UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000.
[ ] 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 May 15, 2000 was 7,316,379.
<PAGE>
AMPLIDYNE, INC.
FORM 10-QSB
THREE MONTHS ENDED MARCH 31, 2000
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, March 31,
1999 2000
---------- ----------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $1,445,055 $1,217,664
Accounts receivable, net of allowance
for doubtful accounts of $349,000 443,585 645,797
Inventories 917,450 845,207
Prepaid expenses 23,373 45,387
---------- ----------
Total current assets 2,829,463 2,754,055
---------- ----------
PROPERTY AND EQUIPMENT - AT COST
Machinery and equipment 683,609 687,370
Furniture and fixtures 43,750 43,750
Autos and trucks 61,183 61,185
Leasehold improvements 8,141 8,141
---------- ----------
Total 796,683 800,446
Less: Accumulated depreciation and amoritization 463,123 495,719
---------- ----------
Net property and equipment 333,560 304,727
---------- ----------
SECURITY DEPOSITS 35,625 35,625
---------- ----------
TOTAL ASSETS $3,198,648 $3,094,407
========== ==========
The accompanying notes are an integral part of these financial statements
-1-
<PAGE>
AMPLIDYNE, INC.
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, March 31,
1999 2000
----------- -----------
(Unaudited)
CURRENT LIABILITIES
Current maturities of lease obligations $ 16,202 $ 16,192
Accounts payable 446,005 219,324
Accrued expenses 116,756 163,747
Settlement of litigation 85,000 85,000
----------- -----------
Total current liabilities 663,963 484,263
LONG-TERM LIABILITIES
Lease obligations, less current maturities 20,320 15,068
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock - authorized 1,000,000 shares
of no stated value; no shares issued and -- --
outstanding
Common stock - authorized, 25,000,000 shares
of $.0001 par value; shares 6,924,970 and
6,989,320 shares
issued and outstanding at December 31, 1999
and March 692 699
31, 2000, respectively.
Additional paid-in-capital 17,618,398 18,023,991
Accumulated deficit (15,104,725) (15,429,614)
----------- -----------
Total stockholders' equity
2,514,365 2,595,076
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,198,648 $ 3,094,407
=========== ===========
The accompanying notes are an integral part of these financial statements
-2-
<PAGE>
AMPLIDYNE, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Three
Months Months
Ended Ended
March 31, March 31,
2000 1999
---------- ----------
Net Sales $ 899,068 $ 655,170
Cost of goods sold 660,098 534,505
---------- ----------
Gross profit 238,970 120,665
Operating expenses
Selling, general & administrative 365,309 342,397
Research, engineering and development 109,567 131,710
Stock Compensation 100,000 --
---------- ----------
Operating loss (335,906) (353,442)
Other non operating income (expenses)
Interest income 11,746 5,976
Interest expense (729) (12,444)
Other Income -- 60,000
---------- ----------
NET LOSS $ (324,889) $ (299,910)
========== ==========
Net loss per share - basic and diluted $ (.05) $ (.05)
========== ==========
Weighted average number of shares
outstanding 6,931,160 5,456,994
========== ==========
The accompanying notes are an integral part of these financial statements
-3-
<PAGE>
AMPLIDYNE, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Three
Months Months
Ended Ended
March 31, 2000 March 31, 1999
-------------- --------------
Cash flows from operating activities:
Net Loss $ (324,889) $ (299,910)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 32,596 28,615
Stock compensation charge 100,000 --
Changes in assets and liabilities
Accounts receivable (202,212) 43,927
Inventories 72,243 (222,508)
Prepaid expenses and other current assets (22,014) 3,081
Accounts payable and accrued expenses (179,690) 42,815
---------- ----------
Total adjustments (199,077) (104,070)
---------- ----------
Net cash used for operating activities (523,966) (403,980)
---------- ----------
Cash flows from investing activities:
Purchase of property and equipment (3,763) --
---------- ----------
Net cash used for investing activities (3,763) --
---------- ----------
Cash flows from financing activities:
Payment of lease obligations (5,262) (16,347)
Repayments of stockholders' loans -- (26,000)
Proceeds from issuance of stock and
exercise of options and warrants 305,600 1,135,137
---------- ----------
Net cash provided by financing 300,338 1,092,790
activities ---------- ----------
NET INCREASE (DECREASE) IN CASH (227,391) 688,810
Cash at beginning of period 1,445,055 427,510
---------- ----------
Cash and cash equivalents at end of period $1,217,664 $1,116,320
========== ==========
Supplemental disclosures of cash flow
information
Cash paid for: Interest $ 729 $ 12,444
Income taxes -- --
The accompanying notes are an integral part of these financial statements
-4-
<PAGE>
AMPLIDYNE, INC.
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE THREE MONTHS ENDED
MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
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
Net Loss (3,535,689) (3,535,689)
Issuance of Preferred
Stock, net of costs 50,000 $ 5 464,995 465,000
Issuance of Common
Stock, net of costs 900,000 90 910,594 910,684
Exercise of warrants 819,000 82 1,444,423 1,444,505
Conversion of
Preferred Stock into
Common Stock (50,000) (5) 370,370 37 32
Financing and
compensation costs
related to
options and
warrants issued 1,721,450 1,721,450
Conversion of amounts
owed for deferred
compensation and
accrued
commissions to
officers and
others into shares
of common stock 132,267 13 341,119 341,132
------- ------ --------- ---- ----------- ----------- -----------
Balance at
December 31, 1999 -- $ -- 6,924,970 $692 $ 17,618,398 $(15,104,725) $2,514,365
Net loss (324,889) (324,889)
Stock compensation
charge 100,000 100,000
Exercise of warrants 24,100 2 144,598 144,600
Exercise of options 40,250 5 160,995 161,000
Balance at Mar 31, 2000 -- $ -- 6,989,320 $699 $18,023,991 $(15,429,614) $2,595,076
======= ====== ========= ==== =========== ============ ==========
</TABLE>
The accompanying notes are an integral part of these financial statements
-5-
<PAGE>
AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE A - ADJUSTMENTS
In the opinion of management, all adjustments, consisting only of normal
recurring adjustments necessary for a fair statement of (a) results of
operations for the three month periods ended March 31, 2000 and March 31, 1999
(b) the financial position at December 31, 1999 and March 31, 2000 (c) the
statements of cash flows for the three-month periods ended March 31, 2000 and
March 31, 1999, and (d) the changes in stockholders' equity for the three-month
period ended March 31, 2000, have been made. The results of operations for the
three months ended March 31, 2000 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, 1999, included in the Company's Form 10-KSB filed with
the Securities and Exchange Commission on April 14, 2000.
NOTE C - PUBLIC OFFERING AND OTHER SALES OF SECURITIES
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. In April 2000, the Company reduced the exercised price of the
warrants to $5.00 per share. The Company has provided notice to redeem the
warrants on May 17, 2000 unless the warrants are previously exercised.
In January 1997 and March 1997, the Company received net proceeds of
approximately $6,782,000, which included the over-allotment of 210,000 units.
The proceeds are net of legal fees, underwriter's fees and other expenses of the
offering totaling approximately $1,429,000.
The underwriter received an option to purchase up to 140,000 shares of common
stock and 140,000 warrants under the same terms.
-6-
<PAGE>
AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE C - PUBLIC OFFERING AND PRIVATE PLACEMENTS
Private Placements
From 1995 to 1997, the Company offered its common stock units (which included
common stock and warrants) and issued promissory notes pursuant to a series of
private placements. The Company also issued warrants to certain consultants
during this time period. All promissory notes were paid prior to December 31,
1997. There were no private placements entered into during 1998.
At March 31, 2000, the following 498,500 warrants remain outstanding: (1) 67,500
exercisable at the lower of $2.50 or 20% below market value on exercise date
through January 20, 2001, (2) 145,000 exercisable at $4.00 through January 20,
2001, (3) 90,000 exercisable at $1.25 through March 2001, (4) 30,000 exercisable
at $1.00 through May 2010, (5) 20,000 exercisable at $7.00 through December
2004, (6) 30,000 exercisable at $6.00 through December 2004, (7) 50,000
exercisable at $2.00 through December 2004 and (8) 50,000 exercisable at $4.00
through December 2004 and (9) 16,000 exercisable at $1.75 through March 2004.
In March 2000, 40,250 options and 24,100 warrants were exercised at $4.00 and
$6.00 respectively, resulting in total proceeds of $305,600.
NOTE D - LOSS PER SHARE
The Company complies with the requirements of 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. 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
Other than as set forth below, the Company is not a party to any litigation or
governmental proceedings that, management believes, would result in judgments or
fines that would have a material adverse effect on the Company.
The Company is involved in the following matters:
-7-
<PAGE>
AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE D - LITIGATION (CONTINUED)
1. AIR COMMUNICATIONS CORPORATION V. AMPLIDYNE, INC.
Plaintiff filed a complaint in the Circuit Court of the Eighteenth Judicial
District of the State of Florida on January 23, 1997 alleging breach of
contract. Plaintiff also alleges damages in the amount of $4,322,579, 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 asserted damages in the amount of
$463,411, plus interest, costs and attorney's fees. Management believes that the
allegations in the complaint are without merit. A motion for summary judgment
was denied in February 1999. The case is currently in discovery.
2. ENS ENGINEERING V. AMPLIDYNE, INC.
The Company is also a defendant in a complaint filed in the United State
District Court for the District of New Jersey on May 13, 1998. The Complaint
alleges breach of contract of a representative agreement between the Company and
ENS Engineering of South Korea. The Company believes settlement terms have been
reached, and has accrued the estimated cost thereof.
3. CLASS ACTION LITIGATION
In the fall of 1999, the Company was served with several class action
complaints on behalf of all purchasers of the Company's common stock and
warrants between September 9 and 14, 1999. The complaints allege that the
Company and certain others violated the Federal securities laws by, among other
things, the issuance of a press release on September 9, 1999. By order of the
District Court for the District of New Jersey, the actions were consolidated and
lead plaintiffs were appointed. Recently, the Company was served with a
consolidated and amended class action complaint. The Company will promptly
respond to this consolidated complaint. The Company believes this complaint has
no merit and will vigorously contest it.
From time to time, the Company is party to what it believes are 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 could have
material effect on the Company's results of operations or financial condition.
-8-
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS-THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS
ENDED MARCH 31, 1999
Net sales for the three month period ended March 31, 2000 were $899,068 while
sales for the three months ended March 31, 1999 were $655,170. Sales increased
due to the Company's new wireless internet products which began shippiing in
the first quarter of 2000. The 2000 quarter reflected continued deliveries of
orders to Harris Corporation and other large OEM's, and reflected substantially
no revenues from the Korean marketkplace. In 1999, sales reflected a
significant portion of shipments to Korea, a marketplace which has been
unstable.
Gross profit for the three months ended March 31, 2000 amounted to $238,970 (27%
of sales), compared to $120,665 (18% of sales) for the corresponding three
months of 1999. This increase in gross margin is principally attributable to
higher gross profits on the new wireless internet products and efficiencies
gained in the manufacturing and assembling of our products, both through larger
and more consistent orders and the use of some automation in the manufacturing
process.
Research, engineering, and development costs dropped by $22,143 from the first
quarter of 2000 from the corresponding three month period of 1999. This trend
was achieved due to the utilization of existing R&D knowledge and experience to
the development of new products.
Stock compensation charges of $100,000 was recorded in 2000 related to warrants
issued to consultants.
Interest income was higher for the first three months of 2000 compared to the
corresponding period of 1999. The increase is due to additional funds from the
private placement and exercise of warrants during 1999.
As a result of the foregoing, the Company incurred net losses of ($324,889) or
(.05) per share for the three months ended March 31, 2000 compared to net losses
of ($299,910) or (.05) per share for the same period in 1999.
-9-
<PAGE>
PART 1 - FINANCIAL INFORMATION - ITEM 2 (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2000, the Company had cash and cash equivalents of $1,217,664
principally due to the injection of private placement funds and exercise of
warrants in 1999 and 2000. The Company issued its common stock in lieu of cash
payments for compensation, commissions, and consulting fees where possible
during 1999. This trend is expected to continue in the second, third and fourth
quarters of 2000.
In April of 2000, the Company raised an additional $1,595,000 through the
privately placed sale of 319,000 shares of common stock. 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
During the first quarter ended March 31, 2000, the Company issued 24,100 shares
of Common Stock, at $6.00 per share, in connection with the exercise of its
publicly traded warrants, resulting in net proceeds of $144,600.
During the first quarter ended March 31, 2000, the Company issued 40,250 shares
of Common Stock, at $4.00 per share, in connection with the exercise of employee
stock options, resulting in net proceeds of $161,000.
-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 authorized.
AMPLIDYNE, INC.
Dated: May 17, 2000 By: /s/ DEVENDAR S. BAINS
----------------------------
Name: Devendar S. Bains
Title: Chief Executive Officer,
President, Treasurer,
Principal Accounting
Officer and Director
-12-
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEETS AND STATEMENTS OF OPERATIONS FOUNDED ON PAGES 1-3 OF THE COMPANY'S FORM
10-QSB, FOR THE YEAR-TO-DATE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001016151
<NAME> Amplidyne, Inc.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,217,664
<SECURITIES> 0
<RECEIVABLES> 994,797
<ALLOWANCES> 349,000
<INVENTORY> 845,207
<CURRENT-ASSETS> 2,754,055
<PP&E> 800,446
<DEPRECIATION> 495,719
<TOTAL-ASSETS> 3,094,407
<CURRENT-LIABILITIES> 484,263
<BONDS> 0
0
0
<COMMON> 699
<OTHER-SE> 2,594,377
<TOTAL-LIABILITY-AND-EQUITY> 3,094,407
<SALES> 899,068
<TOTAL-REVENUES> 910,814
<CGS> 660,098
<TOTAL-COSTS> 769,665
<OTHER-EXPENSES> 465,309
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (729
<INCOME-PRETAX> (324,889
<INCOME-TAX> 0
<INCOME-CONTINUING> (324,889
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (324,889
<EPS-BASIC> (.05)
<EPS-DILUTED> (.05)
</TABLE>
