<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 SEPTEMBER 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 October 31, 1997 was 4,460,000.
<PAGE>
AMPLIDYNE, INC.
FORM 10-QSB
NINE MONTHS ENDED SEPTEMBER 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.......................... 9-11
PART II - OTHER INFORMATION
Signatures............................................................. 12
Exhibit 27 - Financial Data Schedule................................... 13
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
AMPLIDYNE, INC.
BALANCE SHEETS
ASSETS
------
December 31, September 30,
1996* 1997
----- ----
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 104,310 $2,724,629
Accounts receivable, net of allowance
for doubtful accounts of $119,000 207,339 181,575
Inventories 402,696 320,390
Deferred financing costs 324,540 --
Private placement costs 55,000 --
Prepaid expenses and other current assets 5,665 9,208
---------- ----------
Total current assets 1,099,550 3,235,802
PROPERTY AND EQUIPMENT - AT COST
Machinery and equipment 389,433 538,214
Furniture and fixtures 42,806 42,806
Autos and trucks 19,923 19,923
Leasehold improvements 4,162 4,162
---------- ----------
456,324 605,105
Less: Accumulated depreciation and amortization 145,593 199,557
---------- ----------
Net depreciated cost 310,731 405,548
PREPAID REGISTRATION COSTS 167,053 --
OTHER ASSETS 45,230 35,000
---------- ----------
TOTAL ASSETS $1,622,564 $3,676,350
========== ==========
* 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, September 30,
1996* 1997
---- ----
(Unaudited)
CURRENT LIABILITIES
Bank line of credit $ 210,000 $ --
Notes payable 1,214,000 --
Current maturities of lease obligations 381,392 157,825
Accounts payable 690,760 173,634
Accrued expenses 401,518 114,858
Stockholders' loan 442,745 103,051
------------ ------------
Total current liabilities 3,340,415 549,368
LONG-TERM LIABILITIES
Lease obligations 200,969 100,322
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 September 30, 1997,
respectively 285 446
Additional paid-in-capital 5,239,961 12,021,953
Accumulated deficit (7,159,066) (8,995,739)
------------ ------------
Total stockholders' equity (1,918,820) 3,026,660
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,622,564 $ 3,676,350
============ ============
* 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 Nine Months Ended
September 30, September 30,
------------- -------------
1996 1997 1996 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 685,487 286,846 $ 1,957,694 1,185,740
Cost of goods sold 783,010 334,553 1,889,436 1,171,311
----------- ----------- ----------- -----------
Gross profit (97,523) (47,707) 68,258 14,429
Operating expenses
Selling, general, and administrative 372,986 296,380 871,241 916,534
Research, engineering, and development 169,845 199,948 701,209 676,976
----------- ----------- ----------- -----------
Operating loss (640,354) (544,035) (1,504,192) (1,579,081)
Other nonoperating income and expenses
Interest income -- 41,219 -- 107,845
Interest expense 20,259 12,412 51,025 40,298
Stock compensation and financing costs 1,170,000 -- 2,553,125 324,540
----------- ----------- ----------- -----------
Loss before income taxes (1,830,613) (515,228) (4,108,342) (1,836,074)
Provision for income taxes -- 249 -- 599
----------- ----------- ----------- -----------
NET LOSS $(1,830,613) (515,477) $(4,108,342) (1,836,673)
=========== =========== =========== ===========
Net loss per share $ (.50) (.10) $ (1.12) (.35)
=========== =========== =========== ===========
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>
Nine Months Nine Months
Ended Ended
Sept. 30, 1996 Sept. 30, 1997
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net Loss $ (4,108,342) $ (1,836,673)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 42,413 64,194
Stock compensation expense 2,553,125 324,540
Bad debt expense 51,065 --
Changes in assets and liabilities
Accounts receivable (261,385) 25,764
Inventories (184,678) 82,306
Prepaid expenses and other current assets (141,330) 51,457
Accounts payable and accrued expenses 308,691 (803,786)
Customer advances (155,932) --
-------------- --------------
Total adjustments 2,211,969 (255,525)
-------------- --------------
Net cash used for operating activities (1,896,373) (2,092,198)
-------------- --------------
Cash flows from investing activities:
Purchase of fixed assets (92,892) (148,781)
-------------- --------------
Net cash used for investing activities (92,892) (148,781)
-------------- --------------
Cash flows from financing activities:
Proceeds from (repayments of) bank line of credit (20,000) (210,000)
Proceeds from (repayments of) notes payable 925,000 (1,214,000)
Lease obligations 269,101 (324,214)
Proceeds from (repayments of) stockholders' loans 205,000 (339,694)
Prepaid registration costs -- 167,053
Stock issuance 570,000 6,782,153
-------------- --------------
Net cash provided by financing activities 1,949,101 4,861,298
-------------- --------------
NET INCREASE (DECREASE) IN CASH (40,164) 2,620,319
Cash at beginning of year 153,747 104,310
-------------- --------------
Cash and cash equivalents at end of period $ 113,583 $ 2,724,629
============== ==============
Supplemental disclosures of cash flow information
Cash paid for: Interest $ 29,748 $ 112,261
Income taxes -- 249
</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 NINE MONTHS ENDED
SEPTEMBER 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 (1,836,673) (1,836,673)
---------- ----------- --------------- ----------- -----------
Balance at September 30, 1997 4,460,000 $ 446 $ 12,021,953 $(8,995,739) $ 3,026,660
========== =========== =============== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
-5-
<PAGE>
AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 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 nine-month periods ended September 30, 1996 and
September 30 1997, (b) the financial position at December 31, 1996 and
September 30, 1997, (c) the statements of cash flows for the nine-month
periods ended September 30, 1996 and September 30, 1997, and (d) the
changes in stockholders' equity for the nine month period ended September
30, 1997, have been made. The results of operations for the nine months
ended September 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
SEPTEMBER 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 September 30, 1996 and September 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 September 30, 1996 and September 30, 1997,
respectively). The total shares outstanding for purposes of loss per share
calculations are 3,644,950 and 5,254,950 shares at September 30, 1996 and
September 30, 1997, respectively.
-7-
<PAGE>
AMPLIDYNE, INC.
NOTES FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
Note E - Litigation
Reference is hereby made to the Company's form 10-QSB for the period
June 30, 1997.
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
Nine Months ended September 30,
1996 1997
----------- -----------
Net sales $ 1,957,694 $ 1,185,740
Cost of goods sold 1,889,436 1,171,311
----------- -----------
Gross profit 68,258 14,429
----------- -----------
Selling, general, and
administrative 871,241 916,534
Research, engineering,
and development 701,209 676,976
----------- -----------
Total operating expenses 1,572,450 1,593,510
----------- -----------
Stock compensation and
financing costs 2,553,125 324,540
Interest income -- 107,845
Other expenses 51,025 40,298
----------- -----------
Loss before income taxes (4,108,342) (1,836,074)
Provision for income taxes -- 599
----------- -----------
NET LOSS $(4,108,342) $(1,836,673)
=========== ===========
Results of operations-Nine months ended September 30, 1997 compared to Nine
months ended September 30, 1996
Net sales for the nine month period ended September 30, 1997 were $1,185,740,
representing an decrease of approximately 39% 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. In addition, prototype
orders received for wireless loop amplifiers were engineered and delivered
during the third quarter of 1997. These prototypes are expected to generate
1.3 million dollars in sales orders for the fourth quarter of 1997, which are
expected to be shipped during the fourth quarter of 1997 and the first quarter
of 1998. The Company has demonstrated its products at the PCS show in September
1997 which were well received by engineers and managers of the various OEM
organizations throughout the world. As a result, the Company is continuing to
demonstrate it's products to major OEM's in the United States, Europe, and Asia.
Prototype orders continue to be placed with the Company, which should result in
major developments during 1998.
-9-
<PAGE>
PART 1 - FINANCIAL INFORMATION - ITEM 2 (CONTINUED)
Gross profit for the nine month period ended September 30, 1997 amounted to
$14,429 (1.2% of sales), compared to $68,253 (3.5% of sales), for the
corresponding period in 1996. 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 and
prototype orders.
Selling, general and administrative expenses were $916,534 (77% of sales) for
the period ended September 30, 1997 compared to $871,241 (45% of sales) for the
corresponding period in 1996. These expenses increased from 1996 to 1997 due to
higher consulting and professional fees relating to the public offering during
the first quarter of 1997.
Research, engineering and development decreased slightly from 1996 to 1997.
Research and development expenses for the period ended September 30, 1997 were
$676,976 compared to the expenditures for the period ended September 30, 1996
which were $701,209. These expenses remain relatively unchanged due to the fact
that the Company needs to maintain research and development efforts in order to
refine it's products for the needs of the PCS and cellular markets.
Interest income for the nine months ended September 30, 1997 was $107,845
compared to $0 for the corresponding period in 1996. This increase is due to the
injections of IPO which are maintained in an investment account.
Stock compensation expense for the nine months ended September 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 ($1,183,673) or
(.35) per share for the nine months ended September 30 1997 compared with net
losses of ($4,108,342) or (1.12) per share for the same period in 1996.
Liquidity and Capital Resources
At September 30 1997, the Company had cash and cash equivalents of $2,724,629
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, $295,000 of the
outstanding loan from a principal stockholder was paid off during the second and
third quarters of 1997. The Company had accrued expenses of $114,858 at
September 30, 1997 consisting of payroll, taxes, and commissions.
-10-
<PAGE>
PART 1 - FINANCIAL INFORMATION - ITEM 2 (CONTINUED
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.
-11-
<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: November 10, 1997 By: /s/ Devendar S. Bains
------------------------
Name: Devendar S. Bains
Title: Chief Executive Officer,
President, Treasurer,
Principal Accounting
Officer and Director
-12-
<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>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,724,629
<SECURITIES> 0
<RECEIVABLES> 300,575
<ALLOWANCES> 119,000
<INVENTORY> 320,390
<CURRENT-ASSETS> 3,235,802
<PP&E> 605,105
<DEPRECIATION> 199,557
<TOTAL-ASSETS> 3,676,350
<CURRENT-LIABILITIES> 549,368
<BONDS> 0
0
0
<COMMON> 446
<OTHER-SE> 3,026,214
<TOTAL-LIABILITY-AND-EQUITY> 3,676,350
<SALES> 1,185,740
<TOTAL-REVENUES> 1,185,740
<CGS> 1,171,311
<TOTAL-COSTS> 1,848,287
<OTHER-EXPENSES> 1,241,074
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 40,298
<INCOME-PRETAX> (1,943,919)
<INCOME-TAX> 599
<INCOME-CONTINUING> (1,944,518)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,836,673)
<EPS-PRIMARY> (.35)
<EPS-DILUTED> (.35)
</TABLE>
