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, 1999.
[ ] 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 14, 1999 was 5,737,695.
<PAGE>
AMPLIDYNE, INC.
FORM 10-QSB
THREE MONTHS ENDED MARCH 31, 1999
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
PART II - OTHER INFORMATION
Item 2. Change in Securities............................................... 10
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,
1998 * 1999
---------- ----------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 427,510 $1,116,320
Accounts receivable, net of allowance
for doubtful accounts of $86,000 440,516 396,589
Inventories 558,685 781,193
Prepaid expenses and other current assets 14,206 11,125
---------- ----------
Total current assets 1,440,917 2,305,227
PROPERTY AND EQUIPMENT - AT COST
Machinery and equipment 540,116 540,116
Furniture and fixtures 43,750 43,750
Autos and trucks 61,183 61,183
Leasehold improvements 4,162 4,162
---------- ----------
649,211 649,211
Less: Accumulated depreciation and amortization 342,052 370,667
---------- ----------
Net depreciated cost 307,159 278,544
OTHER ASSETS 35,000 55,949
---------- ----------
TOTAL ASSETS $1,783,076 $2,639,720
========== ==========
* Derived from Company's audited Balance Sheet at December 31, 1998
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,
1998 * 1999
------------ ------------
(Unaudited)
CURRENT LIABILITIES
Current maturities of lease obligations $ 70,311 62,933
Accounts payable 220,991 430,750
Accrued expenses 255,439 115,595
Deferred compensation 27,100 --
Stockholders' loan 5,051 --
------------ ------------
Total current liabilities 578,892 609,278
LONG-TERM LIABILITIES
Lease obligations 36,933 27,964
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; 4,703,333 shares and
5,675,195 shares issued and outstanding at
December 31, 1998 and March 31, 1999,
respectively 470 568
Additional paid-in-capital 12,735,817 13,870,856
Accumulated deficit (11,569,036) (11,868,946)
------------ ------------
Total stockholders' equity 1,167,251 2,002,478
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,783,076 $ 2,639,720
============ ============
* Derived from Company's audited Balance Sheet at December 31, 1998
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,
1998 1999
----------- -----------
Net sales $ 321,797 $ 655,170
Cost of goods sold 371,304 534,505
----------- -----------
Gross profit (loss) (49,507) 120,665
Operating expenses
Selling, general, and administrative 274,075 342,397
Research, engineering, and development 122,161 131,710
----------- -----------
Operating loss (445,743) (353,442)
Other non operating income and expenses
Interest income 25,166 5,976
Interest expense 5,323 12,444
Other Income -- 60,000
----------- -----------
Loss before income taxes (425,900) (299,910)
Provision for income taxes 200 --
----------- -----------
NET LOSS $ (426,100) $ (299,910)
=========== ===========
Net loss per share - basic and diluted $ (.10) $ (.05)
=========== ===========
Weighted average number of shares
outstanding 4,367,320 5,456,994
=========== ===========
The accompanying notes are an integral part of these financial statements
-3-
<PAGE>
AMPLIDYNE, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Three Months
Ended Ended
March 31, March 31,
1998 1999
----------- -----------
Cash flows from operating activities:
Net Loss $ (426,100) $ (299,910)
----------- -----------
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 25,575 28,615
Changes in assets and liabilities
Accounts receivable 436,652 43,927
Inventories 36,248 (222,508)
Prepaid expenses and other current assets (3,881) 3,081
Accounts payable and accrued Expenses (91,499) 42,815
----------- -----------
Total adjustments 403,095 (104,070)
----------- -----------
Net cash used for operating activities (23,005) (403,980)
----------- -----------
Cash flows from investing activities:
Purchase of fixed assets -- --
----------- -----------
Net cash used for investing activities -- --
----------- -----------
Cash flows from financing activities:
Lease obligations (39,718) (16,347)
Proceeds from (repayments of) stockholders' loans (10,000) (26,000)
Prepaid registration costs -- --
Stock issuance -- 1,135,137
----------- -----------
Net cash provided by financing activities (49,718) 1,092,790
----------- -----------
NET INCREASE (DECREASE) IN CASH (72,723) 688,810
Cash at beginning of year 2,039,012 427,510
----------- -----------
Cash and cash equivalents at end of year $ 1,966,289 $ 1,116,320
=========== ===========
Supplemental disclosures of cash flow information
Cash paid for: Interest $ 5,877 $ 12,444
Income taxes -- --
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, 1999
(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, 1998 4,703,333 $ 470 $ 12,735,817 $(11,569,036) $ 1,167,251
Issuance of Common Stock 971,862 98 1,135,039 1,135,137
Net Loss (299,910) (299,910)
------------ ------------ ------------ ------------ ------------
Balance at March 31, 1999 5,675,195 $ 568 $ 13,870,856 $(11,868,946) $ 2,002,478
============ ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements
</TABLE>
-5-
<PAGE>
AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
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, 1998 and March 31, 1999
(b) the financial position at December 31, 1998 and March 31, 1999 (c) the
statements of cash flows for the three-month periods ended March 31, 1998 and
March 31, 1999, and (d) the changes in stockholders' equity for the three-month
period ended March 31, 1999, have been made. The results of operations for the
three months ended March 31, 1999 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, 1998, included in the Company's Form 10-KSB filed with
the Securities and Exchange Commission on April 15, 1999.
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 consisted 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, 2001. 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.
The underwriter received an option to purchase up to 140,000 shares of common
stock and 140,000 warrants under the same terms.
-6-
<PAGE>
AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
NOTE C - PUBLIC OFFERING (CONTINUED)
In March of 1999, 900,000 shares were issued through a private placement. The
Company received net proceeds of $915,746. The proceeds are net of legal fees,
underwriting fees and other expenses of the offering totalling $88,375. An
additional 71,862 shares were issued during the first quarter in exchange for
deferred officer's salaries, commissions, and consulting fees totalling
$122,637.
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. All prior years were restated in
accordance with SFAS No. 128.
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. A
motion for summary judgement was denied in February 1999.
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 condition.
NOTE F - SUBSEQUENT EVENT
In April 1999, the Company issued 62,500 shares of common stock in connection
with the exercise of outstanding warrants generating net proceeds of $93,121.
-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,
1998 1999
--------- ---------
Net sales $ 321,797 $ 655,170
Cost of goods sold 371,304 534,505
--------- ---------
Gross profit (Loss) (49,507) 120,665
--------- ---------
Selling, general, and
administrative 274,075 342,397
Research, engineering,
and development 122,161 131,710
--------- ---------
Total operating expenses 396,236 474,107
Interest income 25,166 5,976
Other expenses 5,323 12,444
Other income -- 60,000
--------- ---------
Loss before income taxes (425,900) (299,910)
Provision for income taxes 200 --
--------- ---------
NET LOSS $(426,100) $(299,910)
========= =========
RESULTS OF OPERATIONS-THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS
ENDED MARCH 31, 1998
Net sales for the three month period ended March 31, 1999 were $655,170, while
sales for the three months ended March 31, 1998 were $321,797. Sales have
stabilized due to continuing orders from customers and less orders requiring
large amounts of research and development time.
Gross profit for the three months ended March 31, 1999 amounted to $120,665
(18.4% of sales), compared to $49,507 (-15.4% of sales) for the corresponding
three months of 1998. This increase in gross margin is principally attributable
to improved productivity, and prudent purchasing of raw materials.
-8-
<PAGE>
PART 1 - FINANCIAL INFORMATION - ITEM 2 (CONTINUED)
Selling, general, and administrative expenses (SG&A) were $342,397 (52.3% of
sales) in the first quarter of 1999, compared to $274,075 (85.2% of sales) for
the first quarter of 1998. The increase is due to costs incurred for the
additional funds raised in the first quarter. The actual SG&A decreased to
approximately $242,000 for the first quarter. The decrease is due to continuing
efforts to reduce overhead costs, primarily salaries and office expenses.
Research, engineering, and development costs increased in the first quarter of
1999 by $9,549 compared with the corresponding period of 1998. This increase is
due to a increased level of staff performing research and development
activities, primarily due to work being performed on new products such as the
NMT-450 multi carrier amplifiers.
Interest expense increased in the first quarter of 1999 compared to the
corresponding period of 1998. The increase is due to additional lease payments.
Interest income decreased in the first quarter by $19,190 due to the decrease of
cash in the company's money market fund.
As a result of the foregoing and the forgiveness of consulting fees in the
amount of $60,000 during the first quarter of 1999, the Company incurred net
losses of (299,910) or (.05) per share for the first months ended March 31, 1999
compared to net losses of (426,100) or (.10) per share for the same period in
1998.
Liquidity and Capital Resources
At March 31, 1999, the Company had cash and cash equivalents of $1,116,320. The
Company had accrued expenses of $115,595, consisting of payroll, commissions,
and general and administrative expenses.
The Company believes that the net proceeds of the Company's private placement
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.
-9-
<PAGE>
PART II - OTHER INFORMATION
ITEM 2. CHANGE IN SECURITIES
On March 31, 1999, the Company issued 900,000 shares of common stock to
accredited investors pursuant to Rule 506 of Regulation D of the Securities Act
of 1933, as amended (the "Act"). The Company sold such shares at $1.125,
received gross proceeds of $1,012,500 and paid a 7% commission (for a total of
$70,875) to the placement agent.
On March 31, 1999, the Company issued 7,893 shares of common stock to Devendar
S. Bains (4,025), Tarlochan Bains (2,526) and Nirmal Bains (1,342). The shares
were issued in exchange of accrued salaries owed to such persons at December 31,
1998 ($10,565.67, $6,629.44 and $3,521.89, respectively) and were converted at a
price of $2.625, the market price at such date. The sales were made in reliance
on Section 4(2) of the Act. No underwriting discounts or commissions were paid.
On March 31, 1999, the Company issued 15,969 shares of common stock to Devendar
S. Bains (5,465), Tarlochan Bains (9,704) and Nirmal Bains (800). The shares
were issued in exchange of accrued salaries/commissions owed to such persons at
March 31, 1999 ($14,346.16, $25,473.84 and $2,100.00, respectively) and were
converted at a price of $2.625, the market price at such date. The sales were
made in reliance on Section 4(2) of the Act. No underwriting discounts or
commissions were paid.
In January 1999, the Company issued 48,000 shares of common stock to two former
officers of the Company. The shares were issued in exchange for accrued fees
owed to them in the amount of $60,000, and was converted at $1.25, the market
price at such date. The sales were made in reliance on Section 4(2) of the Act.
No underwriting discounts or commissions were paid.
-10-
<PAGE>
RIDER X
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, 1999 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> USD
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 1,116,320
<SECURITIES> 0
<RECEIVABLES> 482,589
<ALLOWANCES> 86,000
<INVENTORY> 781,193
<CURRENT-ASSETS> 2,305,227
<PP&E> 649,211
<DEPRECIATION> 370,667
<TOTAL-ASSETS> 2,639,720
<CURRENT-LIABILITIES> 609,278
<BONDS> 0
0
0
<COMMON> 568
<OTHER-SE> 2,001,910
<TOTAL-LIABILITY-AND-EQUITY> 2,639,720
<SALES> 655,170
<TOTAL-REVENUES> 721,146
<CGS> 534,505
<TOTAL-COSTS> 666,215
<OTHER-EXPENSES> 342,397
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,444
<INCOME-PRETAX> (299,910)
<INCOME-TAX> 0
<INCOME-CONTINUING> (299,910)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (299,910)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
