<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 JUNE 30, 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 August 14, 1997 was 4,460,000.
<PAGE>
AMPLIDYNE, INC.
FORM 10-QSB
SIX MONTHS ENDED JUNE 30, 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
December 31, June 30,
1996 1997
---- ----
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 104,310 $3,502,394
Accounts receivable, net of allowance
for doubtful accounts of $119,000 207,339 274,031
Inventories 402,696 391,942
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 4,173,732
PROPERTY AND EQUIPMENT - AT COST
Machinery and equipment 389,433 527,198
Furniture and fixtures 42,806 42,806
Autos and trucks 19,923 19,923
Leasehold improvements 4,162 4,162
---------- ----------
456,324 594,089
Less: Accumulated depreciation and amortization 145,593 179,957
---------- ----------
Net depreciated cost 310,731 414,132
PREPAID REGISTRATION COSTS 167,053 --
OTHER ASSETS 45,230 35,000
TOTAL ASSETS $1,622,564 $4,622,864
---------- ----------
* 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
------------------------------------
December 31, June 30,
1996 * 1997
---- ----
(Unaudited)
CURRENT LIABILITIES
Bank line of credit $ 210,000 $ --
Notes payable 1,214,000 --
Current maturities of lease obligations 381,392 263,390
Accounts payable 690,760 149,441
Accrued expenses 401,518 424,307
Stockholders' loan 442,745 148,051
------------ ------------
Total current liabilities 3,340,415 985,189
LONG-TERM LIABILITIES
Lease obligations 200,969 95,538
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 June 30, 1997,
respectively 285 446
Additional paid-in-capital 5,239,961 12,021,953
Accumulated deficit (7,159,066) (8,480,262)
------------ ------------
Total stockholders' equity (1,918,820) 3,542,137
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,622,564 $ 4,622,864
============ ============
* 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 Months Ended Six Months Ended
June 30, June 30,
1996 1997 1996 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 771,549 348,249 $ 1,272,207 898,894
Cost of goods sold 620,771 318,488 1,106,426 836,758
----------- ----------- ----------- -----------
Gross profit 150,778 29,761 165,781 62,136
Operating expenses
Selling, general, and administrative 302,881 310,111 498,255 620,154
Research, engineering, and development 345,450 212,508 531,364 477,028
----------- ----------- ----------- -----------
Operating loss (497,553) (492,858) (863,838) (1,035,046)
Other nonoperating income and expenses
Interest income -- 51,666 -- 66,626
Interest expense 21,323 8,905 30,766 27,886
Stock compensation and financing costs 1,101,875 -- 1,383,125 324,540
----------- ----------- ----------- -----------
Loss before income taxes (1,620,751) (450,097) (2,277,729) (1,320,846)
Provision for income taxes -- -- -- 350
----------- ----------- ----------- -----------
NET LOSS $(1,620,751) (450,097) $(2,277,729) (1,321,196)
=========== =========== =========== ===========
Net loss per share $ (.44) (.08) $ (.62) (.25)
=========== =========== =========== ===========
Weighted average number of shares
outstanding 3,644,950 5,254,950 3,644,950 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>
Six Months Six Months
Ended Ended
June 30, 1996 June 30, 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net Loss $(2,277,729) $(1,321,196)
----------- -----------
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 28,228 44,594
Stock compensation expense 1,383,125 324,540
Changes in assets and liabilities
Accounts receivable (419,605) (66,692)
Inventories (188,157) 10,754
Prepaid expenses and other current assets (46,330) 55,300
Accounts payable and accrued expenses 62,344 (518,530)
Customer advances (144,132) --
----------- -----------
Total adjustments 675,473 (150,034)
----------- -----------
Net cash used for operating activities (1,062,256) (1,471,230)
----------- -----------
Cash flows from investing activities:
Purchase of fixed assets (79,563) (137,765)
----------- -----------
Net cash used for investing activities (79,563) (137,765)
Cash flows from financing activities:
Proceeds from (repayments of) bank line of credit -- (210,000)
Proceeds from (repayments of) notes payable 550,000 (1,214,000)
Lease obligations 216,465 (223,433)
Proceeds from (repayments of) stockholders' loans 205,000 (294,694)
Prepaid registration costs -- 167,053
Stock issuance 570,000 6,782,153
----------- -----------
Net cash provided by financing activities 1,541,465 5,007,079
----------- -----------
NET INCREASE (DECREASE) IN CASH (140,354) 3,398,084
Cash at beginning of year 153,747 104,310
----------- -----------
Cash and cash equivalents at end of period $ 13,393 $ 3,502,394
=========== ===========
Supplemental disclosures of cash flow information
Cash paid for: Interest $ 19,377 $ 97,403
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 SIX MONTHS ENDED
JUNE 30, 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 (1,321,196) (1,321,196)
--------- ----------- ----------- ----------- -----------
Balance at June 30, 1997 4,460,000 $ 446 $12,021,953 $(8,480,262) $ 3,542,137
--------- ----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements
-5-
<PAGE>
AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 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 six-month periods ended June 30, 1996 and June 30 1997,
(b) the financial position at December 31, 1996 and June 30, 1997, (c) the
statements of cash flows for the six-month periods ended June 30, 1996 and
June 30, 1997, and (d) the changes in stockholders' equity for the six
month period ended June 30, 1997, have been made. The results of operations
for the six months ended June 30, 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
JUNE 30, 1997
Note C (Continued)
In the first quarter of 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 June 30, 1996 and June 30, 1997, respectively) for
each period presented plus the effect of below market warrants and options
calculated based on the treasury stock approach (794,950 and 794,950 shares
at June 30, 1996 and June 30, 1997, respectively). The total shares
outstanding for purposes of loss per share calculations are 3,644,950 and
5,254,950 shares at June 30, 1996 and June 30, 1997, respectively.
-7-
<PAGE>
AMPLIDYNE, INC.
NOTES FINANCIAL STATEMENTS
JUNE 30, 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
Six Months ended June 30,
1996 1997
---- ----
Net sales $ 1,272,207 $ 898,894
Cost of goods sold 1,106,426 836,758
----------- -----------
Gross profit 165,781 62,136
----------- -----------
Selling, general, and
administrative 498,255 620,154
Research, engineering,
and development 531,364 477,028
----------- -----------
Total operating expenses 1,029,619 1,097,182
----------- -----------
Stock compensation and
financing costs 1,383,125 324,540
Interest income -- 66,626
Other expenses 30,766 27,886
----------- -----------
Loss before income taxes (2,277,729) (1,320,846)
Provision for income taxes -- 350
----------- -----------
NET LOSS $(2,277,729) $(1,321,196)
=========== ===========
Results of operations-Six months ended June 30 1997 compared to Six months ended
June 30 1996
Net sales for the six month period ended June 30 1997 were $898,894,
representing an decrease of approximately 29% over the corresponding period in
1996. This decrease is principally attributable to purchase orders received in
early 1997 which have been placed on hold due to engineering changes made to
the original specifications by a key customer in Korea.
Gross profit for the six month period ended June 30 1997 amounted to $62,136
(6.9% of sales), compared to $165,781 (13.0% of sales), for the corresponding
period in the prior year. The decrease in the gross margin from the
corresponding period of the prior year is principally attributable to a key
Korean customer placing a hold on purchase orders they placed in early 1997,
thereby reducing sales for the quarter. A hold was put on these purchase orders
due to engineering changes made to the original specifications.
-9-
<PAGE>
PART 1 - FINANCIAL INFORMATION - ITEM 2 (CONTINUED)
Selling, general and administrative expenses were $620,154 (69.0 % of
sales) in the second quarter of 1997 compared to $498,255 (39.2% of sales)
for the second quarter of 1996. The $121,899 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 first quarter of 1997 also added to the increase in
selling, general and administrative expenses.
Research, engineering and development decreased in the second quarter of
1997 compared to the second quarter of 1996 due to continuing orders from
customers involving less research and development expenses. This trend
should continue as reoccurring orders are received.
Interest expense was lower in the second quarter of 1997 because 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 for the six months ended June 30, 997 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
($1,321,196) or (.25) per share for the quarter ended June 30 1997 compared
with net losses of ($2,277,729) or (.62) per share for the same period in
1996.
Liquidity and Capital Resources
At June 30 1997, the Company had cash and cash equivalents of $3,502,394
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. In addition, $250,000 of
the outstanding loan from a principal stockholder was paid off during the
second quarter of 1997. The Company had accrued expenses of $424,307 at
June 30, 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 authorised.
AMPLIDYNE, INC.
Dated: August 14, 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,502,394
<SECURITIES> 0
<RECEIVABLES> 393,031
<ALLOWANCES> 119,000
<INVENTORY> 391,942
<CURRENT-ASSETS> 4,173,732
<PP&E> 594,089
<DEPRECIATION> 179,957
<TOTAL-ASSETS> 4,622,864
<CURRENT-LIABILITIES> 985,189
<BONDS> 0
0
0
<COMMON> 446
<OTHER-SE> 3,541,691
<TOTAL-LIABILITY-AND-EQUITY> 4,622,864
<SALES> 898,894
<TOTAL-REVENUES> 898,894
<CGS> 836,758
<TOTAL-COSTS> 1,313,786
<OTHER-EXPENSES> 944,694
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,886
<INCOME-PRETAX> (1,387,472)
<INCOME-TAX> 350
<INCOME-CONTINUING> (1,387,822)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,321,196)
<EPS-PRIMARY> (.25)
<EPS-DILUTED> (.25)
</TABLE>
