AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 8, 2000,
REGISTRATION NO. 333--
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AMPLIDYNE, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
DELAWARE 3679 22-3440510
- ------------------------- ---------------------------- -------------------
(STATE OR OTHER JURIS- (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
DICTION OF ORGANIZATION) CLASSIFICATION CODE NO.) IDENTIFICATION NO.)
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
59 LAGRANGE STREET
RARITAN, NJ 08869
(908) 253-6870
(ADDRESS OF PRINCIPAL PLACE OF BUSINESS OR
INTENDED PRINCIPAL PLACE OF BUSINESS)
DEVENDAR S. BAINS
CHIEF EXECUTIVE OFFICER
59 LAGRANGE STREET
RARITAN, NJ 08869
(908) 253-6870
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
STUART NEUHAUSER, ESQ.
BERLACK, ISRAELS & LIBERMAN LLP
120 WEST 45TH STREET
NEW YORK, NY 10036
(212) 704-0100
(212) 704-0196 (FAX)
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO TIME
AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT AS DETERMINED BY THE
SELLING SECURITYHOLDERS.
IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED
PURSUANT TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING
BOX. [ ]
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE
OFFERED ON A DELAYED OR CONTINUOUS BASIS, PURSUANT TO RULE 415 UNDER THE
SECURITIES ACT OF 1933, OTHER THAN SECURITIES OFFERED ONLY IN CONNECTION WITH
DIVIDEND OR REINVESTMENT PLANS, CHECK THE FOLLOWING BOX: [X]
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING
PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING BOX
AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER
EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. [ ]
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE
462(C) UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES
ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION
STATEMENT FOR THE SAME OFFERING. [ ]
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE
434, PLEASE CHECK THE FOLLOWING BOX. [ ]
CONTINUED OVERLEAF
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO AMOUNT TO BE OFFERING PRICE PER PROPOSED MAXIMUM AGGREGATE REGISTRATION
BE REGISTERED REGISTERED SECURITIES(1) OFFERING PRICE FEE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock(2) 1,650,370 $6.52 $10,760,412 $2,991.40
- ---------------------------------------------------------------------------------------------------------------------------
Common Stock(3) 362,500 $6.52 $ 2,363,500 $ 657.05
- ---------------------------------------------------------------------------------------------------------------------------
Common Stock(3) 140,000 $7.50 $ 1,050,000 $ 291.90
- ---------------------------------------------------------------------------------------------------------------------------
Common Stock(3) 140,000 $9.00 $ 1,260,000 $ 350.28
- ---------------------------------------------------------------------------------------------------------------------------
Common Stock(3) 20,000 $7.00 $ 140,000 $ 38.92
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Total Registration Fee -- -- $15,573,912 $4,652.17
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Established solely for purposes of calculating registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended
(the "Act") based upon the average of the high and low sales prices of
the Common Stock on January 31, 2000, as reported on the Nasdaq
SmallCap Market.
(2) Common Stock held by selling securityholders.
(3) Common Stock underlying warrants held by selling securityholders. In
accordance with Rule 457(g) of the Act, the offering price is based on
the highest of the following: (a) the price at which such warrants may
be exercised or (b) the price of the common stock as determined in
accordance with Rule 457(c) under the Act. See Footnote 1.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
PROSPECTUS SUBJECT TO COMPLETION DATED FEBRUARY 8, 2000
AMPLIDYNE, INC.
2,312,870 Shares of Common Stock
2,312,870 of the shares of common stock being offered by this
prospectus are being sold by the selling securityholders named under "Selling
Securityholders" beginning on page 12. We are registering the shares pursuant to
an agreement between us and the selling securityholders.
The selling securityholders will sell their shares and shares issuable
upon exercise of warrants they own as described under "Plan of Distribution"
beginning on page 16. We will not receive any of the proceeds from the sale of
the common stock owned by the selling securityholders but will receive funds
from the exercise of their warrants.
Our common stock and warrants are quoted on The Nasdaq SmallCap Market
under the symbols AMPD and AMPDW, respectively. The closing prices of the common
stock and warrants on January 31, 2000 were $6.50 and $2.00, respectively.
Our principal executive offices are located at 59 LaGrange Street,
Raritan, New Jersey 08869. Our telephone number is (908) 253-6870.
-------------------------------------
An investment in the common stock involves a high degree of risk. See
"Risk Factors" beginning on page 4.
-------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined that this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
-------------------------------------
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to by these
securities in any state where the offer or sale is not permitted.
THE DATE OF THIS PROSPECTUS IS _____,2000.
<PAGE>
AVAILABLE INFORMATION
We file reports, proxy statements and other information with
the Securities and Exchange Commission. Those reports, proxy statements and
other information may be obtained:
o At the Public Reference Room of the SEC, Room 1023 --
Judiciary Plaza, 450 Fifth Street, NW, Washington,
D.C. 20549;
o At the public reference facilities at the SEC's
regional offices located at Seven World Trade Center,
13th Floor, New York, New York 10048 or Northwestern
Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661;
o From the SEC, Public Reference Room, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549;
o At the offices of The Nasdaq Stock Market, Inc.,
Reports Section, 1735 K Street, N.W., Washington,
D.C. 20006; or
o From the Internet site maintained by the SEC at
http://www.sec.gov, which contains reports, proxy and
information statements and other information
regarding issuers that file electronically with the
SEC.
Some locations may charge prescribed rates or modest fees for copies.
For more information on the public reference rooms, call the SEC at
1-800-SEC-0330.
This prospectus is part of a registration statement that we filed with
the SEC. The registration statement contains more information than this
prospectus regarding Amplidyne and our common stock, including certain exhibits.
You can get a copy of the registration statement from the SEC at the addresses
listed above or from its Internet file.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring to you those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934 until the selling shareholders sell all the shares. This prospectus
is part of registration statement we filed with the SEC (Registration No.
333-11015).
o Proxy Statement on Schedule 14A dated November 27, 1998.
o Annual Report on Form 10-KSB for the year ended December 31, 1998.
o Quarterly Report on Form 10-QSB for the period ended March 31, 1999.
o Quarterly Report on Form 10-QSB/A for the period ended June 30, 1999.
o Quarterly Report on Form 10-QSB for the period ended September 30,
1999.
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o Current Report on Form 8-K filed August 3, 1999.
o The description of the Common Stock, par value $.0001 per share
("Common Stock") and the Redeemable Common Stock Purchase Warrants
("Warrants"), of Amplidyne contained in its registration statement
filed under Section 12 of the Exchange Act, including any amendment
or report filed for the purpose of updating such description.
On request, we will provide at no cost to each person, including any
beneficial owner, who receives a copy of this prospectus, a copy of any or all
of the documents incorporated in this prospectus by reference. We will not
provide exhibits to any of such documents, however, unless such exhibits are
specifically incorporated by reference into those documents. Requests should be
directed to the Secretary of Amplidyne, Inc., 59 LaGrange Street, Raritan, New
Jersey 08869, telephone number (908) 253-6870.
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone else to provide you
with different information. We are not making an offer of these securities in
any state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other that the date on
the front of this document.
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RISK FACTORS
You should carefully consider the risks described below before
investing in our company. The risks and uncertainties described below are not
the only ones facing our company. Other risks and uncertainties that we have not
predicted or assessed may also adversely affect our company.
Some of the information in this prospectus contains forward-looking
statements that involve substantial risks and uncertainties. You can identify
these statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe,' "intend," "estimate," and "continue" or other similar
words. You should read statements that contain these words carefully for the
following reasons:
o the statements may discuss our future expectations;
o the statements may contain projections of our future earnings
or of our financial condition; and
o the statements may state other "forward-looking" information.
We believe it is important to communicate our expectations to our
investors. There may be events in the future, however, that we are not
accurately able to predict or over which we have no control. The risk factors
listed below, as well as any cautionary language in or incorporated by reference
into this prospectus, provide examples of risks, uncertainties and events that
may cause our actual results to differ materially from the expectations we
describe in our forward-looking statements. Before you invest in our company,
you should be aware that the occurrence of any of the events described in the
risk factors below, elsewhere in or incorporated by reference into this
prospectus and other events that we have not predicted or assessed could have a
material adverse effect on our earnings, financial condition or business. In
such case, the trading price of our securities could decline and you may lose or
all or part of your investment.
WE HAVE A RECENT HISTORY OF LOSSES. We have incurred net losses of
$5,419,940, $2,493,611, and $1,916,359 for the years ended December 31, 1996,
1997 and 1998, respectively and $1,342,148 for the nine months ended September
30, 1999. These losses were due, in large part, to the research, engineering and
development costs associated with the creation of our line of multicarrier
linear power amplifiers. Further, we have not generated sufficient sales volume
to cover our overhead costs and generate profits. We expect that our losses will
increase and continue until such time, if ever, as we are able to successfully
manufacture and market our products on a larger scale and therefore generate
higher profit margins. We will need to generate a substantial increase in
revenues to become profitable. Accordingly, we cannot assure you that we will
ever become or remain profitable. In addition, we had an accumulated deficit of
$12,911,184 at September 30, 1999.
WE MAY REQUIRE ADDITIONAL FINANCING. We believe that our current cash
on hand, as well as additional funds from the exercise of warrants, together
with cash flow from our operations, will be adequate to fund our operations for
at least twelve months. However, we may require additional financing prior to or
after such time. We have issued our common stock, when available to us, in lieu
of cash payment of officers salaries, commissions and consulting fees, although
we may not be able to continue this practice. If additional financing is needed,
we cannot be sure that such financing will be available to us on acceptable
terms. If adequate funds are not available, we may be required to delay, scale
back or eliminate our research, engineering and development or manufacturing
programs or obtain funds through arrangements with partners or others that may
require us to relinquish rights to certain of our technologies, potential
products or other assets. Thus, our inability to obtain such financing could
have a material adverse effect on our business, financial condition and
operations.
OUR SUCCESS RELIES UPON THE GROWTH OF WIRELESS TELECOMMUNICATIONS
SERVICES. The demand for our products will depend in large part upon continued
and growing demand within the wireless telecommunications industry for power
amplifiers. Although demand for power amplifiers has grown in recent years, we
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are not sure whether the quantity and variety of wireless telecommunication
services will continue to grow, or that such services will create a demand for
our products.
OUR LACK OF AUTOMATED MANUFACTURING PROCESSES AND OUR DEPENDENCE ON
THIRD PARTY MANUFACTURERS COULD ADVERSELY AFFECT OUR BUSINESS. We have
consistently reviewed our automated manufacturing needs in order to control our
production schedule. To date, we have not established a fully automated
manufacturing facility. Until such time as we are able to establish such
facilities, we expect to be dependent on third party manufacturers. We cannot be
sure that these third party manufacturers will be able to fulfill our production
commitment. Furthermore, we do not have written agreements with these
manufacturers. Our inability to obtain timely deliveries of acceptable
assemblies could delay our ability to deliver products to our customers, and
would have a material adverse effect on our business, financial condition and
results of operations. In addition, if these manufacturers increase their
production costs, we may not be able to recover such cost increases under the
fixed price commitments with our customers.
OUR LIMITED NUMBER OF SUPPLIERS COULD ADVERSELY AFFECT OUR BUSINESS.
Power transistors and certain other key components used in our products are
currently available from only a limited number of suppliers. Certain of our
suppliers have limited operating histories and limited financial and other
resources. Our suppliers may prove to be unreliable sources of certain
components. Furthermore, we have no written agreements with our suppliers. In
the past, we have not purchased key components in large volumes but anticipate
that our need for component parts will increase. If we are unable to obtain
sufficient quantities of components, particularly power transistors, we could
experience delays or reductions in product shipments. Such delays or reductions
could have a material adverse effect on our business, financial condition and
results of operations. Additionally, such delays or reductions may have a
material adverse effect on our relationships with customers and result in the
termination of existing orders and/or a permanent loss in our future sales.
OUR SUCCESS RELIES ON A SMALL NUMBER OF CUSTOMERS AND OUR SALES ORDERS
HAVE HAD A HIGH DEGREE OF DELAYS AND CANCELLED Orders. In 1996, approximately
70% of our net revenues were derived from sales to three customers. In 1997,
approximately 48% of our net revenues were derived from one customer (in South
Korea). In 1998, approximately 94% of our net revenues were derived from three
customers (two European and one South Korean). In the past few years we have
experienced reductions, delays and cancellations in orders from our new and
existing customers, particularly in the Korean marketplace. We anticipate that
sales of our products to relatively few customers will account for a majority of
our 1999 revenues. The reduction, delay or cancellation of orders from one or
more of our significant customers would materially and adversely affect our
financial condition and results of operation. Moreover, we may experience
significant fluctuations in net sales, gross margins and operating results in
the future as a result of the uncertainty of such sales.
OUR LIMITED MARKETING EXPERIENCE MAY ADVERSELY AFFECT OUR BUSINESS. We
have developed a sales and marketing network, including outside sales agents,
which has demonstrated the advantages of our products over competing products.
In order to be successful, we have to maintain a leading edge position regarding
emerging wireless communication technologies involving ultra linear base station
amplifiers. To this end, we continue to upgrade our sales and marketing efforts,
while maintaining product cost. We may not be able to recruit effective sales
and marketing personnel or agents. We are not sure whether our marketing efforts
will be successful or that we will be able to maintain competitive sales and
distribution capabilities.
WE ARE CONTROLLED BY MANAGEMENT OF OUR COMPANY. Our officers, directors
and persons who may be deemed our affiliates beneficially own, in the aggregate,
and have the right to vote approximately 40% of our issued and outstanding
common stock, not including common stock options they may own. Accordingly, such
holders will be in a position to elect all of our directors and control our
company.
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THE LIMITED PUBLIC MARKET AND TRADING MARKET MAY CAUSE VOLATILITY IN
OUR STOCK PRICE. There has only been a public market for our securities since
January 1997 and we are not sure whether an active trading market in our
securities will ever be maintained. In the absence of such a market, you may
find it more difficult to sell our securities. In addition, the stock market in
recent years has experienced extreme price and volume fluctuations that have
particularly affected the market prices of many smaller companies. The trading
price of our securities is expected to be subject to significant fluctuations in
response to variations in our quarterly operating results; changes in analysts'
earnings estimates regarding our Company; announcements of technological
innovations by us or our competitors; and general conditions in the wireless
communications industry and other factors. These fluctuations, as well as
general economic and market conditions, may have a material adverse effect on
the market price of our securities.
OUR SUCCESS DEPENDS ON OUR ABILITY TO MANAGE THE SIZE OF OUR
OPERATIONS. We had substantially increased the scale of our operations over the
past two years. However, due to the down turn in business activity in the
Southeast Asian market, we have had to reassess our business strategy. We intend
to downsize some of our operations in order to maintain competitiveness and
achieve profitability. We have also explored joint ventures and mergers in order
to achieve these results, but have not consummated any such transaction. If we
do not increase our sales, decrease overhead expenditure or do not adequately
manage the size of our operations, our results of operations will be materially
adversely affected.
DECLINING AVERAGE SALES PRICES COULD ADVERSELY AFFECT OUR BUSINESS. If
wireless telecommunications customers come under increasing price pressure from
cellular and PCS service providers, we could expect to experience downward
pricing pressure on our products. In addition, competition among non-captive
amplifier suppliers could increase the downward pricing pressure on our
products. To date, we have not experienced such pressure. As our customers
frequently negotiate supply arrangements with us far in advance of product
delivery dates, we often must commit to price reductions before we can determine
whether cost reductions can be obtained. If we are unable to achieve cost
reductions, our gross margins will decline and our business, financial condition
and results of operations could be materially and adversely affected.
RAPID TECHNOLOGICAL CHANGE AND INTENSE COMPETITION COULD ADVERSELY
AFFECT OUR BUSINESS. The wireless telecommunications equipment industry is
extremely competitive and is characterized by rapid technological change, new
product development, product obsolescence and evolving industry standards. In
addition, price competition in this market is intense and characterized by
significant price erosion over the life of a product. Currently, we compete
primarily with non-captive suppliers of power amplification products. We believe
that our success will be based primarily upon service, pricing, reputation, and
our ability to meet product delivery schedules. Our existing and potential
customers continuously evaluate whether to manufacture their own amplification
products or to purchase such products from outside sources. These customers and
other large manufacturers of wireless telecommunications equipment could elect
to enter the market and compete directly with us. Many of our competitors have
significantly greater financial, technical, manufacturing, sales and marketing
capabilities and research and development personnel and other resources than us
and have achieved greater name recognition of their existing products and
technologies. In order for us to successfully compete, we must continue to
develop new products, keep pace with advancing technologies and competitive
innovations and successfully market our products. Our inability to successfully
compete against our larger competitors will have a materially adverse affect on
our business, financial condition and operations.
In addition, we are not sure whether new products or alternative
amplifier technology will render our current or planned products obsolete or
inferior. Rapid technological development by others may result in our products
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becoming obsolete before we recover a significant portion of the research,
development and commercialization expenses we incurred with respect to those
products.
OUR BUSINESS WILL BE ADVERSELY AFFECTED IF WE DO NOT KEEP UP WITH THE
INTERNET'S RAPID TECHNOLOGICAL CHANGE, EVOLVING INDUSTRY STANDARDS AND CHANGING
USER REQUIREMENTS. We are currently developing new products for high speed
internet access. To be successful, we must adapt to our rapidly changing market
by continually enhancing the technologies used for Internet access. If we are
unable, for technical, legal, financial or other reasons, to adapt in a timely
manner in response to changing market conditions or user requirements, our
business could be materially adversely affected. Significant issues concerning
the commercial use of Internet technologies, including security, reliability,
cost, ease of use and quality of service, remain unresolved and may inhibit the
growth of businesses relying on the Internet. Our future success will depend, in
part, on our ability to meet these challenges. Among the most important
challenges facing us are the need to:
o effectively use established technologies;
o continue to develop our technical expertise; and
o respond to emerging industry standards and other technical
changes.
All of these changes must be met in a timely and cost-effective manner.
We cannot assure you that we will succeed in effectively meeting these
challenges and our failure to do so could materially and adversely affect our
business.
RISKS ASSOCIATED WITH SALES OUTSIDE OF THE UNITED STATES MAY ADVERSELY
AFFECT OUR BUSINESS. International sales represented approximately 72%, 70%, and
94% of our net revenues for the years ended December 31, 1996, 1997 and 1998,
respectively. We expect that international sales will continue to account for a
significant portion of our net revenues in the future. To the extent that we do
not achieve and maintain substantial international sales, our business, results
of operations and financial condition could be materially and adversely
affected.
Sales of our products outside of the United States are denominated in
US dollars. An increase in the value of the U.S. dollar relative to foreign
currencies would make our products more expensive and, therefore, potentially
less competitive outside the United States. Additional risks inherent in our
sales abroad include:
o the impact of recessionary environments in economies outside
the United States;
o generally longer receivables collection periods;
o unexpected changes in regulatory requirements;
o tariffs and other trade barriers;
o potentially adverse tax consequences;
o restrictions on the repatriation of earnings;
o reduced protection for intellectual property rights in some
countries;
o the burdens of complying with a wide variety of foreign laws.
These factors may have an adverse effect on our future international
sales and, consequently, on our business, financial condition and results of
operations.
OUR OPERATING RESULTS MAY VARY FROM QUARTER TO QUARTER IN FUTURE
PERIODS, AND AS A RESULT, OUR STOCK PRICE MAY FLUCTUATE OR DECLINE. Our
quarterly operating results may fluctuate significantly in the future due to a
variety of factors that could affect our revenues or our expenses in any
particular quarter. Factors that may affect our quarterly results include:
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o our ability to attract and retain customers;
o development of competitive products;
o the short term nature of manufacturing and engineering orders
to date;
o unforeseen changes in operating expenses;
o the loss of key employees; and
o unexpected revenue shortfalls.
A substantial portion of our operating expenses is related to personnel
costs and overhead, which we cannot adjust quickly and are therefore relatively
fixed in the short term. Our operating expense levels are based, in significant
part, on our expectations of future revenues on a quarterly basis. If actual
revenues are below our expectations, our results of operations and financial
condition would be materially and adversely affected because a relatively small
amount of our costs and expenses are proportionate with revenues in the short
term.
Due to all of the foregoing factors and the other risks discussed in
this prospectus, it is possible that in some future periods our results of
operations may be below the expectations of investors and public market analysts
which may cause our stock price to fluctuate or decline.
WE ARE DEPENDENT UPON MANAGEMENT AND TECHNICAL PERSONNEL. Our success
is highly dependent upon the continued services of Devendar Bains, our President
and Chief Executive Officer. We have entered into a five year employment
agreement with Mr. Bains which terminates April 30, 2001 and contains a covenant
not to compete against our company for a two year period following his
termination of employment with our company. We have obtained key man insurance
on the life of Mr. Bains in the amount of $1,000,000. We cannot be sure whether
we will be able to replace Mr. Bains in the event his services become
unavailable or whether the proceeds of such insurance would be adequate to
compensate us for the loss of his services.
Due to the specialized nature of our business, we are highly dependent
on the continued service of, and on our ability to attract and retain, qualified
technical and marketing personnel, particularly those involved in the
development of new products and processes and the manufacture and enhancement of
our existing products. In addition, as part of our team-based sales approach, we
dedicate specific design engineers to service the requirements of individual
customers. The loss of any such engineer could adversely affect our ability to
obtain future purchase orders from the customers to which such engineer was
dedicated. We have employment or non-competition agreements with most of our
current design engineers and test technicians. The competition for such
personnel is intense, and the loss of any such persons, as well as the failure
to recruit additional key technical personnel in a timely manner, could have a
material adverse effect on our business, financial condition and results of
operations.
WE RELY ON THE ABILITY TO PROTECT PROPRIETARY TECHNOLOGY; RISK OF THIRD
PARTY CLAIMS OF INFRINGEMENT MAY AFFECT OUR Business. Our ability to compete
successfully and achieve future revenue growth will depend, in part, on our
ability to protect proprietary technology and operate without infringing upon
the rights of others. Although there are no pending lawsuits regarding our
technology or notices that we are infringing upon intellectual property rights
of others, litigation or infringement claims may occur in the future. Such
litigation or claims could result in substantial costs, and diversion of
resources and could have a material adverse effect on our business, financial
condition, and results of operations. We generally enter into confidentiality
and non-disclosure agreements with our employees and limit access to and
distribution of proprietary information. However, we cannot be sure whether such
measures will provide adequate protection for our trade secrets or other
proprietary information, or whether our trade secrets or proprietary technology
will otherwise become known or independently developed by our competitors. Our
failure to protect proprietary technology could have a material adverse effect
on our business, financial condition and results of operations.
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WE DO NOT PLAN TO PAY DIVIDENDS ON OUR COMMON STOCK. We have never paid
any dividends on our common stock and do not intend to pay dividends on our
common stock in the foreseeable future. Any earnings which we may realize in the
foreseeable future will be retained to finance our growth.
GOVERNMENTAL REGULATIONS AND ENVIRONMENTAL REGULATIONS CAN HAVE A LARGE
IMPACT ON OUR BUSINESS. Our customers must obtain regulatory approval to operate
their base stations. The United States Federal Communications Commission has
regulations that impose stringent radio frequency and microwave emissions
standards on the telecommunications industry. Our customers are required to
comply with such regulations. The failure of our customers to comply with these
regulation could materially adversely affect our business, financial condition
and results of operations. We manufacture products according to specifications
provided by our customers, which specifications are required to comply with
applicable regulations. We do not believe that costs involved with manufacturing
to meet specifications will have a material impact on our operations. We cannot
be sure whether the adoption of future regulations would have a material adverse
affect on our business.
We are subject to Federal, state and local governmental regulations
relating to the storage, discharge, handling, emissions, generation, manufacture
and disposal of toxic or other hazardous substances used to manufacture our
products. We believe that we are currently in compliance in all material
respects with such regulations. Failure to comply with current or future
regulations could result in the imposition of substantial fines on our company,
suspension of our production, alteration of our manufacturing process, cessation
of our operations or other actions which could materially and adversely affect
our business, financial condition and results of operations.
YEAR 2000 PROBLEMS PRESENT TECHNOLOGICAL RISKS WHICH COULD BE COSTLY TO
CORRECT AND WHICH MAY DISRUPT OUR BUSINESS WHICH COULD IMPAIR RESULTS OF
OPERATIONS.
Year 2000 issues may adversely affect our business, although to date we
have not had any internal problems or problems with any of our customers or
vendors. Many currently installed computer systems and software products are
coded to accept only two-digit year entries in the date code field.
Consequently, many of these systems could fail or malfunction because they may
not be able to distinguish 21st century dates from 20th century dates. As a
result, computer systems and software used by many companies, may need to be
upgraded to comply with such "Year 2000" requirements. The Company's technical
software and accounting software have been upgraded for Y2K compliance. For a
more detailed description of our Year 2000 assessment, see Management's
Discussion and Analysis of Financial Condition and Results of Operations - Year
2000, in our Form 10-QSB for the period ending September 30, 1999.
WE MAY NOT BE ABLE TO COMPLY WITH NASDAQ CONTINUED LISTING
REQUIREMENTS. For continued listing on The Nasdaq SmallCap Market, a company
must have, among other things:
o $2,000,000 in net tangible assets;
o $1,000,000 in market value of public float; and
o a minimum bid price of $1.00 per share.
Our common stock and warrants are currently listed on The Nasdaq SmallCap
Market. If we were unable to satisfy the requirements for continued listing on
The Nasdaq Small Cap Market, trading of our common stock and warrants would be
conducted in the over-the-counter market. Transactions in the over-the-counter
market are commonly referred to as "pink sheet" or NASD OTC Electronic Bulletin
9
<PAGE>
Board transactions. If trading of our common stock or warrants in the
over-the-counter market were to occur, the liquidity of our common stock and
warrants would be materially adversely affected. Additionally, you may find it
more difficult to dispose of, or obtain accurate quotations as to the price of,
our common stock or warrants. Our Quarterly Report on Form 10-QSB for the period
ended September 30, 1999 indicates net tangible assets of $2,429,396. However,
we cannot be sure whether, and for how long, listing will continue.
PENNY STOCK REGULATIONS MAY IMPOSE CERTAIN RESTRICTIONS ON
MARKETABILITY OF OUR SECURITIES. The SEC has adopted regulations which generally
define a "penny stock" to be any equity security that has a market price of less
than $5.00 per share or an exercise price of less than $5.00 per share, subject
to certain exceptions. Since our common stock and warrants are listed on The
Nasdaq SmallCap Market, it is exempt from the definition of "penny stock." If
our common stock and warrants are removed from listing by The Nasdaq SmallCap
Market, our common stock and warrants may become subject to the "penny stock"
rules. These rules would impose additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally those with assets in excess of
$1,000,000 or annual income exceeding $200,000, or $300,000 together with their
spouse). For transactions covered by these rules, the broker-dealer must:
o make a special suitability determination with respect to each
purchaser of securities;
o receive the purchaser's written consent to the transaction
prior to the purchase;
o deliver, prior to the purchase, a risk disclosure document
mandated by the SEC relating to the penny stock market;
o disclose the commission payable to both the broker-dealer and
the registered representative;
o disclose current quotations for such securities;
o disclose whether the broker-dealer has control over the
particular market; and
o deliver monthly statements disclosing recent price information
for the securities and information on the limited market in
penny stocks.
Consequently, the "penny stock" rules may restrict the ability of
broker-dealers to sell our securities and adversely affect your ability to sell
our securities in the secondary market and the price of our securities in the
secondary market.
POTENTIAL ADVERSE EFFECT OF REDEMPTION OF PUBLICLY TRADED WARRANTS. We
have the right to redeem our publicly traded warrants. Publicly traded warrants
may be redeemed by us at any time at a redemption price of $.01 per warrant. We
can redeem publicly traded warrants upon at least thirty days written notice if
the average closing price or bid price of our common stock as reported by the
principal exchange on which it is traded equals or exceeds $9.00 per share for
any twenty (20) consecutive trading days ending within five (5) days prior to
the date on which notice of redemption is given. Notice of redemption of the
publicly traded warrants could:
o force the holders to exercise the publicly traded warrants and
pay the exercise price at a time when it may be
disadvantageous for them to do so;
o to sell the publicly traded warrants at the current market
price when they might otherwise wish to hold the publicly
traded warrants; or
o to accept the redemption price which would be substantially
less than the market value of the publicly traded warrants at
the time of redemption.
ANTI-TAKEOVER PROVISIONS MAY ADVERSELY AFFECT THE VALUE OF OUR
OUTSTANDING SECURITIES. Pursuant to our Certificate of Incorporation, our Board
of Directors may issue up to 1,000,000 shares of preferred stock in the future
with such preferences, limitations and relative rights as they may determine
without stockholder approval. Currently, there are no shares of our preferred
10
<PAGE>
stock outstanding. The rights of the holders of our common stock will be subject
to, and may be adversely affected by, the rights of the holders of any preferred
stock outstanding or that may we may issue in the future. The issuance of
preferred stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of delaying or
preventing a change in control of our company without further action by the
stockholders. In addition, we are subject to the anti-takeover provisions of
Section 203 of the Delaware General Corporation Law. Section 203 prohibits us
from engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the persons
became an interested stockholder, unless the business combination is approved in
a prescribed manner. The application of Section 203 also could have the effect
of delaying or preventing a change of control of our company.
ADDITIONAL AUTHORIZED SHARES OF COMMON STOCK AND PREFERRED STOCK
AVAILABLE FOR ISSUANCE MAY ADVERSELY AFFECT THE MARKET. We are authorized to
issue 25,000,000 shares of our common stock. As of December 31, 1999, there were
6,924,970 shares of our common stock issued and outstanding, which amount does
not include:
o the exercise of up to 1,610,000 of our publicly traded
warrants to purchase up to 1,610,000 shares of our common
stock; o the option to purchase up to 140,000 shares of our
common stock granted to the underwriter of our initial public
offering at an exercise price of $7.50 per share (and an
additional 140,000 shares of common stock underlying warrants
(which are exercisable at $.15 per warrant) at an exercise
price of $9.00 per share);
o 67,500 shares of our common stock issuable upon exercise of
warrants at $2.50 per share;
o 195,000 shares of our common stock issuable upon exercise of
warrants at $4.00 per share;
o 30,000 shares of our common stock issuable upon exercise of
warrants at $1.00 per share;
o 90,000 shares of our common stock issuable upon exercise of
warrants issued to our placement agent (and its designees) of
our private placement of common stock in March 1999 at $1.25
per share;
o 30,000 shares of our common stock issuable upon exercise of
warrants at $6.00 per share;
o 50,000 shares of our common stock issuable upon exercise of
warrants at $2.00 per share;
o 20,000 shares of our common stock issuable upon exercise of
warrants at $7.00 per share; and
o 1,396,000 shares of our common stock issuable upon exercise of
options granted pursuant to our Incentive Option Plan.
After reserving a total of 3,768,500 shares of our common stock for
issuance upon the exercise of all options and warrants described above, we will
have at least 14,306,530 shares of authorized but unissued common stock
available for issuance without further shareholder approval. Any issuance of
additional shares of our common stock may cause our current shareholders to
suffer significant dilution which may adversely affect the market for our
securities.
In addition, we have 1,000,000 shares of authorized preferred stock.
There are no shares of preferred stock currently issued or outstanding. While we
have no present plans to issue any additional shares of preferred stock, our
Board of Directors has the authority, without shareholder approval, to create
and issue one or more series of such preferred stock and to determine the
voting, dividend and other rights of holders of such preferred stock. The
issuance of any of our preferred stock could have an adverse effect on the
holders of our common stock.
SHARES ELIGIBLE FOR FUTURE SALE MAY ADVERSELY AFFECT THE MARKET. As of
December 31, 1999, we had 6,924,970 shares of our common stock issued and
outstanding. Of these 6,924,970 shares of issued and outstanding common stock,
4,084,970 shares are considered "restricted securities". These "restricted
securities" may be sold pursuant to Rule 144 of the Securities Act of 1933 as
follows:
11
<PAGE>
o 2,213,333 shares of our common stock may currently be sold
pursuant to Rule 144;
o 48,000 shares of our common stock may be sold pursuant to Rule
144 commencing March 2000;
o 986,362 shares of our common stock may be sold pursuant to
Rule 144 commencing April 2000;
o 32,312 shares of our common stock may be sold pursuant to Rule
144 commencing July 2000;
o 370,370 shares of our common stock may be sold pursuant to
Rule 144 commencing August 2000;
o 157,702 shares of our common stock may be sold pursuant to
Rule 144 commencing October 2000;
o 5,000 shares of our common stock may be sold pursuant to Rule
144 commencing November 2000;
o 250,000 shares of our common stock may be sold pursuant to
Rule 144 commencing December 1999; and
o 21,891 shares of our common stock may be sold pursuant to Rule
144 commencing January 2001.
Rule 144 provides, in essence, that a person holding "restricted
securities" for a period of one year may sell only an amount every three months
equal to the greater of:
(a) one percent of the Company's issued and outstanding shares; or
(b) the average weekly volume of sales during the four calendar
weeks preceding the sale.
The amount of "restricted securities" which a person who is not an
affiliate of our company may sell is not so limited. Non-affiliates may sell
without volume limitation their shares held for two years if there is adequate
current public information available concerning our company.
The sale in the public market of our common stock may adversely affect
prevailing market prices of our common stock.
THE EXERCISE OF OUTSTANDING OPTIONS AND WARRANTS MAY ADVERSELY AFFECT
THE MARKET FOR OUR COMMON STOCK. As of December 31, 1999, we had the following
outstanding stock options and warrants to purchase shares of our common stock:
o warrants to purchase an aggregate of 90,000 shares of our
common stock at an exercise price of $1.25 per share;
o warrants to purchase 67,500 shares of our common stock at an
exercise price of $2.50 per share;
o warrants to purchase 195,000 shares of our common stock at an
exercise price of $4.00 per share;
o warrants to purchase 30,000 shares of our common stock at an
exercise price of $1.00 per share;
o publicly traded warrants to purchase an aggregate of 1,610,000
shares of our common stock at an exercise price of $6.00 per
share;
o warrants to purchase 140,000 shares of our common stock at an
exercise price of $7.50 per share;
o warrants to purchase 140,000 shares of our common stock at an
exercise price of $9.00 per share;
12
<PAGE>
o warrants to purchase 30,000 shares of our common stock at an
exercise price of $6.00 per share;
o warrants to purchase 20,000 shares of our common stock at an
exercise price of $7.00 per share; and
o warrants to purchase 50,000 shares of our common stock at an
exercise price of $2.00 per share.
In addition, we have reserved 1,396,000 shares of our common stock for
issuance pursuant to outstanding options issued under our incentive stock option
plan. The exercise of our outstanding options and warrants will dilute the
percentage ownership of our stockholders. Sales in the public market of our
common stock underlying such options or warrants may adversely affect prevailing
market prices for our common stock. Moreover, the terms upon which we will be
able to obtain additional equity capital may be adversely affected since the
holders of such outstanding securities can be expected to exercise their
respective rights therein at a time when we would, in all likelihood, be able to
obtain any needed capital on terms more favorable to us those provided in such
securities.
LIMITATION ON DIRECTOR LIABILITY MAY ADVERSELY AFFECT THE VALUE OF OUR
COMMON STOCK. As permitted by Delaware law, our Certificate of Incorporation
limits the liability of our directors for monetary damages for breach of their
fiduciary duty except for liability in certain instances. As a result of our
charter provision and Delaware law, you may have limited rights to recover
against our directors for breach of their fiduciary duty.
WE ARE THE SUBJECT OF CLASS ACTION COMPLAINTS. We have been recently
served with various class action complaints on behalf of all purchasers of our
common stock and warrants between September 9-14, 1999. The complaints allege
that we and certain of our officers and directors violated the federal
securities law by, among other things, the issuance of a press release on
September 9, 1999. We believe that the complaints are without merit and we will
vigorously contest them, although we can give no assurances as to the ultimate
outcome of such complaints. See our Quarterly Report on Form 10-QSB for the
period ended September 30, 1999.
13
<PAGE>
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares
owned by the Selling Securityholders. However, we will receive $3,521,250 if all
of the shares underlying their warrants are exercised. We intend to use all of
such proceeds for research and development, the launch of new products, working
capital and general corporate purposes. Pending use of the proceeds, they will
be invested in short-term, interest bearing securities or money market funds.
SELLING SECURITYHOLDERS
This prospectus relates to the proposed resale of 2,312,870 shares of
our common stock by the Selling Securityholders or their transferees. Of such
shares, 1,650,370 shares are currently outstanding, 67,500 shares are issuable
upon exercise of warrants at $2.50, 145,000 shares are issuable upon exercise of
warrants at $4.00, 30,000 shares are issuable upon exercise of warrants at
$1.00, 90,000 shares are issuable upon exercise of warrants at $1.25, 140,000
shares are issuable upon exercise of warrants at $7.50, 140,000 shares are
issuable upon exercise of warrants at $9.00, 30,000 shares are issuable upon
exercise of warrants at $6.00 per share, and 20,000 shares are issuable upon
exercise of warrants at $7.00.
The following table sets forth the beneficial ownership of the
securities of the Company held by each person who is a Selling Securityholder
prior to this offering and after this offering, assuming all of the shares of
common stock owned by the Selling Securityholders are sold.
<TABLE>
<CAPTION>
SHARES OUTSTANDING OWNED BY SELLING SECURITYHOLDERS
SHARES BENEFICIALLY SHARES BENEFICIALLY
NAME OWNED BEFORE OFFERING SHARES BEING OFFERED OWNED AFTER OFFERING
- ---- --------------------- -------------------- --------------------
<S> <C> <C> <C>
Joseph Giamanco 259,074 259,074 0
Joseph C. Roselle 134,074 134,074 0
Harvey L. Ross 20,000 20,000 0
Louis Pepe 23,000 23,000 0
Francis M. Casagrande 23,000 23,000 0
Gaby Milne 20,000 20,000 0
Robert Karsten 37,500 37,500 0
Ronald Monello 40,000 40,000 0
Daniel Orenstein 20,000 20,000 0
Frances Lagano 30,000 30,000 0
Marvin Sheeber 20,000 20,000 0
Michael L. Burrows 40,000 40,000 0
Elliot and Beth Bauer, JTTEN 20,000 20,000 0
Leonard Cohen 20,000 20,000 0
Harold Miller 20,000 20,000 0
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
NAME OWNED BEFORE OFFERING SHARES BEING OFFERED OWNED AFTER OFFERING
- ---- --------------------- -------------------- --------------------
<S> <C> <C> <C>
Susan A. Brauser 40,000 40,000 0
Ronald Schaffer 20,000 20,000 0
Joseph A. Dussich 20,000 20,000 0
Symthe, Meadows, Harrrange, Inc. 20,000 20,000 0
Richard M. Maser 20,000 20,000 0
Murray Alon 20,000 20,000 0
Bridge Ventures, Inc. 150,000 150,000 0
Richard A. Brown 80,000 80,000 0
R Capital II, Ltd. 20,000 20,000 0
Brian M. Herman 7,500 7,500 0
John O. Johnston 7,500 7,500 0
Louis J. Sitaris 15,000 15,000 0
Eric Lefkowitz 10,000 10,000 0
Generation Capital Associates 50,000 50,000 0
New Amsterdam Investment 12,500 12,500 0
Trust(1)
Jerome Belson 124,074 124,074 0
Tis Prager 37,037 37,037 0
Keys Foundation 74,074 74,074 0
Conzett Europa Invest Ltd. 37,037 37,037 0
Milton Greiss 4,000 4,000 0
Robert Wax 6,000 6,000 0
Gerald Brauser 22,500 22,500 0
Stanley Snyder(2) 12,500 12,500 0
Marvin Ginsberg 5,000 5,000 0
Evan Stern 4,000 4,000 0
Thomas Powell(3) 5,000 5,000 0
Saggi Capital Corp. 100,000 100,000 0
TOTAL 1,650,370 1,650,370 0
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
SHARES UNDERLYING WARRANTS EXERCISABLE AT $2.50
SHARES BENEFICIALLY SHARES BENEFICIALLY
NAME OWNED BEFORE OFFERING SHARES BEING OFFERED OWNED AFTER THE OFFERING
- ---- --------------------- -------------------- ------------------------
<S> <C> <C> <C>
TreeTop Investments, Inc.(4) 25,000 25,000 0
Marty Martire 10,000 10,000 0
Joseph Paresi(5) 5,000 5,000 0
Julia Pasini 5,000 5,000 0
Dino Liso 7,500 7,500 0
Laurissa Martire 5,000 5,000 0
Jennifer Martire 5,000 5,000 0
Lisa Matire 5,000 5,000 0
TOTAL 67,500 67,500 0
SHARES UNDERLYING WARRANTS EXERCISABLE AT $4.00
SHARES BENEFICIALLY SHARES BENEFICIALLY
NAME OWNED BEFORE OFFERING SHARES BEING OFFERED OWNED AFTER THE OFFERING
- ---- --------------------- -------------------- ------------------------
Joseph Paresi 25,000 25,000 0
Raymond Agoglia 10,000 10,000 0
TreeTop Investments, Inc. 50,000 50,000 0
New Amsterdam Investment Trust 5,000 5,000 0
Ekistics, Inc. 50,000 50,000 0
Stanley Snyder 5,000 5,000 0
TOTAL 145,000 145,000 0
SHARES UNDERLYING WARRANTS EXERCISABLE AT $1.00
SHARES BENEFICIALLY SHARES BENEFICIALLY
NAME OWNED BEFORE OFFERING SHARES BEING OFFERED OWNED AFTER THE OFFERING
- ---- --------------------- -------------------- ------------------------
Thomas Powell 30,000 30,000 0
SHARES UNDERLYING WARRANTS EXERCISABLE AT $1.25
SHARES BENEFICIALLY SHARES BENEFICIALLY
NAME OWNED BEFORE OFFERING SHARES BEING OFFERED OWNED AFTER THE OFFERING
- ---- --------------------- -------------------- ------------------------
Lawrence Zaslow 18,625 18,625 0
Paul Michaels 18,625 18,625 0
Marc Komorsky 18,625 18,625 0
Peter Adolph 18,625 18,625 0
Ameriprop, Inc. 1,000 1,000 0
Susan Bender 5,000 5,000 0
Gilford Securities, Inc. 3,750 3,750 0
Millenium Capital Corp. 3,750 3,750 0
Thomas Fox 2,000 2,000 0
TOTAL 90,000 90,000 0
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
SHARES UNDERLYING WARRANTS EXERCISABLE AT $7.50
SHARES BENEFICIALLY SHARES BENEFICIALLY
NAME OWNED BEFORE OFFERING SHARES BEING OFFERED OWNED AFTER THE OFFERING
- ---- --------------------- -------------------- ------------------------
<S> <C> <C> <C>
Judah Wernick(6) 95,000 95,000 0
Joshua Levine(7) 45,000 45,000 0
TOTAL 140,000 140,000 0
SHARES UNDERLYING WARRANTS EXERCISABLE AT $9.00
SHARES BENEFICIALLY SHARES BENEFICIALLY
NAME OWNED BEFORE OFFERING SHARES BEING OFFERED OWNED AFTER THE OFFERING
- ---- --------------------- -------------------- ------------------------
Judah Wernick 95,000 95,000 0
Joshua Levine 45,000 45,000 0
TOTAL 140,000 140,000 0
SHARES UNDERLYING WARRANTS EXERCISABLE AT $6.00
SHARES BENEFICIALLY SHARES BENEFICIALLY
NAME OWNED BEFORE OFFERING SHARES BEING OFFERED OWNED AFTER THE OFFERING
- ---- --------------------- -------------------- ------------------------
Wellman Consulting 30,000 30,000 0
TOTAL 30,000 30,000 0
SHARES UNDERLYING WARRANTS EXERCISABLE AT $7.00
SHARES BENEFICIALLY SHARES BENEFICIALLY
NAME OWNED BEFORE OFFERING SHARES BEING OFFERED OWNED AFTER THE OFFERING
- ---- --------------------- -------------------- ------------------------
Michael Flicker 10,000 10,000 0
Michael Hur 10,000 10,000 0
TOTAL 20,000 20,000 0
</TABLE>
- ----------------------
(1) Also owns 5,000 shares underlying warrants exercisable at $4.00 per share.
(2) Also owns 5,000 shares underlying warrants exercisable at $4.00 per share.
(3) Also owns 30,000 shares underlying warrants exercisable at $1.00 per share.
(4) Also owns 50,000 shares underlying warrants exercisable at $4.00 per share.
(5) Also owns 25,000 shares underlying warrants exercisable at $4.00 per share.
(6) Also owns 95,000 shares underlying warrants exercisable at $9.00 per share.
(7) Also owns 45,000 shares underlying warrants exercisable at $9.00 per share.
17
<PAGE>
PLAN OF DISTRIBUTION
We will not receive any of the proceeds from the sale of the shares by
the Selling Securityholders or their transferees. "Selling Securityholders"
includes donees and pledgees selling shares received from a named Selling
Securityholder after the date of this prospectus.
The securities offered by this Prospectus may be sold from time to time
directly by the Selling Securityholders or their transferees, or to their
transferees. Alternatively, the Selling Securityholders or their transferees may
from time to time offer such securities through underwriters, brokers or agents.
No underwriting arrangements have been entered into by the Selling
Securityholders or their transferees. The distribution of the securities by the
Selling Securityholders or their transferees may be effected in one or more
transactions that may take place on the over-the-counter market including
ordinary broker's transactions, privately negotiated transactions or through
sales to one or more market makers or dealers for resale of such securities as
principals at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Securityholders or their transferees in connection with sales of the securities.
This offering is currently not being underwritten. However, the Selling
Securityholders or their transferees, brokers, dealers or underwriters and
intermediaries that participate with the Selling Securityholders or their
transferees may be deemed "underwriters" within the meaning of the Securities
Act of 1933, as amended (the "Act"), with respect to the securities offered and
any profits realized or commissions received may be deemed underwriting
compensation. It is anticipated that all the securities being offered hereby,
when sales thereof are made, will be made in one or more transactions (which may
involve one or more block transaction) through customary brokerage channels,
either through brokers acting as brokers or agents for the sellers, or through
market makers, dealers or underwriters acting as principals who may resell our
common stock on The Nasdaq SmallCap Market or the securities in privately
negotiated sales, or otherwise, or by a combination of such methods of offering.
Sales may be made at market prices prevailing at the time of the sales or at
negotiated prices.
At the time a particular offer of securities is made by or on behalf of
a Selling Securityholders or their transferees, to the extent required, a
prospectus will be distributed which will set forth the number of securities
being offered and the terms of the offering, including the name or names of any
underwriters, dealers or agents, if any, the purchase price paid by any
underwriter for securities purchased from the Selling Securityholders or their
transferees and any discounts, commissions or concessions allowed or reallowed
or paid to dealers, and the proposed selling price to the public.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the shares of Common Stock may not
simultaneously engage in market making activities with respect to the Common
Stock for a period of up to five days preceding such distribution. The Selling
Securityholders or their transferees will be subject to the applicable
provisions of the Exchange Act and the rules and regulations promulgated
thereunder, including without limitation Regulation M, which provisions may
limit the timing of purchases and sales by the Selling Securityholders or their
transferees.
18
<PAGE>
In order to comply with certain state securities laws, if applicable,
the Common Stock will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In certain states, the Common Stock may not be sold
unless the Common Stock has been registered and qualified for sale in such
state, or unless an exemption from registration or qualification is available
and is obtained. All costs, expenses and fees in connection with the
registration of the Shares offered hereby will be borne by us. Brokerage
commissions and similar selling expenses, if any, attributable to the sale of
the Shares will be borne by the Selling Securityholders.
LEGAL MATTERS
The validity of our securities offered hereby have been passed upon by
Berlack, Israels & Liberman LLP. Berlack, Israels Liberman LLP, is the owner of
warrants to purchase 100,000 shares of our common stock.
EXPERTS
The financial statements of Amplidyne, Inc. included in our annual
report on Form 10-KSB for the year ended December 31, 1998, incorporated by
reference in this Prospectus have been audited by Grant Thornton LLP,
independent certified public accountants, as stated in their report with respect
thereto, and are incorporated herein by reference in reliance upon the report of
such firm given upon their authority as experts in accounting and auditing.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION OF SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers, and controlling persons, we
have been advised that in the opinion of the Commission this indemnification is
against public policy as expressed in the Securities Act and is, therefore
unenforceable. In the event that a claim of indemnification against these
liabilities, other than our payment of expense incurred or paid by one of our
directors, officers, or controlling persons in the successful defense of any
action, suit or proceeding, is asserted by that director, officer or controlling
person in connection with the securities being registered, we will, unless in
the opinion of our counsel the matter has been settled by a controlling
precedent, submit to a court of appropriate jurisdiction the question whether
this indemnification by us is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of these issues.
19
<PAGE>
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone else to provide you
with different information. We are not making an offer of these securities in
any state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other that the date on
the front of this document.
TABLE OF CONTENTS
Page
----
Available Information..........................................................2
Risk Factors...................................................................4
Use of Proceeds...............................................................14
Selling Securityholder........................................................14
Plan of Distribution..........................................................18
Legal Matters.................................................................19
Experts.......................................................................19
Disclosure of Commission
Position on Indemnification of
Securities Act Liabilities .................................................19
AMPLIDYNE, INC.
2,312,870 SHARES OF COMMON STOCK
PROSPECTUS
_______, 2000
20
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with this offering are as follows:
SEC filing fee.................................... $ 4,652.17
Legal fees and expenses*.......................... $15,000.00
Accounting fees and expenses*..................... $ 5,000.00
Blue Sky fees and expenses*....................... $ --
Printing and engraving*........................... $ 2,000.00
Transfer Agent's and Registrar fees*.............. $ --
Miscellaneous expenses*........................... $ 3,670.45
Total............................................. $30,000.00
==========
* Estimated
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Certificate of Incorporation provides that the Company
shall indemnify its officers and directors to the fullest extent permitted by
Section 145 of the Delaware General Corporation Law ("DGCL").
Section 145 of the DGCL permits a corporation, under specified
circumstances, to indemnify its directors, officers, employees or agents against
expenses (including attorney's fees), judgments, fines and amounts paid in
settlements actually and reasonably incurred by them in connection with any
action, suit or proceeding brought by third parties by reason of the fact that
they were or are directors, officers, employees or agents of the corporation, if
such directors, officers, employees or agents acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests of
the corporation and, with respect to any criminal action or proceedings, had no
reason to believe their conduct was unlawful. In a derivative action, i.e., one
by or in the right of the corporation, indemnification may be made only for
expenses actually and reasonably incurred by directors, officers, employees or
agent in connection with the defense or settlement of an action or suit, and
only with respect to a matter as to which they shall have acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made if
such person shall have been adjudged liable to the corporation, unless and only
to the extent that the court in which the action or suit was brought shall
determine upon application that the defendant directors, officers, employees or
agents are fairly and reasonably entitled to indemnify for such expenses despite
such adjudication of liability.
In addition, the Company's Certificate of Incorporation eliminates the
personal liability of directors to the fullest extent permitted by Section 102
of the DGCL.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
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ITEM 16. EXHIBITS.
Exhibits
- --------
3.1* Certificate of Incorporation of the Company
3.2* Certificate of Merger (Delaware)
3.3* Certificate of Merger (New Jersey)
3.4* Agreement and Plan of Merger
3.5* By-Laws of the Company
3.6** Certificate of Designation of Series A Preferred Stock
4.1* Specimen Certificate for shares of Common Stock
4.2* Specimen Certificate for Warrants
4.3* Form of Underwriter's Purchase Option
4.4* Form of Warrant Agreement
5.1 Opinion of Berlack, Israels & Liberman LLP, counsel to the
Company
23.1 Consent of Berlack, Israels & Liberman LLP (included in
Exhibit 5.1)
23.2 Consent of Grant Thornton LLP, Independent Certified Public
Accountants.
* Incorporated by Reference to the Company's Registration Statement on Form
SB-2, No. 333-11015.
** Incorporated by Reference to the Company's Form 8-K filed on August 3,
1999.
ITEM 17. UNDERTAKINGS.
(a) RULE 415 OFFERING
The undersigned registrant will:
1. File, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Act;
(ii) Reflect in the prospectus any facts or events which, individually
or in the aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii)Include any additional or changed material information on the plan
of distribution;
2. For determining liability under the Securities Act, treat each such
post-effective amendment as a new registration statement of the securities
offered, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering.
3. File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(c) INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or controlling persons of the
Registrant pursuant to the provisions referred to in Item 15 of this
Registration Statement or otherwise, the Registrant has been advised that in the
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<PAGE>
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(d) RULE 430A
The undersigned Registrant will:
(1) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in the form of a
prospectus filed by the Company under Rule 424(b)(1) or (4) or 497(h) under the
Securities Act as part of this Registration Statement as of the time the
Commission declared it effective.
(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
Registration Statement for the securities offered in the Registration Statement,
and the offering of the securities at that time shall be deemed as the initial
bona fide offering of those securities.
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<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Act of 1933, as amended,
the Registrant, certifies that it has reasonable grounds to believe that it
meets all the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in New York City, New York, on the 3rd day of February, 2000.
AMPLIDYNE, INC.
By: /s/ DEVANDAR S. BAINS
---------------------------------------
Devendar S. Bains
President, Chief Executive Officer,
Treasurer, Principal Accounting
Officer and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Amendments thereto has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ DEVANDAR S. BAINS President, Chief Executive Officer February 3, 2000
- ---------------------- Treasurer, Principal Accounting
Devendar S. Bains Officer and Director
/s/ TARLOCHAN BAINS
- ---------------------- Vice President and Director February 3, 2000
Tarlochan Bains
/s/ NIRMAL BAINS Secretary February 3, 2000
- ----------------------
Nirmal Bains
/s/ CHARLES J. RITCHIE Director February 3, 2000
- ----------------------
Charles J. Ritchie
/s/ MARISH V. DETROJA Director February 3, 2000
- ----------------------
Marish V. Detroja
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EXHIBIT 5.01
<PAGE>
[LETTERHEAD OF BERLACK, ISRAELS & LIBERMAN LLP]
February 3, 2000
Amplidyne, Inc.
59 LaGrange Street
Raritan, NJ 08869
Ladies and Gentlemen:
We have acted as counsel for Amplidyne, Inc., a Delaware corporation
("Company"), in connection with a Registration Statement on Form S-3
("Registration Statement") being filed contemporaneously herewith by the Company
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Securities Act"), covering an aggregate of 2,312,870 Shares (the
"Shares") of the Company's common stock, par value $.0001 per share, which are
being sold by certain selling securityholders.
In that connection, we have examined the Certificate of Incorporation,
as amended, and the By-Laws of the Company, the Registration Statement, the
Warrant Agreement between the Company and American Stock Transfer & Trust
Company, corporate proceedings of the Company relating to the issuance of the
Common Stock and such other instruments and documents as we have deemed relevant
under the circumstances.
In making the aforesaid examinations, we have assumed the genuineness
of all signatures and the conformity to original documents of all copies
furnished to us as original or photostat copies. We have also assumed that the
corporate records of the Company include all corporate proceedings taken by the
Company to date.
Based upon and subject to the foregoing, we are of the opinion that the
Shares have been, or upon payment therefor will be, duly authorized, validly
issued and are, or will be, fully paid and nonassessable.
We hereby consent to the use of this opinion as herein set forth as an
exhibit to the Registration Statement.
Very truly yours,
/s/ Berlack, Israels & Liberman LLP
-----------------------------------
BERLACK, ISRAELS & LIBERMAN LLP
EXHIBIT 23.01
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated March 31, 1999 accompanying the
financial statements of Amplidyne, Inc. appearing in the Annual Report on Form
10-KSB for the year ended December 31, 1998 which is incorporated by reference
in this Registration Statement. We consent to the incorporation by reference in
the Registration Statement of the aforementioned report and to the use of our
name as its appears under the caption "Experts".
Grant Thornton, LLP
Edison, New Jersey
February 3, 2000
