<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
(Mark One)
/x/ Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934.
For the quarterly period ended September 30, 1997.
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the transition period from to .
---------- ------------
Commission File No. 0-1921
-----------
POWER DESIGNS INC.
- --------------------------------------------------------------------------------
(Name of Small Business Issuer as specified in its charter)
Delaware 11-1708714
- ------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
14 Commerce Drive, Danbury, Connecticut 06810
- ---------------------------------------- ------
(Address of principal executive offices) (Zip Code)
(203) 748-7001
- --------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act 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 No X
--------- ---------
1
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Sections 12, 13 and 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan confirmed by a court.
Yes No X
--------- ---------
APPLICABLE ONLY TO CORPORATE REGISTRANTS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
2,391,493 as of November 10, 1997
Transitional Small Business Issuer Format (check one):
Yes No X
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2
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POWER DESIGNS, INC.
FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
INDEX
PART I--FINANCIAL INFORMATION PAGE NO.
Item 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheet as of
September 30, 1997 and 1996......................... 5
Condensed Consolidated Statement of
Operations for the three months ended
September 30, 1997 and 1996......................... 6
Condensed Consolidated Statements of
Changes in Stockholders' Deficit for the
three months ended September 30,
1997 and 1996....................................... 7
Condensed Consolidated Statement of
Cash Flows for the three months ended
September 30, 1997 and 1996.......................... 8
Notes to Condensed Consolidated Financial
Statements........................................... 9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS........................................... 12
PART II--OTHER INFORMATION
Item 3. DEFAULTS ON SENIOR SECURITIES........................ 16
Item 6. EXHIBITS AND REPORTS ON FORM 8-K..................... 17
Signatures..................................................... 18
3
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
4
<PAGE>
POWER DESIGNS, INC.
Condensed Consolidated Balance Sheet
(Unaudited)
September 30, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Accounts receivable................................................................. $ 542,086 $ 71,162
Inventories......................................................................... 2,028,036 207,297
Prepaid expenses.................................................................... 38,888 4,452
------------ ------------
Total current assets................................................................ 2,609,010 282,911
------------ ------------
Property and equipment, less accumulated depreciation............................... 805,225 4,246
------------ ------------
Other assets:
Investment in partnership........................................................... 22,041 21,221
Security deposits................................................................... 4,187 3,855
Goodwill............................................................................ 2,839,742 --
Financing fees and organizational costs............................................. 148,795 --
------------ ------------
3,014,765 465,076
------------ ------------
$ 6,429,000 $ 752,233
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Seller financing.................................................................... $ 1,000,000 $ 0
Cash overdraft...................................................................... 31,140 4,153
Accounts payable and accrued expenses............................................... 2,630,033 201,673
Notes payable--affiliates........................................................... 9,532,193 1,619,775
Payables related to reorganization, including accrued interest...................... 103,330 261,531
------------ ------------
Total current liabilities........................................................... 13,296,696 2,087,132
------------ ------------
Capital lease obligation--less current portion...................................... 98,734 --
------------ ------------
Total liabilities................................................................... 13,395,430 --
------------ ------------
Stockholders' deficit
Preferred stock..................................................................... 3,167 --
Common stock........................................................................ 240 240
Additional paid in capital.......................................................... 1,382,807 820,732
Deficit............................................................................. (8,352,644) (2,155,871)
------------ ------------
Total stockholders' deficit......................................................... (6,966,430) (1,334,899)
------------ ------------
$ 6,429,000 $ 752,233
------------ ------------
------------ ------------
</TABLE>
5
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Power Designs, Inc.
Condensed Consolidated Statement of Operations
(Unaudited)
For The Three Months Ended September 30, 1997 and 1996
<TABLE>
<CAPTION>
3 months ended 3 months ended
September 30, 1997 September 30, 1996
------------------ ------------------
<S> <C> <C>
Net Sales................................................................. $ 754,665 $ 90,502
Cost of Sales............................................................. 770,045 79,642
------------ ----------
Gross profit.............................................................. (15,379) 10,860
Selling, general and admin. expense....................................... 770,379 108,320
------------ ----------
Net loss before other income (expense).................................... (785,757) (97,460)
------------ ----------
Other income (expense):
Investment income......................................................... 300 1,000
Interest expense.......................................................... (415,092) (33,947)
------------ ----------
(414,792) (32,947)
------------ ----------
Net loss.................................................................. ($ 1,200,550) ($ 130,407)
------------ ----------
------------ ----------
Net loss per share........................................................ ($ 0.50) ($ 0.04)
------------ ----------
------------ ----------
</TABLE>
6
<PAGE>
POWER DESIGNS, INC.
Condensed Consolidated Statement of Changes in Stockholders' Deficit
(Unaudited)
For The Three Months Ended September 30, 1997 and 1996
<TABLE>
<CAPTION>
Shares Shares
Preferred Common Additional
Stock Stock Preferred Common Paid in
Outstanding Outstanding Stock Stock Capital Deficit Total
----------- ----------- ----------- ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1996......... 0 2,391,493 $ 0 $ 240 $ 820,732 ($ 2,025,464) ($ 1,204,492)
Net loss....................... -- -- -- -- -- (130,407) (130,407)
----------- ----------- ----------- ----- ------------ ------------- -------------
Balance, September 30, 1996.... 0 2,391,493 $ 0 $ 240 $ 820,732 ($ 2,155,871) ($ 1,334,899)
----------- ----------- ----------- ----- ------------ ------------- -------------
----------- ----------- ----------- ----- ------------ ------------- -------------
Balance, June 30, 1997......... 316,689 2,391,493 $ 3,167 $ 240 $ 1,382,807 ($ 7,152,094) ($ 5,765,880)
Net loss....................... -- -- -- -- -- (1,200,550) (1,200,550)
----------- ----------- ----------- ----- ------------ ------------- -------------
Balance, September 30, 1997.... 316,689 2,391,493 $ 3,167 $ 240 $ 1,382,807 ($ 8,352,644) ($ 6,966,430)
----------- ----------- ----------- ----- ------------ ------------- -------------
----------- ----------- ----------- ----- ------------ ------------- -------------
</TABLE>
7
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POWER DESIGNS, INC.
Condensed Consolidated Statement of Cash Flows
(Unaudited)
For The Three Months Ended September 30, 1997 and 1996
<TABLE>
<CAPTION>
3 months ended 3 months ended
September 30, September 30,
1997 1996
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net loss............................................. ($ 1,200,550) ($ 130,407)
Adjustments to reconcile net loss to net cash used in
operating activities
Depreciation and amortization...................... 151,840 251
(Increase) decrease in:
Accounts receivable................................ 187,055 (37,767)
Inventories........................................ (135,789) (32,811)
Prepaid Expenses................................... (37,365) (4,452)
Other assets....................................... 9,292 (250,000)
Increase (decrease) in:
Accounts payable and accrued expenses.............. 205,360 33,170
Payables related to reorganization................. 1,204 (124)
-------------- --------------
Cash flows used in operating activities.............. (818,953) (422,140)
-------------- --------------
Cash flows used in investing activities:
Purchase of property and equipment................. (112,162) --
-------------- --------------
Cash flows from (used in) financing activities:
Advances from affiliates........................... 900,707 (71,251)
Principal payments on capital lease obligations.... (9,631) --
Cash received from long term financing............. -- 495,178
-------------- --------------
Cash flows provided by financing activities.......... 891,076 423,927
-------------- --------------
Net increase (decrease) in cash...................... (40,039) 1,787
Cash (overdraft), beginning of period................ 8,899 (5,940)
-------------- --------------
Cash (overdraft), end of period...................... ($ 31,140) ($ 4,153)
-------------- --------------
-------------- --------------
</TABLE>
8
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POWER DESIGNS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997 and 1996
Note 1. Basis of Presentation
The condensed consolidated financial statements included herein have been
prepared by Power Designs, Inc. (the "Company"), without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosure normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although management
of the Company believes that the disclosures are adequate to make the
information presented not misleading. These condensed consolidated financial
statements should be read in conjunction with the notes thereto. In the opinion
of the management of the Company, the condensed consolidated financial
statements include all adjustments, consisting of only normal recurring
adjustments, necessary to fairly present the results for the interim periods to
which these financial statements relate.
The results of operations for the three months ended September 30, 1997 are
not necessarily indicative of the results to be expected for the full year.
The consolidated statements of operations for the period ended September 30,
1997 include the operations of PDIXF Acquisition Corporation (see Note 2) for
the period July 1, 1997 through September 30, 1997.
Note 2. Significant Events
On October 11, 1996, a wholly owned subsidiary of the Company, PDIXF
Acquisition Corporation ("PAC"), acquired for approximately $4.4 million, the
assets of Technipower, Inc. and Constant Power, Inc., two divisions of Penril
Datacomm Networks, Inc. ("Penril"), encompassing three product lines.
Additionally, the Company repaid loans, notes payable and obligations to
creditors totaling approximately $1,490,000 that existed as of October 11, 1996.
The Company also incurred approximately $260,000 in costs related to the
transaction.
The following provided funding for the above transaction (approximately
$6,180,000):
316,689 shares of preferred stock convertible to common stock at
a conversion rate to be determined at a future date........... $ 265,000
Warrants convertible into 416,749 shares of common stock at 87.5
cents per share............................................... 7,000
Subordinate debt from six individuals and a limited
partnership................................................... 1,087,000
9
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Note payable to Inverness Corporation ("Inverness") (Due April
1, 1998)...................................................... 2,290,000
Seller financing (Note due December 31, 1996)................... 2,750,000
---------
Total sources................................................... 6,399,000
Less: cash deposited into PAC for working capital............... (219,000)
---------
$6,180,000
---------
---------
The Company defaulted on the $2,750,000 note (the "Penril Indebtedness")
secured by the majority of the Company's assets, due to Penril at December 31,
1996. As a result of the default, the company was in breach of its asset
purchase agreement with Penril (the "Asset Purchase Agreement"), executed
pursuant to the Acquisition. In March 1997, the Company and Penril executed a
Forbearance Agreement providing for an extension of time for repayment of the
Penril Indebtedness. The Forbearance Agreement, as modified, required the
company to make a series of payments totaling $1,750,000 prior to June 1, 1997,
and thereafter to make a final payment of $1,000,000 on July 31, 1997.
As of June 30, 1997, the Company was current on its obligations under the
terms of the agreement. Subsequent to that date, the Company remained current on
the interest amounts due to Penril, but was unable to repay the $1,000,000
outstanding obligation on July 31, 1997. As a result, the Company has commenced
negotiations with Penril concerning the amount and due date on the remainder of
the Penril Indebtedness.
Subsequent to the Penril acquisition, the Company experienced a number of
production problems encountered in the manufacturing of the UPS/PLC product
line. As a result, the Company has experienced significant financial
difficulties including incurring operating losses which have resulted in a
working capital deficiency and a substantial accumulated deficit as of September
30, 1997. To finance this deficit, Inverness Corporation amended its revolving
credit facilities with the Company to increase the maximum availability under
this vehicle from $2,500,000 initially to $8,000,000.
The Company has raised additional funds needed for general working
capital purposes and to repay a portion of the Penril Indebtedness. In an
effort to meet obligations, the Company obtained bridge financing in the form
of a private placement offering. This offering of units comprise Bridge Notes
("Bridge Notes") and Common Stock purchase warrants, and was completed on
July 31, 1997. As of the closing date, $1,653,500 represents the total amount
raised through the offering of these units. The issuer has recently undertaken
a similar additional private offering of units. In addition to these Bridge
Notes, the Company has also executed two short-term notes in the amount of
$300,000 payable to two related investors. The issuer has accrued
10
<PAGE>
interest on these obligations at 10%, and expects to repay the principal and
all accrued interest on these obligations when due.
Note 3--Subsequent Events:
Subsequent to September 30, 1997, the Company has raised an additional
$200,000 in temporary financing based upon terms similar to the private offering
noted above from investors, directors and other affiliates.
In November 1997, the stockholders of the Company approved a proposal to
authorize the issuance of an additional 10,000,000 shares of Common Stock and an
additional 4,000,000 shares of Preferred Stock, as well as a proposed
eight-for-one reverse stock split.
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations.
Current Developments
During fiscal year 1997, the issuer's manufacturing and engineering
departments found an unacceptable level of failures in uninterruptible power
supply and power line conditioner ("UPS/PLC) products being shipped. The issuer
immediately suspended shipments of the new products and initiated efforts to
resolve any production problems. This effort resulted in substantial
improvements in product reliability and manufacturability. As discussed in more
detail in "Liquidity and Capital Resources" below, funds for the operating
deficits incurred during fiscal 1997 were obtained through additional financing
Since June 30, 1997, the issuer has been actively interviewing and surveying
possible turnkey contract manufacturing vendors for these products in view of
the issuer's lack of expertise in building higher volume production quantities
of any product. It is expected that volume production will begin to be available
from the outside sources late in the second quarter of fiscal year 1998.
In early 1995, the issuer's shareholders had approved a resolution calling
for the reincorporation of the issuer under Delaware law, by merging the issuer
into a Delaware corporation also named Power Designs, Inc. This merger was
completed on August 8, 1997 upon approval by the New York State Department of
State, Division of Corporations.
Liquidity and Capital Resources
In connection with the Penril acquisition, the issuer simultaneously
obtained significant additional outside financing, totaling approximately
$6,400,000. The financing consisted of three primary components: a private
placement of debt and equity securities and Common Stock purchase warrants for
approximately $1,360,000 to six individuals and a limited partnership; advances
on revolving notes payable to Inverness in the amount of $2,290,000, and a Term
Note payable to Penril of $2,750,000 due on December 31, 1996. The issuer
defaulted on the Penril Indebtedness and thereafter entered into the Forbearance
Agreement pursuant to which the issuer is also in default. See Part II--Item 3,
"Defaults Upon Senior Securities."
As part of the acquisition and financing, the issuer also created a class of
Preferred Stock, $.01 par value, which had been authorized by vote of the
shareholders in fiscal year 1995. Shares of the Preferred Stock were included
with the securities placed with the six individuals and a limited partnership.
12
<PAGE>
Subsequent to the Penril acquisition, the resources and personnel of the
issuer were deployed in the investigation and resolution of a number of
manufacturing and production problems encountered in the manufacturing of the
UPS/PLC product lines. These problems resulted in extremely low manufacturing
yields evidenced by the gross profit (loss) at June 30, 1997 of ($366,138), and
at September 30, 1997 of ($15,379). To correct these problems, significant
operating funds were expended over the course of the remainder of fiscal year
1997 and the first quarter of fiscal 1998, resulting in a net loss for the 1997
year of ($5,126,630) for fiscal 1997 and ($1,200,550) for the first quarter of
fiscal 1998. In order to finance these operating expenditures, Inverness
Corporation amended its revolving credit facilities with the issuer on November
27, 1996, December 31, 1996, and March 1, 1997 to increase the maximum
availability under this vehicle from $2,500,000 initially to $8,000,000.
As a result of the UPS/PLC product failures created by the manufacturing
problems described above, the issuer experienced delays in the shipment of its
primary product line. These delays resulted in net sales for the year, which
were insufficient to cover operating costs. This reduced revenue stream, coupled
with limited availability under the revolving credit facility, left the issuer
unable to repay the Penril obligation when due. To meet this obligation, the
issuer completed a private placement of $100,000 Bridge Notes and Common
Stock purchase warrants. This Offering commenced
on March 21, 1997 and was completed on July 31, 1997. For each unit purchased,
the bridge lenders received a promissory note for $100,000 due no later than
July 31, 1998 and 40,000 warrants to acquire shares of the issuer's Common Stock
for $0.25 per share subject to adjustment. The obligations outstanding of
$1,364,500 at September 30, 1997 represent the total amount raised through the
offering of $1,653,500, less $289,000 allocated to the warrants and recorded as
additional paid in capital. The issuer has recently undertaken a similar
private offering of units.
In addition to the loans described above, the issuer has executed two short
term notes in the aggregate amount of $300,000 payable to two,
investors. The issuer has accrued interest on these obligations at 10%, and
expects to repay the principal and all accruedinterest on these obligations
when due.
13
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An additional $200,000 in interim financing was raised from investors, directors
and affiliates of the issuer subsequent to September 30, 1997 on the same
terms as the bridge offering noted above.
The issuer hopes to be able to supply a greater percentage of its working
capital needs through improved operating cash flow during the 1998 fiscal year.
This improved operating cash flow is predicated upon a stabilized UPS/PLC
manufacturing process and increased revenue for fiscal 1998 of which there can
be no assurance. Nevertheless, the issuer expects that it will be in need of
additional financing through offerings of debt or equity and is exploring
certain alternatives to that end. The issuer has entered into a letter of intent
with an underwriter pursuant to which, the issuer proposes to undertake a public
offering of Common Stock. Such an offering is predicated upon stockholder
approval of a proposal to authorize an additional 10,000,000 shares of Common
Stock and an additional 4,000,000 shares of Preferred Stock, as well as a
proposed eight-for-one reverse stock split. Stockholder approval for these
approvals was obtained by the issuer on November 12, 1997. The terms and
conditions of this offering have not been finalized. Depending on market
conditions, the issuer may decide at any time not to proceed with the above-
referenced public offering.
The issuer currently has a net stockholders' deficit of approximately
$6,900,000, meaning that amounts owed to its creditors, including without
limitation Inverness Corporation, exceed the issuer's assets.
Results of Operations
Results for the first three months of fiscal 1998 reflect the Acquisition,
and therefore represent a substantial change from the figures for the same
period in 1997. Accordingly a period-to-period comparison of the historical
results of operations and financial condition of the issuer is not meaningful.
First three months of fiscal 1998 versus first three months of fiscal 1997.
Net sales exceeded $750,000 for the quarter ended September 30, 1997 as
compared with approximately $90,000 for the same period in 1996.
However, gross profit decreased from $10,860 for the first quarter of fiscal
1997 to ($15,379) for the current quarter, the result of the low manufacturing
yields experienced by the issuer prior to a full conversion to turnkey
manufacturing. Operating expenses increased from $108,320 for the first quarter
of fiscal 1997 to $770,379 for the same period in fiscal 1998. This increase is
reflective of the increased volumes inherent in the Acquisition, as well as the
issuer's increased depreciation and amortization expenses recognized from assets
obtained in the Acquisition. The issuer's significant reliance on debt financing
accounts for the increase in interest expense to $414,792 as of
14
<PAGE>
September 30,1997 from $32,947 as of September 30, 1996. As a result of the
above conditions, the net loss for the first quarter of fiscal 1998 is
($1,200,550), as compared to ($130,407) for the same period in fiscal 1997.
Through the first quarter of fiscal year 1998, the issuer expended
considerable funds and effort in completing the necessary operational
improvements identified during the months following the Acquisition. The
issuer's plans for improvement include instituting processes that can streamline
operations, and raising additional debt and capital financing. Operating plans
include contracting for an outsourced manufacturing resource to allow for active
production of the UPS/PLC product line to resume, and allow for a higher volume
of production. The issuer is also reassessing its pricing strategies for many of
its products. Operating costs are being closely monitored and temporary staffing
reductions have been made to reduce operating expenses. In order to address the
issuer's financing requirements, the issuer is planning for an infusion of
additional bridge financing during 1997, and raising new equity
capital in 1998. However, there can be no assurances that the issuer will be
able to obtain such additional debt and equity financing, or be successful at
streamlining and improving operating results.
Certain statements contained in this Item 2 regarding matters that are not
historical facts, including, among others, statements regarding the future
adequacy of the issuer's working capital, its ability to raise capital through
debt or equity offerings, its ability to maintain or improve its present cash
flow, are "forward-looking statements". Such forward-looking statements involve
risks and uncertainties which may cause the actual results, performance or
achievements of the issuer to be materially different from any future results,
performance or achievements, express or implied by such forward-looking
statements.
These forward-looking statements are identified by their use of forms of
such terms and phrases as "expects," "intends," "goals," "estimates,"
"projects," "plans," "anticipates," "should," "future," "believes," and
"scheduled". The variables which may cause differences include, but are not
limited to, the following: general economic and business conditions;
competition; success of operating initiatives; operating costs; advertising and
promotional efforts; the existence or absence of adverse publicity; changes in
business strategy or development plans; the ability to retain management;
availability, terms and deployment of capital; business abilities and judgement
of personnel; availability of qualified personnel; labor and employee benefit
costs; availability and costs of raw materials and supplies; and changes in, or
failure to comply with, government regulations. Although the issuer believes
that the assumptions underlying the forward-looking statements contained herein
are reasonable, any of the assumptions could be inaccurate, and therefore, there
can be no assurance that the forward-looking statements included in this filing
will prove to be accurate. In light of the significant uncertainties inherent in
the forward-looking statements included herein, the inclusion of such
information should not be regarded as a representation by the issuer or any
other person that the objectives and expectations of the issuer will be
achieved.
15
<PAGE>
PART II. OTHER INFORMATION
Item 3. Defaults Upon Senior Securities
On December 31, 1996 the principal amount of the Penril Indebtedness
described at Part I, Item 2 above was not paid in full, thereby placing the
issuer in default. On March 10, 1997 the issuer and Penril executed a
forbearance agreement, which required the issuer to make payments of $50,000 per
week totaling $200,000 prior to March 21, 1997, a payment of $500,000 on or
before April 14, 1997, and a balloon payment equal to the remainder due on or
before May 31, 1997. All payments required under the Forbearance Agreement prior
to April 29, 1997 were made in full.
On April 29, 1997, the issuer and Penril entered into a modification
agreement (the "Modification Agreement"), which created a new payment schedule
under the Forbearance Agreement. The Modification Agreement required the issuer
to pay Penril $400,000 on April 30, 1997, $50,000 on each of May 5, May 12 and
May 19, 1997, $300,000 on May 30, 1997, and the remainder due under the Term
Note on July 31, 1997.
Penril subsequently agreed to permit the issuer to make payments of
$100,000, $50,000, $75,000 and $75,000 on May 30, 1997, June 4, 1997, June 10,
1997 and June 20, 1997, respectively, in lieu of the $300,000 payment due on May
30, 1997. As of June 10, 1997, the issuer was current on its obligations under
the terms of the Forbearance Agreement, as modified. Subsequent to June 10, 1997
the issuer remained current on interest amounts due to Penril, but was unable to
repay the $1,000,000 outstanding obligation on July 31, 1997. As a result, the
issuer has commenced negotiations with Penril concerning the amount and due date
on the remainder of the Term Note.
As is discussed in more detail in "Liquidity and Capital Resources" above,
at the same time as the acquisition the issuer received additional financing of
about $6.2 million. As part of the acquisition and financing, the issuer also
completed a private placement of debt and equity securities and Common Stock
purchase warrants for approximately $1,360,000 to six individuals and a limited
partnership. The issuer is in default on the notes for
non-payment of interest. Accrued and unpaid interest at September
30, 1997 was approximately $47,650. The investors have not taken any
actions to accelerate and demand payment on these obligations.
16
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 Financial Data Schedule
(b) No reports on Form 8-K have been filed during the quarter ended
September 30, 1997.
17
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: November 17, 1997 POWER DESIGNS, INC.
Danbury, Connecticut (Registrant) (Registrant)
By: /s/ Fred G. Basso
---------------------------------
Fred G. Basso, President
By: /s/ Anthony F. Intino II
---------------------------------
Anthony F. Intino II,
Chief Financial Officer
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1997
<CASH> (31,140)
<SECURITIES> 0
<RECEIVABLES> 699,053
<ALLOWANCES> (156,967)
<INVENTORY> 2,025,036
<CURRENT-ASSETS> 2,809,010
<PP&E> 950,256
<DEPRECIATION> (145,031)
<TOTAL-ASSETS> 8,429,000
<CURRENT-LIABILITIES> 13,298,696
<BONDS> 98,734
240
0
<COMMON> 3,187
<OTHER-SE> (8,869,837)
<TOTAL-LIABILITY-AND-EQUITY> 6,428,000
<SALES> 754,665
<TOTAL-REVENUES> 754,665
<CGS> 770,045
<TOTAL-COSTS> 770,045
<OTHER-EXPENSES> 770,379
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 414,792
<INCOME-PRETAX> (1,200,550)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,200,550)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,200,550)
<EPS-PRIMARY> (0.48)
<EPS-DILUTED> (0.48)
</TABLE>
