162
---------- ----------
456,324 520,604
Less: Accumulated depreciation and amortization 145,593 161,053
---------- ----------
Net depreciated cost 310,731 359,551
PREPAID REGISTRATION COSTS 167,053 --
OTHER ASSETS 45,230 35,000
---------- ----------
TOTAL ASSETS $1,622,564 $5,372,421
========== ==========
</TABLE>
* Derived from Company's audited Balance Sheet at December 31, 1996
The accompanying notes are an integral part of these financial statements
-1-
<PAGE>
AMPLIDYNE, INC.
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31, March 31,
1996 * 1997
------------ ------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Bank line of credit $ 210,000 $ --
Notes payable 1,214,000 --
Current maturities of lease obligations 381,392 267,090
Accounts payable 690,760 200,398
Accrued expenses 401,518 331,616
Stockholders' loan 442,745 418,051
------------ ------------
Total current liabilities 3,340,415 1,217,155
LONG-TERM LIABILITIES
Lease obligations 200,969 163,032
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 and
4,460,000 shares issued and outstanding at
December 31, 1996 and March 31, 1997,
respectively 285 446
Additional paid-in-capital 5,239,961 12,021,953
Accumulated deficit (7,159,066) (8,030,165)
------------ ------------
Total stockholders' equity (1,918,820) 3,992,234
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,622,564 $ 5,372,421
============ ============
</TABLE>
* Derived from Company's audited Balance Sheet at December 31, 1996
The accompanying notes are an integral part of these financial statements
-2-
<PAGE>
AMPLIDYNE, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Three
Months Months
Ended Ended
March 31, March 31,
1996 1997
----------- -----------
<S> <C> <C>
Net sales $ 500,658 $ 550,645
Cost of goods sold 485,655 518,270
----------- -----------
Gross profit 15,003 32,375
Operating expenses
Selling, general, and administrative 195,374 310,043
Research, engineering, and development 185,914 264,520
----------- -----------
Operating loss (366,285) (542,188)
Other nonoperating income and expenses
Interest income -- 14,960
Interest expense 9,443 18,981
Stock compensation and financing costs 281,250 324,540
----------- -----------
Loss before income taxes (656,978) (870,749)
Provision for income taxes -- 350
NET LOSS $ (656,978) $ (871,099)
=========== ===========
Net loss per share $ (.21) $ (.17)
=========== ===========
Weighted average number of shares
outstanding 3,187,500 5,254,950
</TABLE>
The accompanying notes are an integral part of these financial statements
-3-
<PAGE>
AMPLIDYNE, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1996 March 31, 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net Loss $ (656,978) $ (871,099)
----------- -----------
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 8,903 25,690
Stock compensation expense 281,250 324,540
Changes in assets and liabilities
Accounts receivable (63,583) (167,453)
Inventories (43,033) 121,994
Prepaid expenses and other current assets (18,830) 55,300
Accounts payable and accrued expenses (163,719) (560,264)
Customer advances (79,247) --
----------- -----------
Total adjustments (78,259) (200,193)
----------- -----------
Net cash used for operating activities (735,237) (1,071,292)
----------- -----------
Cash flows from investing activities:
Purchase of fixed assets (29,169) (64,280)
----------- -----------
Net cash used for investing activities (29,169) (64,280)
----------- -----------
Cash flows from financing activities:
Proceeds from (repayments of) bank line of credit -- (210,000)
Proceeds from (repayments of) notes payable 250,000 (1,214,000)
Lease obligations 55,659 (152,239)
Proceeds from (repayments of) stockholders' loans 55,000 (24,694)
Prepaid registration costs -- 167,053
Stock issuance 250,000 6,782,153
----------- -----------
Net cash provided by financing activities 610,659 5,348,273
----------- -----------
NET INCREASE (DECREASE) IN CASH (153,747) 4,212,701
Cash at beginning of year 153,747 104,310
----------- -----------
Cash and cash equivalents at end of year $ -- $ 4,317,011
=========== ===========
Supplemental disclosures of cash flow information
Cash paid for: Interest $ 9,443 $ 83,659
Income taxes -- --
</TABLE>
The accompanying notes are an integral part of these financial statements
-4-
<PAGE>
AMPLIDYNE, INC.
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE THREE MONTHS ENDED
MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Common Stock Additional Accumulated
Shares Par Value Paid-In-Capital (Deficit) Total
--------- --------- --------------- ------------ -------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 2,850,000 $ 285 $ 5,239,961 $ (7,159,066) $ (1,918,820)
Issuance of common stock 1,610,000 161 6,781,992 6,782,153
Net Loss (871,099) (871,099)
--------- ----- ----------- ------------ ------------
Balance at March 31, 1997 4,460,000 $ 446 $12,021,953 $ (8,030,165) $ 3,992,234
========= ===== =========== ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
-5-
<PAGE>
AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
Note A - Adjustments
In the opinion of management, all adjustments, consisting only of normal
recurring adjustments necessary for a fair statement of (a) results of
operations for the three-month periods ended March 31, 1996 and March 31,
1997, (b) the financial position at December 31, 1996 and March 31, 1997,
(c) the statements of cash flows for the three-month periods ended March
31, 1996 and March 31, 1997, and (d) the changes in stockholders' equity
for the three month period ended March 31, 1997, have been made. The
results of operations for the three months ended March 31, 1997 are not
necessarily indicative of the results to be expected for the full year.
Note B - Unaudited Interim Financial Information
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all the information
and footnotes required by generally accepted accounting principles for
financial statements. For further information, refer to the audited
financial statements and notes thereto for the year ended December 31,
1996, included in the Company's Form 10-KSB filed with the Securities and
Exchange Commission on April 15, 1997.
Note C - Public Offering
A registration statement covering an underwritten public offering of
1,610,000 units at a price of $5.10 per unit, prior to underwriters'
commissions, was declared effective by the Securities and Exchange
Commission on January 21, 1997. Each unit consists of one share of common
stock, par value $.0001 per share and one redeemable common stock purchase
warrant. Each warrant entitles the holder to purchase one share for $6.00
during the four-year period commencing one year from the date of the
offering. The Company may redeem the warrants at a price of $.01 per
warrant at any time with not less than thirty days' prior written notice if
the average closing price equals or exceeds $9.00 per share for any twenty
consecutive trading days.
-6-
<PAGE>
AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
Note C (Continued)
In the first quarter ended March 31, 1997, the Company received proceeds
from the public offering of $ 8,211,000, which included the overallotment
of 210,000 units. The net proceeds received by the Company was calculated
as follows:
Gross Proceeds $ 8,211,000
Less: Costs of Issuance:
Underwriting 1,024,430
Legal and Blue Sky Fees 178,453
Printing 58,911
Registration Costs 167,053
-----------
Net Proceeds of Stock Issuance $ 6,782,153
===========
The Company paid down the bank line of credit, notes payable and accrued
interest which totalled approximately $1,500,000.
The following table summarizes shares of common stock reserved for issuance:
Offering warrants 1,610,000
Underwriters' purchase option warrants and shares 280,000
Options to noteholders 550,000
Warrants to noteholders 476,500
Shares reserved for stock option and SARs plan 1,500,000
Warrants to officers 350,000
Options to employees 30,000
-----------
4,796,500
Note D - Loss Per Share
All shares, warrants and options issued or granted within the prior 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
and 4,460,000 shares at March 31, 1996 and March 31, 1997, respectively)
for each period presented plus the effect of below market warrants and
options calculated based on the treasury stock approach (337,500 and
794,950 shares at March 31, 1996 and March 31, 1997, respectively). The
total shares outstanding for purposes of loss per share calculations are
3,187,500 and 5,254,950 shares at March 31, 1996 and March 31, 1997,
respectively.
-7-
<PAGE>
AMPLIDYNE, INC.
NOTES FINANCIAL STATEMENTS
MARCH 31, 1997
Note E - Litigation
The Company is a defendant to a complaint filed in the Circuit Court of the
Eighteenth Judicial District of the State of Florida on January 23, 1997,
alleging breach of contract and alleged damages in the amount of
$4,322,579.05, plus interest, costs and attorneys' fees. The Company filed
an answer to the complaint denying the allegations therein and a
counterclaim on March 10, 1997. The counterclaim alleges breach of
contract, common law fraud, conversion and unjust enrichment. The Company
further asserts damages in the amount of $463,411.36, plus interest, costs
and attorneys' fees. Management believes that the allegations in the
complaint are without merit.
Note F - New Accounting Pronouncement
In February 1997, the Financial Accounting Standards Board issued
Statements on Financial Accounting Standards No. 128, Earnings Per Share,
which is effective for financial statements for both interim and annual
periods ending after December 1997. Early adoption of the new standard is
not permitted. The new standard eliminates primary and fully diluted
earnings per share and requires presentation of basic and diluted earnings
per share together with disclosure of how the per share amounts were
computed. The pro forma effect of adopting the new standard would have no
impact on these financial statements.
-8-
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
The following table sets forth certain operating data:
Percentage of Total Net Sales
Quarter ended March 31,
1996 1997
--------- ---------
Net sales $ 500,658 $ 550,645
Cost of goods sold 485,655 518,270
--------- ---------
Gross profit 15,003 32,375
--------- ---------
Selling, general, and
administrative 195,374 310,043
Research, engineering,
and development 185,914 264,520
--------- ---------
Total operating expenses 381,288 574,563
--------- ---------
Stock compensation and
financing costs 281,250 324,540
Interest income -- 14,960
Other expenses 9,443 18,981
--------- ---------
Loss before income taxes (656,978) (870,749)
Provision for income taxes -- 350
--------- ---------
NET LOSS $(656,978) $(871,099)
========= =========
Results of operations-Quarter ended March 31, 1997 compared to Quarter ended
March 31, 1996
Net sales for the three month period ended March 31, 1997 were $550,645,
representing an increase of approximately 10% over the corresponding period in
1996. The increase is principally attributable to additional sales from the
supply of PCS Multicarrier Linear Power amplifiers to a key customer in Korea.
Gross profit for the three month period ended March 31, 1997 amounted to
$32,375 (5.8% of sales), compared to $15,003 (3% of sales), for the
corresponding period in the prior year. The increase in the gross margin from
the corresponding quarter of the prior year is principally attributable to
continuing orders from one customer involving less research and development.
This trend should continue as reoccurring orders are received.
-9-
<PAGE>
PART 1 - FINANCIAL INFORMATION - ITEM 2 (CONTINUED)
Selling, general and administrative expenses were $310,043 (56.3 % of
sales) in the first quarter of 1997 compared to $195,374 (39.0% of sales) for
the first quarter of 1996. The $114,669 rise is due in part to increased rental
expense for the new larger facilities leased May 1, 1996. These expenses will
decrease in November 1997 when the lease on the old location expires. Higher
consulting and professional fees relating to the public offering in the fist
quarter of 1997 also added to the increase in selling, general and
administrative expenses.
Research, engineering and development also increased in the first quarter
of 1997 compared to the first quarter of 1996 due to increased engineering
salaries and other related research and development expenses necessary for the
specific design and testing of prototype products for OEM manufacturers.
Interest expense was higher in the first quarter of 1997 because of the
outstanding bank debt, lease obligations, and promissory notes. Bank debt and
private placement notes were paid off with the proceeds of the public offering
which will eliminate most of the interest expense during the remainder of 1997.
Stock compensation expense in the first quarter of 1997 was $324,540 which
relates to the deferred costs on warrants issued in September and December 1996
at prices substantially lower than the initial public offering price. No future
write offs are expected.
As a result of the foregoing, the Company incurred net losses of
($871,099) or (.17) per share for the quarter ended March 31, 1997 compared
with net losses of ($656,978) or (.21) per share for the same period in 1996.
Liquidity and Capital Resources
At March 31, 1997, the Company had cash and cash equivalents of $4,317,011
principally due to the injection of IPO funds. The outstanding bank loans,
private placement debt and interest totalling approximately $1,500,000 was paid
off during the period ended March 31, 1997. The Company had accrued expenses of
$331,616 at March 31, 1997 consisting of back payroll, taxes and commissions.
The Company believes that the net proceeds of the Company's initial public
offering and operations will meet its working capital obligations and fund
further development of it's business for the next twelve months. There can be
no assurance that any additional financing will be available to the Company.
-10-
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
AMPLIDYNE, INC.
Dated: May 20, 1997 By: /s/ Devendar S. Bains
----------------------------
Name: Devendar S. Bains
Title: Chief Executive Officer,
President, Treasurer,
Principal Accounting
Officer and Director
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEETS AND STATEMENTS OF OPERATIONS FOUNDED ON PAGES 1-3 OF THE COMPANY'S FORM
10-QSB, FOR THE YEAR-TO-DATE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 4,317,011
<SECURITIES> 0
<RECEIVABLES> 493,792
<ALLOWANCES> 119,000
<INVENTORY> 280,702
<CURRENT-ASSETS> 4,977,870
<PP&E> 520,604
<DEPRECIATION> 161,053
<TOTAL-ASSETS> 5,372,421
<CURRENT-LIABILITIES> 1,217,155
<BONDS> 0
0
0
<COMMON> 446
<OTHER-SE> 3,991,788
<TOTAL-LIABILITY-AND-EQUITY> 5,372,421
<SALES> 550,645
<TOTAL-REVENUES> 550,645
<CGS> 518,270
<TOTAL-COSTS> 782,790
<OTHER-EXPENSES> 634,583
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,981
<INCOME-PRETAX> (885,709)
<INCOME-TAX> 350
<INCOME-CONTINUING> (886,059)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (871,099)
<EPS-PRIMARY> (.17)
<EPS-DILUTED> (.17)
</TABLE>
