PROSPECTUS
AMPLIDYNE, INC.
2,139,759 Shares of Common Stock
2,139,759 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 is quoted on The Nasdaq SmallCap Market under the
symbol AMPD. The closing price of the common stock on June 29, 2000 was
$3 21/32.
Our principal executive offices are located at 59 LaGrange Street,
Raritan, New Jersey 08869. Our telephone number is (908) 253-6870.
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An investment in the common stock involves a high degree of risk. See
"Risk Factors" beginning on page 4.
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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 JULY 3, 2000.
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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.
o Proxy Statement on Schedule 14A dated November 26, 1999.
o Annual Report on Form 10-KSB for the year ended December 31, 1999.
o Quarterly Report on Form 10-QSB for the period ended March 31,
2000.
o Current Report on Form 8-K filed August 3, 1999.
o Current Report on Form 8-K filed April 7, 2000.
o Current Report on Form 8-K filed May 3, 2000.
o The description of the Common Stock, par value $.0001 per share
("Common Stock") 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.
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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
$1,916,359 and $3,535,689 for the years ended December 31, 1998 and 1999,
respectively and $324,889 for the three months ended March 31, 2000. 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 and high speed wireless internet products. We have made commitments
to vendors to purchase hardware for use in our wireless internet systems. We
expect to have increased sales in this area to compensate for the expenses,
however, there is no guarantee that this will happen. The need for high band
width products may lead to rapid product obsolescence. Therefore, we expect to
increase our research and development efforts for more products which could
result in higher operating losses. 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 $15,429,614 at March 31, 2000.
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
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amplifiers and our high speed wireless internet access products. Although demand
for such products has grown in recent years, we 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 although we have recently purchased new manufacturing
equipment. Our wireless internet products are manufactured at offshore
facilities which are our sole suppliers. 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
wireless internet products are manufactured at offshore facilities. The lack of
supply from this source due to any reason could adversely impact our business.
OUR SUCCESS RELIES ON A SMALL NUMBER OF CUSTOMERS AND OUR SALES ORDERS
HAVE HAD A HIGH DEGREE OF DELAYS AND CANCELLED Orders. In 1998, approximately
94% of our net revenues were derived from three customers (two European and one
South Korean). In 1999, approximately 76% of our net revenues were derived from
3 customers (31%, 27% and 18%). 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 2000
revenues and that sales to Korea during this period are not expected to be
significant. 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 wireless internet product sales
are expected to increase through contracts we have with ISPs. If these sales do
not materialize due to any reason, this would have a significant negative impact
on our projected revenues.
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. 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. In addition,
we have limited experience in the marketing and sales of our wireless internet
products, and cannot be certain that this sector will grow in revenue as
expected.
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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 31% 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.
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
downsized 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 internet and telecommunications customers come under increasing price
pressure from 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 amplifier
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 internet and 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.
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In addition, we are not sure whether new products or alternative
technology will render our current or planned products obsolete or inferior.
Rapid technological development by others may result in our products 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 94% and 90%
of our net revenues for the years ended December 31, 1998 and 1999,
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 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 Form S-3, 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.
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.
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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.
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 is 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 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 Board transactions. If trading of
our common stock in the over-the-counter market were to occur, the liquidity of
our common stock 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. Our Quarterly Report on Form 10-QSB for the period
ended March 31, 2000 indicates net tangible assets of $2,595,076. 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 is listed on The Nasdaq SmallCap
Market, it is exempt from the definition of "penny stock." If our common stock
is removed from listing by The Nasdaq SmallCap Market, our common stock 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:
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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.
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
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 May 31, 2000, there were
7,411,591 shares of our common stock issued and outstanding, which amount does
not include:
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;
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;
o 141,000 shares of our common stock issuable upon exercise of
warrants at $1.75 per share; and
o 1,428,250 shares of our common stock issuable upon exercise of
options granted pursuant to our Incentive Option Plan.
After reserving a total of 2,191,750 shares of our common stock for
issuance upon the exercise of all options and warrants described above, we will
have at least 15,396,659 shares of authorized but unissued common stock
available for issuance without further shareholder approval. Any issuance of
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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
May 31, 2000, we had 7,411,591 shares of our common stock issued and
outstanding. Of these 7,411,591 shares of issued and outstanding common stock,
4,403,970 shares are considered "restricted securities". These "restricted
securities" may be sold pursuant to Rule 144 of the Securities Act of 1933 as
follows:
o 3,247,695 shares of our common stock may currently be sold pursuant
to Rule 144;
o 402,682 shares of our common stock may be sold pursuant to Rule 144
commencing July 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;
o 21,891 shares of our common stock may be sold pursuant to Rule 144
commencing January 2001; and
o 319,000 shares of our common stock may be sold pursuant to Rule 144
commencing April 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 May 31, 2000, 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;
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<PAGE>
o warrants to purchase 140,000 shares of our common stock at an
exercise price of $7.50 per share;
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;
o warrants to purchase 50,000 shares of our common stock at an
exercise price of $2.00 per share; and
o warrants to purchase 141,000 shares of our common stock at an
exercise price of $1.75 per share.
In addition, we have reserved 1,428,250 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 A CLASS ACTION COMPLAINT. We are the subject of a
class action complaint on behalf of all purchasers of our common stock and
warrants between September 9-17, 1999. The complaint alleges that we and others
violated the federal securities law by, among other things, the issuance of a
press release on September 9, 1999. We believe that the complaint is without
merit and we will vigorously contest it, although we can give no assurances as
to the ultimate outcome of such complaint.
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<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 $2,780,000 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 2,139,759 shares of
our common stock by the Selling Securityholders or their transferees. Of such
shares, 1,392,259 shares are currently outstanding, 67,500 shares are issuable
upon exercise of warrants at $2.50, 195,000 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, 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, 50,000 shares are issuable upon
exercise of warrants at $2.00 per share and 125,000 shares are issuable upon
exercise of warrants at $1.75 per share.
The following table sets forth, to our knowledge, 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 THE OFFERING
<S> <C> <C> <C>
Joseph Giamanco 364,357 319,074 45,283
Joseph C. Roselle 154,074 154,074 0
Robert Karsten 37,500 37,500 0
Ronald Monello 40,000 40,000 0
Elliot and Beth Bauer, 20,000 20,000 0
JTTEN
Susan A. Brauser 40,000 40,000 0
Bridge Ventures, Inc. 150,000 150,000 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
New Amsterdam Investment 12,500 12,500 0
Trust(1)
Jerome Belson 354,074 244,074 110,000
Conzett Europa Invest Ltd. 73,037 73,037 0
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
NAME OWNED BEFORE OFFERING SHARES BEING OFFERED OWNED AFTER OFFERING
<S> <C> <C> <C>
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
Gilbert D. Kaye and Joyce 12,000 12,000 0
Kaye, Trustees of the
Gilbert D. Kaye Trust
Maurice Abadi 12,000 12,000 0
Mayer Ballas 7,000 7,000 0
Murray Alon 12,000 12,000 0
Frank B. Carr IRA 75,000 40,000 35,000
TOTAL 1,582,542 1,392,259 190,283
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, 25,000 25,000 0
Inc. (4)
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
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SHARES UNDERLYING WARRANTS EXERCISABLE AT $4.00
SHARES BENEFICIALLY SHARES BENEFICIALLY
NAME OWNED BEFORE OFFERING SHARES BEING OFFERED OWNED AFTER THE OFFERING
<S> <C> <C> <C>
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
Berlack, Israels & Liberman 50,000 50,000 0
LLP(6)
TOTAL 195,000 195,000 0
SHARES UNDERLYING WARRANTS EXERCISABLE AT $1.00
SHARES BENEFICIALLY SHARES BENEFICIALLY
NAME OWNED BEFORE OFFERING SHARES BEING OFFERED OWNED AFTER THE OFFERING
<S> <C> <C> <C>
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
<S> <C> <C> <C>
Lawrence Zaslow 22,625 18,625 4,000
Paul Michaels 22,625 18,625 4,000
Marc Komorsky 22,625 18,625 4,000
Peter Adolph 22,625 18,625 4,000
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 106,000 90,000 16,000
SHARES UNDERLYING WARRANTS EXERCISABLE AT $2.00
SHARES BENEFICIALLY SHARES BENEFICIALLY
NAME OWNED BEFORE OFFERING SHARES BEING OFFERED OWNED AFTER THE OFFERING
<S> <C> <C> <C>
Berlack, Israels & Liberman 50,000 50,000 0
LLP
</TABLE>
15
<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 95,000 95,000 0
Joshua Levine 45,000 45,000 0
TOTAL 140,000 140,000 0
SHARES UNDERLYING WARRANTS EXERCISABLE AT $1.75
SHARES BENEFICIALLY SHARES BENEFICIALLY
NAME OWNED BEFORE OFFERING SHARES BEING OFFERED OWNED AFTER THE OFFERING
<S> <C> <C> <C>
Strategic Capital 125,000 125,000 0
Consultants Inc.
SHARES UNDERLYING WARRANTS EXERCISABLE AT $6.00
SHARES BENEFICIALLY SHARES BENEFICIALLY
NAME OWNED BEFORE OFFERING SHARES BEING OFFERED OWNED AFTER THE OFFERING
<S> <C> <C> <C>
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
<S> <C> <C> <C>
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 50,000 shares underlying warrants exercisable at $2.00 per share.
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<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.
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.
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<PAGE>
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, 1999, 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.
18
<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................... 13
Selling Securityholder............ 13
Plan of Distribution.............. 17
Legal Matters..................... 18
Experts........................... 18
Disclosure of Commission
Position on Indemnification of
Securities Act Liabilities...... 18
AMPLIDYNE, INC.
2,139,759 SHARES OF COMMON STOCK
PROSPECTUS
July 3, 2000
19
