UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 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 November 14, 1998 was 4,530,000.
<PAGE>
AMPLIDYNE, INC.
FORM 10-QSB/A
NINE MONTHS ENDED SEPTEMBER 30, 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...........................8-9
Signatures......................................................10
Exhibit 27- Financial Data Schedule.............................11
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
AMPLIDYNE, INC.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31, September 30,
1997 * 1998
---------- ----------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $2,039,012 $1,097,204
Accounts receivable, net of allowance
for doubtful accounts of $40,510 706,893 393,747
Inventories 324,622 651,945
Prepaid expenses and other current assets 9,296 14,208
---------- ----------
Total current assets 3,079,823 2,157,104
PROPERTY AND EQUIPMENT - AT COST
Machinery and equipment 538,214 540,114
Furniture and fixtures 43,750 43,751
Autos and trucks 19,923 19,923
Leasehold improvements 4,162 4,162
---------- ----------
606,049 607,950
Less: Accumulated depreciation and amortization 237,494 314,412
---------- ----------
Net depreciated cost 368,555 293,538
---------- ----------
OTHER ASSETS 35,000 35,000
---------- ----------
TOTAL ASSETS $3,483,378 $2,485,642
---------- ----------
</TABLE>
* 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
<TABLE>
<CAPTION>
December 31, September 30,
1997 * 1998
------------ ------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of lease obligations $ 136,396 102,658
Accounts payable 194,572 255,266
Accrued expenses 189,123 121,998
Stockholders' loan 103,051 5,051
------------ ------------
Total current liabilities 623,142 484,973
LONG-TERM LIABILITIES
Lease obligations 67,875 --
Deferred compensation 140,000 --
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 4,500,000 shares issued and outstanding at
December 31, 1997 and September 30, 1998 respectively 446 450
Additional paid-in-capital 12,304,592 12,549,588
Accumulated deficit (9,652,677) (10,549,369)
------------ ------------
Total stockholders' equity 2,652,361 2,000,669
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,483,378 $ 2,485,642
------------ ------------
</TABLE>
* 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)
<TABLE>
<CAPTION>
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
Sept 30, Sept 30, Sept 30, Sept 30,
1997 1998 1997 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 286,846 $ 331,353 $ 1,185,740 $ 1,155,864
Cost of goods sold 334,553 204,705 1,171,311 951,679
----------- ----------- ----------- -----------
Gross profit (loss) (47,707) 126,648 14,429 204,185
Operating expenses
Selling, general, and administrative 296,380 223,327 916,534 758,657
Research, engineering, and development 199,948 125,467 676,976 389,632
----------- ----------- ----------- -----------
Operating loss (544,035) (222,146) (1,579,081) (944,104)
Other nonoperating income and expenses
Interest income 41,219 19,166 107,845 67,575
Interest expense 12,412 3,654 40,298 13,439
Stock compensation and financing costs -- -- 324,540 --
----------- ----------- ----------- -----------
Loss before income taxes (515,228) (206,634) (1,836,074) (889,968)
Provision for income taxes 249 6,049 599 6,724
----------- ----------- ----------- -----------
NET LOSS $ (515,477) $ (200,585) $(1,836,673) $ (896,692)
----------- ----------- ----------- -----------
Net loss per share - basic and diluted $ (.10) $ (.05) $ (.35) $ (.20)
----------- ----------- ----------- -----------
Weighted average number of shares
outstanding 5,254,950 4,417,370 5,254,950 4,417,370
----------- ----------- ----------- -----------
The accompanying notes are an integral part of these financial statements
3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMPLIDYNE, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Nine Months
Ended Ended
Sept 30, 1997 Sept 30, 1998
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net Loss $(1,836,673) $ (896,692)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 64,194 76,918
Stock compensation expense 324,540 --
Changes in assets and liabilities
Accounts receivable 25,764 313,146
Inventories 82,306 (327,323)
Prepaid expenses and other current assets 51,457 (4,912)
Accounts payable and accrued expenses (803,786) 48,569
----------- -----------
Total adjustments (255,525) 106,398
----------- -----------
Net cash used for operating activities (2,092,198) (790,294)
----------- -----------
Cash flows from investing activities:
Purchase of fixed assets (148,781) (1,901)
----------- -----------
Net cash used for investing activities (148,781) (1,901)
----------- -----------
Cash flows from financing activities:
Proceeds from (repayments of) bank line of credit (210,000) --
Proceeds from (repayments of) notes payable (1,214,000) --
Payment of Lease obligations (324,214) (101,613)
Proceeds from (repayments of) stockholders' loans (339,694) (98,000)
Prepaid registration costs 167,053 --
Stock issuance 6,782,153 50,000
----------- -----------
Net cash provided (used) by financing activities 4,861,298 (149,613)
----------- -----------
NET INCREASE (DECREASE) IN CASH 2,620,319 (941,808)
Cash at beginning of year 104,310 2,039,012
----------- -----------
Cash and cash equivalents at end of year $ 2,724,629 $ 1,097,204
----------- -----------
Supplemental disclosures of cash flow information
Cash paid for: Interest $ 112,261 $ 13,993
Income taxes 249 6,524
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE>
<TABLE>
<CAPTION>
AMPLIDYNE, INC.
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 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
Issuance of Common Stock 40,000 4 49,996 50,000
Forgiveness of Deferred Compensation 195,000 195,000
Net Loss (896,692) (896,692)
------------ ------------ ------------ ------------ -----------
Balance at Sept 30, 1998* 4,500,000 $ 450 $12,549,588 $(10,549,359) $2,000,669
------------ ------------ ------------ ------------ -----------
The accompanying notes are an integral part of these financial statements
</TABLE>
5
<PAGE>
AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 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 nine-month periods ended September 30, 1997 and September 30,
1998, (b) the financial position at December 31, 1997 and September 30, 1998,
(c) the statements of cash flows for the nine-month periods ended September 30,
1997 and September 30, 1998, and (d) the changes in stockholders' equity for the
nine-month period ended September 30, 1998, have been made. The results of
operations for the nine months ended September 30, 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 totaling approximately $1,429,000.
In June 1998, 40,000 shares of common stock were issued to satisfy a portion of
the outstanding balance for the officer's deferred compensation.
6
<PAGE>
AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 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.
The Company is also a defendant in a complaint file in the United States
District Court for the District of New Jersey on May 13, 1998. The complaint
alleges breach of contract of a representative agreement between the Company and
ENS Engineering of South Korea. According to the plaintiff's attorney, the claim
against Amplidyne, Inc. is for $135,000, plus unspecified compensatory and
punitive damages. The Company filed an answer to the complaint denying the
allegations and a counterclaim against the plaintiff on September 12, 1998. The
counterclaim alleges breach of contract for unspecified damages, which in the
opinion of management exceeds $1,000,000. The Company intends to aggressively
defend this action and to prosecute its counterclaim. Management believes that
the breach of contract was caused by the plaintiff.
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
Nine Months ended September 30,
1997 1998
----------- -----------
Net sales $ 1,185,740 $ 1,155,864
Cost of goods sold 1,171,311 951,679
----------- -----------
Gross profit (Loss) 14,429 204,185
----------- -----------
Selling, general, and
administrative 916,534 758,657
Research, engineering,
and development 676,976 389,632
----------- -----------
Total operating expenses 1,593,510 1,148,289
----------- -----------
Stock compensation and
financing costs 324,540 --
Interest income 107,845 67,575
Other expenses 40,298 13,439
----------- -----------
Loss before income taxes (1,836,074) (899,968)
Provision for income taxes 599 6,724
----------- -----------
NET LOSS $(1,836,673) $ (896,692)
Results of operations - Nine months ended September 30, 1998 compared to the
Nine months ended September 30, 1997
Net sales for the nine month period ended September 30, 1998 were $1,155,864,
while sales for the nine months ended September 30, 1997 were $1,185,740. Sales
have stabilized due to continuing orders from customers and less orders
requiring large amounts of research and development time.
Gross profit for the nine months ended September 30, 1998 amounted to $204,185
(17.7% of sales), compared to $14,429 (1.2% of sales) for the corresponding nine
months of 1997. This increase in gross margin is principally attributable to
improved productivity and purchasing of raw materials.
8
<PAGE>
PART 1 - FINANCIAL INFORMATION - ITEM 2 (CONTINUED)
Selling, general, and administrative expenses were $223,327 (67% of sales) in
the third quarter of 1998, compared to $296,380 (103% of sales) for the third
quarter of 1997. The decrease is due to continuing efforts to reduce overhead
costs, primarily salaries and office expenses.
Research, engineering, and development costs decreased in the third quarter of
1998 by $74,481 compared with the corresponding period of 1997. This decrease is
due to a reduced level of staff performing research and development activities.
This trend should continue as reoccurring orders are received.
Interest expense was lower in the third quarter of 1998 compared to the
corresponding period of 1997. The decrease is due to lower lease payments, as
some of the leases on test equipment have been paid off. This trend is expected
to continue as the majority of the equipment necessary for production has
already been purchased or leased.
Net loss decreased to ($896,692) or ($.20) per share for the nine months ended
September 30, 1998 compared to net losses of (1,836,673) or (.35) per share for
the same period in 1997. This decrease was primarily due to increase in gross
margins by $189,756 and decrease in operating expenses by $634,977 compared to
the corresponding period of 1997.
Liquidity and Capital Resources
At September 30, 1998, the Company had cash and cash equivalents of $1,097,204
principally due to the injection of IPO funds in early 1997. The Company had
accrued expenses of $121,998, consisting of payroll 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 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.
On September 30, 1998, certain officers forgave a portion of their deferred
compensation in the aggregate amount of $195,000. The Company intends to issue
such officers, shares of Common Stock, with a value of $195,000, based upon the
closing sales price of the Common Stock on such date.
Year 2000
Many existing computer systems, including certain of the Company's internal
systems, use only the last two digits to identify years in the date field. As a
result, these computer systems do not properly recognize a year that begins with
"20" instead of the familiar "19", or may not function properly with years later
than 1999. If not corrected, many computer applications could fall or create
erroneous results. This is generally referred to as the "Year 2000" or "Y2K"
issue.
9
<PAGE>
Computer systems that are able to deal correctly with dates after 1999 are
referred to as "Year 2000 compliant".
The Company has 40 employees of which 30 are involved in production processes.
The Company's internal computers systems consist of individualized PCs. The
Company intends to replace all of these PCs with the latest hardware, at an
estimated cost of about $20,000. The Company's technical software has been
upgraded for the Y2K compliance. Presently the Company is exploring the purchase
of a new MRP system, which will be Y2K compliant, and will be installed by the
second or third quarter of 1999. All other software for day to day office work
is Y2K compliant. The Company's accounting software will also be upgraded as
part of the MRP system. Estimated cost is about $25,000. Therefore, the Company
expect to be fully Y2K compliant by the third quarter of 1999.
The Company has contacted all its major vendors and suppliers to ensure that
they are Y2K compliant. Overall the Company does not see any material effect
upon its business and operations due to the Y2K problem.
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: February 16 1998 By: /s/ DEVENDAR S. BAINS
----------------------------
Name: Devendar S. Bains
Title: President
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> USD
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 1,097,204
<SECURITIES> 0
<RECEIVABLES> 434,257
<ALLOWANCES> 40,510
<INVENTORY> 651,945
<CURRENT-ASSETS> 2,157,104
<PP&E> 607,950
<DEPRECIATION> 314,412
<TOTAL-ASSETS> 2,485,642
<CURRENT-LIABILITIES> 484,973
<BONDS> 0
0
0
<COMMON> 450
<OTHER-SE> 2,000,219
<TOTAL-LIABILITY-AND-EQUITY> 2,485,642
<SALES> 1,155,864
<TOTAL-REVENUES> 1,223,439
<CGS> 951,679
<TOTAL-COSTS> 1,341,311
<OTHER-EXPENSES> 758,657
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,439
<INCOME-PRETAX> (889,968)
<INCOME-TAX> 6,724
<INCOME-CONTINUING> (889,968)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (889,968)
<EPS-PRIMARY> (.20)
<EPS-DILUTED> (.20)
</TABLE>
