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, 1998.
[ ] 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)
(732) 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, 1998 was 4,460,000.
<PAGE>
AMPLIDYNE, INC.
FORM 10-QSB
THREE MONTHS ENDED MARCH 31, 1998
TABLE OF CONTENTS
PART 1 - FINANCIAL INFORMATION
Item 1 FINANCIAL STATEMENTS (Unaudited):
Balance Sheets.................................................1-2
Statements of Operations.........................................3
Statement of Cash Flows..........................................4
Statement of Changes in Stockholder's Equity.....................5
Notes to Financial Statements..................................6-7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations.........................8-10
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, March 31,
1997* 1998
----- ----
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $2,039,012 $1,966,289
Accounts receivable, net of allowance
for doubtful accounts of $40,510 706,893 270,241
Inventories 324,622 288,374
Prepaid expenses and other current assets 9,296 13,177
---------- ----------
Total current assets 3,079,823 2,538,081
PROPERTY AND EQUIPMENT - AT COST
Machinery and equipment 538,214 538,214
Furniture and fixtures 43,750 43,750
Autos and trucks 19,923 19,923
Leasehold improvements 4,162 4,162
---------- ----------
606,049 606,049
Less: Accumulated depreciation and amortization 237,494 263,069
---------- ----------
Net depreciated cost 368,555 342,980
OTHER ASSETS 35,000 35,000
---------- ----------
TOTAL ASSETS $3,483,378 $2,916,061
========== ==========
* Derived from Company's audited Balance Sheet at December 31, 1997
The accompanying notes are an integral part of these financial statements
-1-
<PAGE>
AMPLIDYNE, INC.
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, March 31,
1997* 1998
---- ----
(Unaudited)
CURRENT LIABILITIES
Current maturities of lease obligations $ 136,396 130,073
Accounts payable 194,572 133,772
Accrued expenses 189,123 118,424
Stockholders' loan 103,051 93,051
---------- -----------
Total current liabilities 623,142 475,320
LONG-TERM LIABILITIES
Lease obligations 67,875 34,480
Deferred compensation 140,000 180,000
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; 4,460,000 shares and
4,460,000 shares issued and outstanding at
December 31, 1997 and March 31, 1998,
respectively
446 446
Additional paid-in-capital 12,304,592 12,304,592
Accumulated deficit (9,652,677) (10,078,777)
---------- -----------
Total stockholders' equity 2,652,361 2,226,261
---------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $3,483,378 $ 2,916,061
========== ===========
* Derived from Company's audited Balance Sheet at December 31, 1997
The accompanying notes are an integral part of these financial statements
-2-
<PAGE>
AMPLIDYNE, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Three
Months Months
Ended Ended
March 31, March 31,
1997 1998
---- ----
Net sales $ 550,645 $ 321,797
Cost of goods sold 518,270 371,304
--------- ---------
Gross profit (loss) 32,375 (49,507)
Operating expenses
Selling, general, and administrative 310,043 274,075
Research, engineering, and development 264,520 122,161
--------- ---------
Operating loss (542,188) (445,743)
Other nonoperating income and expenses
Interest income 14,960 25,166
Interest expense
18,981 5,323
Stock compensation and financing costs 324,540 --
--------- ---------
Loss before income taxes (870,749) (425,900)
Provision for income taxes 350 200
--------- ---------
NET LOSS $(871,099) $(426,100)
========= =========
Net loss per share - basic and diluted $ (.17) $ (.10)
========= =========
Weighted average number of shares
outstanding 5,254,950 4,367,320
========= =========
The accompanying notes are an integral part of these financial statements
-3-
<PAGE>
<TABLE>
<CAPTION>
AMPLIDYNE, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Three Months
Ended Ended
March 31, 1997 March 31, 1998
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net Loss $ (871,099) $ (426,100)
----------- -----------
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 25,690 25,575
Stock compensation expense 324,540 --
Changes in assets and liabilities
Accounts receivable (167,453) 436,652
Inventories 121,994 36,248
Prepaid expenses and other current assets 55,300 (3,881)
Accounts payable and accrued Expenses (560,264) (91,499)
----------- -----------
Total adjustments (200,193) 403,095
----------- -----------
Net cash used for operating activities (1,710,292) (23,005)
----------- -----------
Cash flows from investing activities:
Purchase of fixed assets (64,280) --
----------- -----------
Net cash used for investing activities (64,280) --
----------- -----------
Cash flows from financing activities:
Proceeds from (repayments of) bank line of credit (210,000) --
Proceeds from (repayments of) notes payable (1,214,000) --
Lease obligations (152,239) (39,718)
Proceeds from (repayments of) stockholders' loans (24,694) (10,000)
Prepaid registration costs 167,053 --
Stock issuance 6,782,153 --
----------- -----------
Net cash provided by financing activities 5,348,273 (49,718)
----------- -----------
NET INCREASE (DECREASE) IN CASH 4,212,701 (72,723)
Cash at beginning of year 104,310 2,039,012
----------- -----------
Cash and cash equivalents at end of year $ 4,317,011 $ 1,966,289
=========== ===========
Supplemental disclosures of cash flow information
Cash paid for: Interest $ 83,659 $ 5,877
Income taxes -- --
The accompanying notes are an integral part of these financial statements
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
AMPLIDYNE, INC.
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE THREE MONTHS ENDED
MARCH 31, 1998
(UNAUDITED)
Common Stock Additional Accumulated
------------ ---------- -----------
Shares Par Value Paid-in-capital (Deficit) Total
------ --------- --------------- --------- -----
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1997 4,460,000 $ 446 $12,304,592 $ (9,652,677) $2,652,361
Net Loss
(426,100) (426,100)
--------- ----- ----------- ------------ ----------
Balance at March 31, 1998 4,460,000 $ 446 $12,304,592 $(10,078,777) $2,226,261
========= ===== =========== ============ ==========
The accompanying notes are an integral part of these financial statements
</TABLE>
-5-
<PAGE>
AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
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, 1997 and March 31,
1998, (b) the financial position at December 31, 1997 and March 31, 1998,
(c) the statements of cash flows for the three-month periods ended March 31,
1997 and March 31, 1998, and (d) the changes in stockholders' equity for the
three-month period ended March 31, 1998, have been made. The results of
operations for the three months ended March 31, 1998 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, 1997,
included in the Company's Form 10-KSB filed with the Securities and Exchange
Commission on April 15, 1998.
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 ending January 21, 2002. 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.
In January 1997 and March 1997, the Company received net proceeds of
approximately $6,782,000, which included the overallotment of 210,000 units.
The proceeds are net of legal fees, underwriter's fees and other expenses of
the offering totalling approximately $1,429,000.
-6-
<PAGE>
AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
NOTE D - LOSS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS No.
128"). SFAS No. 128 specifies the compilation, presentation and disclosure
requirements for earnings per share for entities with publicly held common
stock or potential common stock. The requirements of this statement are
effective for interim and annual periods ending after December 15, 1997.
Net loss per common share - basic and diluted is determined by dividing the
net loss by the weighted average number of common stock outstanding. Net
loss per common share - diluted does not include potential common shares
derived from stock options and warrants because they are antidilutive.
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
approximately $4,323,000, plus interest, costs and attorney's 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 approximately $463,000, plus
interest, costs and attorney's fees. Management believes that the
allegations in the complaint are without merit.
From time to time, the Company is party to what it believes is routine
litigation and proceedings that may be considered as part of the ordinary
course of its business. Except for the proceedings noted above, the Company
is not aware of any current or pending litigation or proceedings that would
have a material effect on the Company's results of operations or financial
statements.
-7-
<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:
Total Net Sales
Three Months ended March 31,
1997 1998
---- ----
Net sales $ 550,645 $ 321,797
Cost of goods sold 518,270 371,304
--------- ---------
Gross profit (Loss) 32,375 (49,507)
--------- ---------
Selling, general, and
administrative 310,043 274,075
Research, engineering,
and development 264,520 122,161
--------- ---------
Total operating expenses 574,563 396,236
Stock compensation and
financing costs 324,540 --
Interest income 14,960 25,166
Other expenses 18,981 5,323
--------- ---------
Loss before income taxes (870,749) (425,900)
Provision for income taxes 350 200
--------- ---------
NET LOSS $(871,099) $(426,100)
========= =========
RESULTS OF OPERATIONS-THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE
MONTHS ENDED MARCH 31, 1997
Net sales for the three month period ended March 31, 1998 were $321,797,
representing a decrease of approximately 42% over the corresponding period in
1997. This decrease is principally attributable to the ongoing economic
conditions in South Korea, which resulted in a slowing of shipments of products
to South Korea. South Korean customers comprised 42% and 66% of the total sales
for the quarter ended March 31, 1998 and March 31, 1997, respectively. Sales to
the PCS Wireless Local Loop customers increased from less than 1% of total sales
for the quarter ended March 31, 1997 to 35% of total sales for the quarter ended
March 31, 1998. This trend is expected to continue throughout the year. The
Company's sales to US and European customers comprised 20% of total sales for
the first quarter of 1998 compared with less than 18% for the first quarter of
1997. The Company is continuing its sales and marketing efforts to diversify its
client base with its PCS single and multichannel products.
-8-
<PAGE>
PART 1 - FINANCIAL INFORMATION - ITEM 2 (CONTINUED)
Gross profit (loss) for the three month period ended March 31, 1998 amounted to
$ (49,507) (-15.4% of sales), compared to $32,375 (5.8% of sales), for the
corresponding period in 1997. The decrease in the gross margin from the
corresponding period of the prior year is principally attributable to key Korean
customers placing holds on purchase orders they placed in early 1997.
Selling, general and administrative expenses were $274,075 (85% of sales) for
the period ended March 31, 1998 compared to $310,043 (56% of sales) for the
corresponding period in 1997. These expenses decreased from 1998 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 from 1997 to 1998. Research and
development expenses for the period ended March 31, 1998 were $122,161 compared
to the expenditures for the period ended March 31, 1997 which were $264,520.
Research, engineering and development decreased in the first quarter of 1998
compared to the first quarter of 1997 due to continuing orders from customers
involving less research and development expenses. This trend should continue as
reoccurring orders are received.
Interest income for the three months ended March 31, 1998 was $25,166 compared
to $14,960 for the corresponding period in 1997. This increase is due to the
injection of IPO funds in January and March of 1997, which were invested in a
money market account.
Stock compensation expense for the three months ended March 31, 1998 was $0
compared with $ 324,540 for the corresponding period in 1997, 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 off
are expected.
As a result of the foregoing, the Company incurred net losses of ($426,100) or
(.10) per share for the three months ended March 31, 1998 compared with net
losses of ($871,099) or (.17) per share for the same period in 1997.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998, the Company had cash of $1,966,289 principally due to the
injection of IPO funds. During the first quarter of 1998 $10,000 of the
outstanding loan from a principal stockholder was paid off . The Company had
accrued expenses of $89,593 at March 31, 1998 consisting of payroll and
commissions.
-9-
<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 its business for the next twelve months. There can be
no assurance that any additional financing will be available to the Company
on acceptable terms, or at all.
-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: May 19, 1998 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>
<CIK> 0001016151
<NAME> AMPLIDYNE, INC.
<MULTIPLIER> 1
<CURRENCY> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 1,966,289
<SECURITIES> 0
<RECEIVABLES> 310,751
<ALLOWANCES> 40,510
<INVENTORY> 288,374
<CURRENT-ASSETS> 2,538,081
<PP&E> 606,049
<DEPRECIATION> 263,069
<TOTAL-ASSETS> 2,916,061
<CURRENT-LIABILITIES> 475,320
<BONDS> 0
0
0
<COMMON> 446
<OTHER-SE> 2,225,815
<TOTAL-LIABILITY-AND-EQUITY> 2,916,061
<SALES> 321,797
<TOTAL-REVENUES> 346,963
<CGS> 371,304
<TOTAL-COSTS> 493,465
<OTHER-EXPENSES> 274,075
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,323
<INCOME-PRETAX> (425,900)
<INCOME-TAX> 200
<INCOME-CONTINUING> (426,100)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (426,100)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
