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 SEPTEMBER 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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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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 September 30, 2000 was 7,453,841.
<PAGE>
AMPLIDYNE, INC.
FORM 10-QSB
NINE MONTHS ENDED SEPTEMBER 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
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
September 30, December 31,
2000 1999
------------ ------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 2,361,752 $ 1,445,055
Accounts receivable, net of allowance
for doubtful accounts of $282,000 and
$349,000 at September 30, 2000 and
December 31, 1999, respectively 452,966 443,585
Inventories 715,844 917,450
Prepaid expenses 48,582 23,373
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Total current assets 3,579,144 2,829,463
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PROPERTY AND EQUIPMENT - AT COST
Machinery and equipment 690,303 683,609
Furniture and fixtures 43,750 43,750
Autos and trucks 61,185 61,183
Leasehold improvements 8,137 8,141
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Total 803,375 796,683
Less: Accumulated depreciation and amoritization 562,275 463,123
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Net property and equipment 241,100 333,560
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SECURITY DEPOSITS 35,625 35,625
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TOTAL ASSETS $ 3,855,869 $ 3,198,648
============ ============
The accompanying notes are an integral part of these financial statements
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<PAGE>
<TABLE>
<CAPTION>
AMPLIDYNE, INC.
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
2000 1999
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(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of lease obligations $ 14,351 $ 16,202
Accounts payable 176,555 446,005
Accrued expenses 139,091 116,756
Accrual for settlement of litigation 85,000 85,000
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Total current liabilities 414,997 663,963
LONG-TERM LIABILITIES
Lease obligations, less current maturities 8,261 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 7,453,841, and 6,924,970 shares
issued and outstanding at September 30, 2000 and
December 31, 1999, respectively 745 692
Additional paid-in-capital 20,187,611 17,618,398
Accumulated deficit (16,755,745) (15,104,725)
------------ ------------
Total stockholders' equity 3,432,611 2,514,365
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,855,869 $ 3,198,648
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
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<PAGE>
<TABLE>
<CAPTION>
AMPLIDYNE, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $ 474,128 $ 229,587 $ 1,902,204 $ 1,307,669
Cost of goods sold 564,949 348,091 1,734,631 1,308,400
----------- ----------- ----------- -----------
Gross profit (loss) (90,821) (118,504) 167,573 (731)
Operating expenses
Selling, general & administrative 454,606 301,993 1,407,292 993,521
Research, engineering and development 133,799 124,662 380,638 392,074
Stock Compensation -- -- 100,000 --
----------- ----------- ----------- -----------
Operating loss (679,226) (545,159) (1,720,357) (1,386,326)
Other non operating income (expenses)
Interest income 39,085 6,737 69,887 18,260
Interest expense 179 (14,133) (550) (27,778)
Other Income -- -- -- 60,000
----------- ----------- ----------- -----------
Loss before Taxes $ (639,962) $ (552,555) $(1,651,020) $(1,335,844)
Provision for Taxes -- 4,304 -- 6,304
----------- ----------- ----------- -----------
NET LOSS $ (639,962) $ (556,859) $(1,651,020) $(1,342,148)
=========== =========== =========== ===========
Net loss per share - basic and diluted $ (.09) $ (.09) $ (.23) $ (.24)
=========== =========== =========== ===========
Weighted average number of shares
outstanding 7,430,448 6,003,462 7,211,546 5,482,185
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
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<PAGE>
AMPLIDYNE, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Nine
Months Months
Ended Ended
Sept. 30, 2000 Sept. 30, 1999
-------------- --------------
Cash flows from operating activities:
Net Loss $(1,651,020) $(1,342,148)
Adjustments to reconcile net loss to net cash
used in operating activities
Provision for slow moving inventory 20,000
Provision for bad debt 125,000
Depreciation and amortization 99,152 88,178
Stock compensation charge 100,000 19,000
Changes in assets and liabilities
Accounts receivable (9,381) (35,257)
Inventories 201,606 (325,084)
Prepaid expenses and other current assets (25,209) 6,396
Accounts payable and accrued expenses (247,115) (151,852)
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Total adjustments 119,053 (253,619)
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Net cash used for operating activities (1,531,967) (1,595,767)
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Cash flows from investing activities:
Purchase of property and equipment (6,692) (20,299)
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Net cash used for investing activities (6,692) (20,299)
----------- -----------
Cash flows from financing activities:
Payment of lease obligations (13,910) (63,810)
Repayments of stockholders' loans -- (44,500)
Proceeds from issuance of stock and exercise of
options and warrants 2,469,266 2,585,293
----------- -----------
Net cash provided by financing activities 2,455,356 2,476,983
----------- -----------
NET INCREASE IN CASH 916,697 860,917
Cash at beginning of period 1,445,055 427,510
----------- -----------
Cash and cash equivalents at end of period $ 2,361,752 $ 1,288,427
=========== ===========
Supplemental disclosures of cash flow information
Cash paid for: Interest $ 729 $ 27,778
Income taxes 2,700 4,304
The accompanying notes are an integral part of these financial statements
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<PAGE>
<TABLE>
<CAPTION>
AMPLIDYNE, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2000
(UNAUDITED)
Preferred Stock Common Stock Additional Accumulated
--------------- ------------ ---------- -----------
Shares Par Value Shares Par Value Paid-in-capital (Deficit) Total
------ --------- ------ --------- --------------- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
January 1, 2000 -- $-- 6,924,970 $ 692 $17,618,398 $ (15,104,725) $ 2,514,365
Net loss (1,651,020) (1,651,020)
Stock compensation
charge 100,000 100,000
Exercise of warrants 167,121 17 703,249 703,266
Exercise of options 42,750 5 170,995 171,000
Issuance of common stock 319,000 31 1,594,969 1,595,000
--------- ----- ----------- ------------- -----------
Balance at Sept. 30, 2000 -- $-- 7,453,841 $ 745 $20,187,611 $ (16,755,745) $ 3,432,611
====== === ========= ===== =========== ============= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
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<PAGE>
AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
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 nine month periods ended September 30, 2000 and
September 30, 1999 (b) the financial position at December 31, 1999 and September
30, 2000 (c) the statements of cash flows for the nine-month periods ended
September 30, 2000 and September 30, 1999, and (d) the changes in stockholders'
equity for the nine-month period ended September 30, 2000 and the year ended
December 31, 1999, have been made. The results of operations for the nine months
ended September 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
SEPTEMBER 30, 2000
(UNAUDITED)
NOTE C - PUBLIC OFFERING AND PRIVATE PLACEMENTS
Private Placements
At September 30, 2000, the following 581,250 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) 47,750 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.
At September 30, 2000, the Company had employee stock options outstanding to
acquire 1,491,000 shares of common stock at exercise prices of $1.25 to $4.00.
In the quarter ended September 30, 2000, 42,250 warrants were exercised at $1.25
resulting in proceeds of $52,813.
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
SEPTEMBER 30, 2000
(UNAUDITED)
NOTE E - LITIGATION (CONTINUED)
1. AIRNET 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 in the
second quarter of 2000 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's motion to dismiss the consolidated and amended complaint
was denied. 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.
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<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-NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO
NINE AND THREE MONTHS ENDED SEPTEMBER 30, 1999
Net sales for the nine month period ended September 30, 2000 were $1,902,204
while sales for the nine months ended September 30, 1999 were $1,307,669. Net
sales for the three month period ended September 30, 2000 were $474,128, while
net sales for the three month period ended September 30, 1999 were $229,587.
Sales increased due to the Company's new wireless internet products which began
shipping in the first quarter of 2000. In addition, the 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 nine months ended September 30, 2000 amounted to $167,573
(9% of sales), compared to gross loss of $(731) (0% of sales) for the
corresponding nine months of 1999 and $(90,281) (-19% of sales) compared to
$(118,504) (-52% of sales) for the three months ended September 30, 2000 and
1999, respectively. Gross profit improved in 2000, especially in the first two
quarters of 2000 due to higher profit margins on the Harris Corporation and
other large OEM orders, and improvements in the manufacturing process. The
wireless internet products also produced some of the gross profit, however, the
set-up time to develop manufacturing processes and small order quantities
decreased the overall gross profit margin. The third quarter of both periods
were also impacted due to lower sales in the third quarter, as compared to the
first two, which were not sufficient to cover fixed costs.
Selling, general and administrative expenses were $1,407,292 and 993,521 for the
nine months ended September 30, 2000 and 1999 respectively, and $454,606 and
$301,993 for the three months ended September 30, 2000 and 1999 respectively.
The increased costs reflect additional consulting fees and professional 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 $11,436 for the first
nine months of 2000 from the corresponding nine 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 nine 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 and options during 2000.
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<PAGE>
PART 1 - FINANCIAL INFORMATION - ITEM 2 (CONTINUED)
As a result of the foregoing, the Company incurred net losses of ($1,651,020) or
($.23) per share for the nine months ended September 30, 2000 compared to net
losses of ($1,342,148) or ($.24) per share for the same period in 1999, and
($639,962) or ($.09) per share and ($556,859) or ($.09) per share for the three
months ended September 30, 2000 and 1999, respectively.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2000, the Company had cash and cash equivalents of $2,361,752
principally due to the injection of private placement funds and exercise of
warrants in 1999 and 2000. Working capital at September 30, 2000 was $3,164,147
compared to $2,165,500 at December 31, 1999. During 1999, the Company issued its
common stock in lieu of cash payments for compensation, commissions, and
consulting fees where possible. This trend is expected to continue in the fourth
quarter 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 options, 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 third quarter ended September 30, 2000, the Company issued 42,250
shares of Common Stock, at an exercise price of $1.25 per share, in connection
with the exercise of certain outstanding warrants, resulting in net proceeds of
$52,813.
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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: November 14, 2000 By: /s/ DEVENDAR S. BAINS
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Name: Devendar S. Bains
Title: Chief Executive Officer,
President, Treasurer,
Principal Accounting
Officer and Director
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