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, 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.)
59 LaGrange Street
Raritan, New Jersey 08869
--------------------------
(Address of principal executive offices)
(908) 253-6870
--------------
(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 July 31, 1999 was 5,770,007.
<PAGE>
AMPLIDYNE, INC.
FORM 10-QSB
SIX MONTHS ENDED JUNE 30, 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.................................6-8
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations........................9-10
PART II - OTHER INFORMATION
Item 2. Change in Securities.................................................11
Signatures....................................................................12
Exhibit 27- Financial Data Schedule...........................................13
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
AMPLIDYNE, INC.
BALANCE SHEETS
ASSETS
December 31, June 30,
1998 * 1999
---------- ----------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 427,510 $ 885,717
Accounts receivable, net of allowance
for doubtful accounts of $86,000 440,516 514,790
Inventories 558,685 801,268
Prepaid expenses and other current assets 14,206 8,044
---------- ----------
Total current assets 1,440,917 2,209,819
---------- ----------
PROPERTY AND EQUIPMENT - AT COST
Machinery and equipment 540,116 549,826
Furniture and fixtures 43,750 43,750
Autos and trucks 61,183 61,183
Leasehold improvements 4,162 4,162
---------- ----------
649,211 658,921
Less: Accumulated depreciation and amortization 342,052 400,099
---------- ----------
Net depreciated cost 307,159 258,822
---------- ----------
OTHER ASSETS 35,000 67,949
---------- ----------
TOTAL ASSETS $1,783,076 $2,536,590
========== ==========
* Derived from Company's audited Balance Sheet at December 31, 1998
The accompanying notes are an integral part of these financial statements
-1-
<PAGE>
<TABLE>
<CAPTION>
AMPLIDYNE, INC.
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, June 30,
1998 * 1999
------------ ------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of lease obligations $ 70,311 $ 15,533
Accounts payable 220,991 204,019
Accrued expenses 255,439 123,522
Deferred compensation 27,100 --
Stockholders' loan 5,051 --
------------ ------------
Total current liabilities 578,892 343,074
LONG-TERM LIABILITIES
Lease obligations 36,933 26,434
------------ ------------
TOTAL LIABILITIES 615,825 369,508
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock - authorized, 1,000,000 shares of $.0001 par value; 0 shares
and 50,000 shares
outstanding at December 31, 1998 and June 30, 1999 -- 5
Common stock - authorized, 25,000,000 shares
of $.0001 par value; 4,703,333 shares and 5,770,007 shares issued and
outstanding at December 31, 1998 and June 30, 1999,
respectively 470 577
Additional paid-in-capital 12,735,817 14,520,825
Accumulated deficit (11,569,036) (12,354,325)
------------ ------------
Total stockholders' equity 1,167,251 2,167,082
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,783,076 $ 2,536,590
============ ============
* Derived from Company's audited Balance Sheet at December 31, 1998
The accompanying notes are an integral part of these financial statements
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
AMPLIDYNE, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1998 1999 1998 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $ 502,714 $ 422,912 $ 824,511 $ 1,078,082
Cost of goods sold 375,670 425,804 746,974 960,309
----------- ----------- ----------- -----------
Gross profit (loss) 127,044 (2,892) 77,537 117,773
Operating expenses
Selling, general & admin 261,255 349,131 535,330 691,528
Research, eng. & devel. 142,004 135,702 264,165 267,412
----------- ----------- ----------- -----------
Operating loss (276,215) (487,725) (721,958) (841,167)
Other nonoperating income
and expenses
Interest income 23,243 5,547 48,409 11,523
Interest expense 4,462 1,201 9,785 13,645
Other Income -- -- -- 60,000
----------- ----------- ----------- -----------
Loss before income taxes (257,434) (483,379) (683,334) (783,289)
Provision for income taxes 475 2,000 675 2,000
NET LOSS $ (257,909) $ (485,379) $ (684,009) $ (785,289)
=========== =========== =========== ===========
Net loss per share - basic
and diluted (.06) (.08) (.16) (.15)
=========== =========== =========== ===========
Weighted average number
of shares outstanding 4,407,370 5,734,625 4,407,370 5,221,547
=========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements
-3-
</TABLE>
<PAGE>
AMPLIDYNE, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Six Months
Ended Ended
June 30, 1998 June 30, 1999
----------- -----------
Cash flows from operating activities:
Net Loss $ (684,009) $ (785,289)
----------- -----------
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 51,152 58,047
Changes in assets and liabilities
Accounts receivable 279,472 (74,274)
Inventories 26,119 (242,583)
Prepaid expenses and other current assets (4,394) 6,162
Accounts payable and accrued expenses (50,868) (175,989)
----------- -----------
Total adjustments 301,481 (428,637)
----------- -----------
Net cash used for operating activities (382,528) (1,213,926)
----------- -----------
Cash flows from investing activities:
Purchase of fixed assets -- (9,709)
----------- -----------
Net cash used for investing activities -- (9,709)
----------- -----------
Cash flows from financing activities:
Lease obligations (69,423) (65,278)
Proceeds from (repayments of) stockholders' loans (25,000) (38,000)
Stock issuance 50,000 1,785,120
----------- -----------
Net cash provided/used for financing activities (44,423) 1,681,842
----------- -----------
NET INCREASE (DECREASE) IN CASH (426,951) 458,207
Cash at beginning of year 2,039,012 427,510
----------- -----------
Cash and cash equivalents at end of period $1,612, 061 $ 885,717
=========== ===========
Supplemental disclosures of cash flow information
Cash paid for: Interest $ 10,339 $ 13,645
Income taxes 475 --
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 SIX MONTHS ENDED
JUNE 30, 1999
(UNAUDITED)
PREFERRED STOCK COMMON STOCK
--------------------------- --------------------------- ADDITIONAL ACCUMULATED
SHARES PAR VALUE SHARES PAR VALUE PAID-IN-CAPITAL (DEFICIT) TOTAL
------------ ------------ ------------ ------------ --------------- ------------ ------------
<S> <C> <C> <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 Preferred Stock 50,000 5 499,995 500,000
Issuance of Common Stock
1,066,674 107 1,285,013 1,285,120
Net Loss (785,289) (785,289)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Balance at June 30, 1999 50,000 $ 5 5,770,007 $ 577 $ 14,520,825 $(12,354,325) $ 2,167,082
============ ============ ============ ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements
</TABLE>
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<PAGE>
AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 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 six-month periods ended June 30, 1998 and June 30, 1999 (b)
the financial position at December 31, 1998 and June 30, 1999 (c) the statements
of cash flows for the six-month periods ended June 30, 1998 and June 30, 1999,
and (d) the changes in stockholders' equity for the six-month period ended June
30, 1999, have been made. The results of operations for the six months ended
June 30, 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
JUNE 30, 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.
In June of 1999, 50,000 shares of Series A Preferred Stock, $.0001 par value,
were issued through a private placement (at $10.00 per share). The Company
received net proceeds of $465,000, net of consulting fees. The Preferred Stock:
(I) are entitled to dividends at the annual rate of 6%, payable semi-annually,
in cash or in shares of Common Stock; (ii) has a liquidation preference of
$10.00 per share, (iii) is convertible into shares of Common Stock at the lesser
of (A) 110% of the average closing sales price of the Common Stock on the five
trading days prior to issuance or (B) 85% of the average closing sales price of
the Common Stock for the five trading days prior to conversion, in each case not
less than $1.25 per share; (iv) is non-voting, (v) is subject to redemption; and
(vi) shall automatically convert into Common Stock on June 30, 2002 (if not
previously converted).
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.
-7-
<PAGE>
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 July 1999 the Company moved it's operations to a smaller facility of 11,400
square feet in Raritan, New Jersey under a five year lease expiring July 14,
2004 with a monthly rent of $5,937 plus real estate taxes.
-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:
Total Net Sales
Six Months ended June 30,
1998 1999
----------- -----------
Net sales $ 824,511 $ 1,078,082
Cost of goods sold 746,974 960,309
----------- -----------
Gross profit (Loss) 77,537 117,773
----------- -----------
Selling, general, and
administrative 535,330 691,528
Research, engineering,
and development 264,165 267,412
----------- -----------
Total operating expenses 799,495 958,940
----------- -----------
Interest income 48,409 11,523
Other expenses 9,785 13,645
Other income -- 60,000
----------- -----------
Loss before income taxes (683,334) (783,289)
Provision for income taxes 675 2,000
----------- -----------
NET LOSS $ (684,009) $ (785,289)
=========== ===========
RESULTS OF OPERATIONS-SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO
SIX MONTHS ENDED JUNE 30, 1998
Net sales for the six month period ended June 30, 1999 were $1,078,082, while
sales for the six months ended June 30, 1998 were $824,511. Sales increased in
the first half of 1999 compared with the first half of 1998, due to continuing
orders from customers and less orders requiring large amounts of research and
development time, primarily in the the first quarter. In the second quarter, the
Company shipped its NMT-450 Multicarrier products to a key North American
customer. However, sales to S. Korean customers slowed down due to specification
upgrades.
Gross profit for the six months ended June 30, 1999 amounted to $117,773 (10.92%
of sales), compared to $77,537 (9.4% of sales) for the corresponding six months
of 1998. This increase in gross margin is principally attributable to lower
lease expenses on equipment used to manufacture products and reduced material
costs. The company expects to continue to reduce overhead expenses during the
third quarter of 1999.
-9-
<PAGE>
PART 1 - FINANCIAL INFORMATION - ITEM 2 (CONTINUED)
Selling, general, and administrative expenses were $691,528 (64% of sales) in
the first six months of 1999, compared to $535,330 (65% of sales) for the first
six months of 1998. The actual expenses (rather than the percentage of sales)
were higher in 1999, due to an increase in stock and professional fees relating
to the Company's private placements.
Research, engineering, and development costs remained relatively unchanged for
the six months ended June 30, 1999 compared with the corresponding period of
1998. This trend should continue as reoccurring orders are received from
customers utilizing the existing technology.
Interest income was lower in the second half of 1999 compared to the
corresponding period of 1998. The decrease is due to lower amounts of cash in
the Company's money market account.
As a result of the foregoing, the Company incurred net losses of ($785,289) or
(.15) per share for the six months ended June 30, 1999 compared to net losses of
($684,009) or (.16) per share for the same period in 1998.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1999, the Company had cash and cash equivalents of $885,717
principally due to the injection of private placement funds in the first half of
1999. The Company had accrued expenses of $123,522, consisting for payroll and
commissions..
The Company believes that the net proceeds of the Company's private placements
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>
PART II - OTHER INFORMATION
Item 2. Change in Securities
On June 30, 1999, the Company issued 50,000 shares of Series A Preferred 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 10.00 per
share, received gross proceeds of $500,000 and paid consulting fees of $35,000,
resulting in net proceeds of $465,000.
On June 30, 1999, the Company issued 32,312 shares of common stock to Devendar
S. Bains (15,398), Tarlochan Bains (12,815) and Nirmal Bains (4,099). The shares
were issued in exchange of accrued salaries owed to such persons at June 30,
1999 ($27,424, $22,872, and $7,300, respectively) and were converted at a price
of $1.781, 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 April 1999, the Company issued 62,500 shares of Common Stock in connection
with the exercise of outstanding warrants generating gross proceeds of $93,121.
The Company issued such shares in reliance on Section 4(2) of the Act. No
underwriting discounts or commissions were paid.
-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: August 13, 1999 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>
</LEGEND>
<CIK> 0001016151
<NAME> AMPLIDYNE, INC.
<MULTIPLIER> 1
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 885,717
<SECURITIES> 0
<RECEIVABLES> 600,790
<ALLOWANCES> 86,000
<INVENTORY> 801,268
<CURRENT-ASSETS> 2,209,819
<PP&E> 658,921
<DEPRECIATION> 400,099
<TOTAL-ASSETS> 2,536,590
<CURRENT-LIABILITIES> 343,074
<BONDS> 0
0
5
<COMMON> 577
<OTHER-SE> 2,166,500
<TOTAL-LIABILITY-AND-EQUITY> 2,536,590
<SALES> 1,078,082
<TOTAL-REVENUES> 1,149,605
<CGS> 960,309
<TOTAL-COSTS> 1,227,721
<OTHER-EXPENSES> 691,528
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,645
<INCOME-PRETAX> (783,289)
<INCOME-TAX> 2,000
<INCOME-CONTINUING> (785,289)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (785,289)
<EPS-BASIC> (.15)
<EPS-DILUTED> (.15)
</TABLE>
