UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 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.
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(Exact name of small business issuer as specified in its charter)
Delaware 22-3440510
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(I.R.S. Employer (State or other jurisdiction of
Identification No.) incorporation or organization)
59 LaGrange Street
Raritan, New Jersey 08869
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(Address of principal executive offices)
(908) 253-6870
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes [X] No [ ]
The number of shares outstanding of the Issuer's Common Stock, $.0001 Par
Value, as of July 20, 2000 was 7,448,841.
<PAGE>
AMPLIDYNE, INC.
FORM 10-QSB
SIX MONTHS ENDED JUNE 30, 2000
TABLE OF CONTENTS
PART 1 - FINANCIAL INFORMATION
Item 1 FINANCIAL STATEMENTS (Unaudited):
Balance Sheets.............................................. 1-2
Statements of Operations.................................... 3
Statements of Cash Flows.................................... 4
Statement of Changes in Stockholders' 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............................................... 11
Signatures................................................................ 12
Exhibit 27 - Financial Data Schedule...................................... 13
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
AMPLIDYNE, INC.
BALANCE SHEETS
ASSETS
------
June 30, December 31,
2000 1999
---------- ----------
(Unaudited) (derived from
audited
financial
statements)
CURRENT ASSETS
Cash and cash equivalents $2,855,471 $1,445,055
Accounts receivable, net of allowance
for doubtful accounts of $349,000 463,733 443,585
Inventories 776,111 917,450
Prepaid expenses 36,845 23,373
---------- ----------
Total current assets 4,132,160 2,829,463
---------- ----------
PROPERTY AND EQUIPMENT - AT COST
Machinery and equipment 689,984 683,609
Furniture and fixtures 43,750 43,750
Autos and trucks 61,183 61,183
Leasehold improvements 8,141 8,141
---------- ----------
Total 803,058 796,683
Less: Accumulated depreciation and amoritization 528,997 463,123
---------- ----------
Net property and equipment 274,061 333,560
---------- ----------
SECURITY DEPOSITS 35,625 35,625
---------- ----------
TOTAL ASSETS $4,441,846 $3,198,648
========== ==========
The accompanying notes are an integral part of these financial statements
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<PAGE>
AMPLIDYNE, INC.
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
June 30, December 31,
2000 1999
------------ ------------
(Unaudited) (derived from
audited financial
statements)
CURRENT LIABILITIES
Current maturities of lease obligations $ 14,005 $ 16,202
Accounts payable 201,363 446,005
Accrued expenses 106,649 116,756
Settlement of litigation 85,000 85,000
------------ ------------
Total current liabilities 407,017 663,963
LONG-TERM LIABILITIES
Lease obligations, less current maturities 15,068 20,320
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock - authorized 100,000 shares
of $.0001 par value; no shares issued and
outstanding -- --
Common stock - authorized, 25,000,000 shares
of $.0001 par value; shares 7,411,591, and
6,924,970 shares issued and outstanding at
June 30, 2000 and December 31, 1999,
respectively 741 692
Additional paid-in-capital 20,134,803 17,618,398
Accumulated deficit (16,115,783) (15,104,725)
------------ ------------
Total stockholders' equity 4,019,761 2,514,365
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,441,846 $ 3,198,648
============ ============
The accompanying notes are an integral part of these financial statements
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<PAGE>
AMPLIDYNE, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 529,008 $ 422,912 $ 1,428,076 $ 1,078,082
Cost of goods sold 509,584 425,804 1,169,682 960,309
----------- ----------- ----------- -----------
Gross profit 19,424 (2,892) 258,394 117,773
Operating expenses
Selling, general and administrative 587,377 349,131 952,686 691,528
Research, engineering and development 137,272 135,702 246,839 267,412
Stock compensation -- -- 100,000 --
----------- ----------- ----------- -----------
Operating loss (705,225) (487,725) (1,041,131) (841,167)
Other non operating income (expenses)
Interest income 19,056 5,547 30,802 11,523
Interest expense -- 1,201 (729) 13,645
Other income -- -- -- 60,000
----------- ----------- ----------- -----------
Loss before income taxes $ (686,169) $ (483,379) $(1,011,058) $ (783,289)
Provision for income taxes -- 2,000 -- 2,000
----------- ----------- ----------- -----------
NET LOSS $ (686,169) $ (485,379) $(1,011,058) $ (785,289)
=========== =========== =========== ===========
Net loss per share - basic and diluted $ (.09) $ (.08) $ (.14) $ (.15)
=========== =========== =========== ===========
Weighted average number of shares outstanding 7,270,858 5,734,625 7,101,009 5,221,547
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
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<PAGE>
AMPLIDYNE, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Six
Months Months
Ended Ended
June 30, 2000 June 30, 1999
------------- -------------
Cash flows from operating activities:
Net loss $(1,011,058) $ (785,289)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization 65,874 58,047
Stock compensation charge 100,000 --
Changes in assets and liabilities
Accounts receivable (20,148) (74,274)
Inventories 141,339 (242,583)
Prepaid expenses and other current assets (13,472) 6,162
Accounts payable and accrued expenses (254,749) (175,989)
----------- -----------
Total adjustments 18,844 (428,637)
----------- -----------
Net cash used for operating activities (992,214) (1,213,926)
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment (6,375) (9,709)
----------- -----------
Net cash used for investing activities (6,375) (9,709)
----------- -----------
Cash flows from financing activities:
Payment of lease obligations (7,449) (65,278)
Repayments of stockholders' loans -- (38,000)
Proceeds from issuance of stock and
exercise of options and warrants 2,416,454 1,785,120
----------- -----------
Net cash provided by financing activities 2,409,005 1,681,842
----------- -----------
NET INCREASE IN CASH 1,410,416 458,207
Cash at beginning of period 1,445,055 427,510
----------- -----------
Cash and cash equivalents at end of period $ 2,855,471 $ 885,717
=========== ===========
Supplemental disclosures of cash flow
information
Cash paid for: Interest $ 729 $ 13,645
Income taxes -- --
The accompanying notes are an integral part of these financial statements
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<PAGE>
AMPLIDYNE, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED
JUNE 30, 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 January 1, 2000 -- $ -- 6,924,970 $ 692 $ 17,618,398 $(15,104,725) $ 2,514,365
Net loss (1,011,058) (1,011,058)
Stock compensation
charge 100,000 100,000
Exercise of warrants 124,871 13 650,441 650,454
Exercise of options 42,750 5 170,995 171,000
Issuance from private
placement 319,000 31 1,594,969 1,595,000
----------- ----------- ----------- ----------- ------------ ------------ -----------
Balance at June 30, 2000 -- $ -- 7,411,591 $ 741 $ 20,134,803 $(16,115,783) $ 4,019,761
=========== =========== =========== =========== ============ ============= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
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<PAGE>
AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 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 and six month periods ended June 30, 2000 and June 30,
1999 (b) the financial position at December 31, 1999 and June 30, 2000 (c) the
statements of cash flows for the six-month periods ended June 30, 2000 and June
30, 1999, and (d) the changes in stockholders' equity for the six-month period
ended June 30, 2000, have been made. The results of operations for the six
months ended June 30, 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 originally
entitled the holder to purchase one share for $6.00 during the four-year period
ending January 21, 2001. The Company provided notice in April 2000, to redeem
the warrants on May 17, 2000 unless the warrants were previously exercised. On
May 1, 2000 the Company reduced the exercise price of the warrants to $5.00 per
share. Through May 16, 2000 124,871 warrants were exercised for $650,454. The
remaining unexercised warrants of 1,485,129 were redeemed at $.01 per warrant on
May 17, 2000.
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<PAGE>
AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE C - PUBLIC OFFERING AND PRIVATE PLACEMENTS
Private Placements
At June 30, 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) 141,000 exercisable at $1.75 through March 2004.
During the six months ended June 30, 2000, 42,750 options were exercised
resulting in total proceeds of $171,000.
In April 2000, the Company issued in a private placement, 319,000 shares at
$5.00 per share, resulting in proceeds of $1,595,000.
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
The Company is involved in the following matters:
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<PAGE>
AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 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 reached settlement terms and accrued
the estimated cost thereof at December 31, 1999.
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. By order of the District Court for
the District of New Jersey, the actions were consolidated and lead plaintiffs
were appointed. In March 2000, the Company was served with a consolidated and
amended class action complaint on behalf of all purchasers of the Company's
common stock and warrants between September 9 and 17, 1999. The complaint
alleges 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.
Recently, the Company made a motion to dismiss the consolidated and amended
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-SIX AND THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX
AND THREE MONTHS ENDED JUNE 30, 1999
Net sales for the six month period ended June 30, 2000 were $1,428,076
while sales for the six months ended June 30, 1999 were $1,078,082. Net sales
for the three month period ended June 30, 2000 were $529,008 while net sales for
the three month period ended June 30, 1999 were $422,912. Sales increased due to
the Company's new wireless internet products which began shipping in the first
quarter of 2000. In addition, the 2000 period reflected continued deliveries of
orders to Harris Corporation and other large OEM's, and reflected substantially
no revenues from the Korean marketplace. In 1999, sales reflected a significant
portion of shipments to Korea, a marketplace which has been unstable.
Gross profit for the six months ended June 30, 2000 amounted to $258,394 (18% of
sales), compared to $117,773 (11% of sales) for the corresponding six months of
1999 and $19,424 (4% of sales) compared to ($2,892) ((1%) of sales) for the
three months ended June 30, 2000 and 1999, respectively. 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.
Selling, general and administrative expenses were $952,686 and $691,528 for the
six months ended June 30, 2000 and 1999, respectively, and $587,377 and $349,131
for the three months ended June 30, 2000 and 1999, respectively. The increased
costs reflect additional consulting fees and professinal fees in connection with
the class action law suit and additional personnel and marketing efforts
dedicated to the new wireless internet products.
Research, engineering, and development costs dropped by $20,573 for the first
six months of 2000 from the corresponding six 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 during the first quarter of
2000 and related to warrants issued to consultants.
Interest income was higher for the first six 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 ($1,011,058) or
($.14) per share for the six months ended June 30, 2000 compared to net losses
of ($785,289) or ($.15) per share for the same period in 1999, and ($686,169) or
($.09) per share and ($485,379) or ($.08) per share for the three months ended
June 30, 2000 and 1999, respectively.
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<PAGE>
PART 1 - FINANCIAL INFORMATION - ITEM 2 (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2000, the Company had cash and cash equivalents of $2,855,471
principally due to the injection of private placement funds and exercise of
warrants in 1999 and 2000. During 1999, the Company issued its common stock in
lieu of cash payments for compensation, commissions, and consulting fees where
possible. This trend may continue in the 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, the exercise of
warrants, 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.
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<PAGE>
PART II - OTHER INFORMATION
ITEM 2. CHANGE IN SECURITIES
During the second quarter ended June 30, 2000, the Company issued 2,000 shares
of Common Stock, at an exercise price of $6.00 per share, in connection with the
exercise of its publicly traded warrants, resulting in net proceeds of $12,000.
During the second quarter ended June 30, 2000, the Company issued 98,771 shares
of Common Stock, at an exercise price of $5.00 per share, in connection with the
exercise of its publicly traded warrants, resulting in net proceeds of $493,855.
During the second quarter ended June 30, 2000, the Company issued 2,500 shares
of Common Stock, at $4.00 per share, in connection with the exercise of employee
stock options, resulting in net proceeds of $10,000.
In April 2000, the Company issued 319,000 shares of Common stock, at $5.00 per
share, to accredited investors pursuant to Rule 506 of Regulation D of the
Securities Act of 1933, as amended, resulting in net proceeds of $1,595,000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(b) REPORTS ON FORM 8-K
(i) The Registrant filed a Current Report on Form 8-K on April 7,
2000, disclosing the notice of redemption of the publicly traded
warrants on May 10, 2000.
(ii) The Registrant filed a Current Report on Form 8-K on May 3, 2000,
disclosing the reduction of the exercise price of the publicly
traded warrants from $6.00 to $5.00 per share and the extension
of the exercise period through the close of business on May 16,
2000.
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<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: August 14, 2000 By: /s/ DEVENDAR S. BAINS
-------------------------
Name: Devendar S. Bains
Title: Chief Executive Officer,
President, Treasurer,
Principal Accounting
Officer and Director
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