<PAGE>
U.S. 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 March 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
Commission file number
0-24886
ACRODYNE COMMUNICATIONS, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 11-3067564
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
516 Township Line Road
Blue Bell, Pennsylvania 19422
----------------------- -----
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: 215-542-7000
Check whether the issuer (1) has 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 X No
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 6,769,523 shares of common stock of
Acrodyne Communications, Inc. were outstanding on May 7, 1999.
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ACRODYNE COMMUNICATIONS, INC.
INDEX
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Page
No.
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PART I. FINANCIAL INFORMATION:
Consolidated Balance Sheet at March 31, 1999 (unaudited) and
December 31, 1998..................................................2
Consolidated Statement of Operations for the Three Months Ended
March 31, 1999 and 1998 (unaudited).................................3
Consolidated Statement of Cash Flows for the Three Months Ended
March 31, 1999 and 1998
(unaudited).........................................................4
Notes to Consolidated Financial Statements (unaudited)....................5
Management's Discussion and Analysis of Financial Condition and Results
of Operations.......................................................6
PART II. OTHER INFORMATION, AS APPLICABLE....................................15
SIGNATURES....................................................................16
1
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<TABLE>
<CAPTION>
Acrodyne Communications, Inc.
Consolidated Balance Sheet
(Unaudited)
- -------------------------------------------------------------------------------------------------
March 31, December 31
Assets 1999 1998
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,587,727 $ 963,695
Accounts receivable, net of allowance for doubtful accounts 2,300,868 1,497,197
Inventories 4,747,867 4,325,445
Prepaid expenses and deposits 115,576 170,958
----------- -----------
Total current assets 8,752,038 6,977,295
Property, plant and equipment, net 487,258 504,469
Non-compete agreement, net 417,072 435,822
Goodwill, net 4,016,583 4,055,707
----------- -----------
Total assets $13,672,951 $11,973,293
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt $ 75,630 $ 75,630
Borrowings under Line of Credit 1,000,000 1,275,000
Accounts payable 1,177,789 2,119,604
Accrued expenses 524,558 386,363
Customer advances 165,391 161,418
----------- -----------
Total current liabilities 2,943,368 4,018,015
Long-term debt 53,164 69,824
Non-compete liability 709,412 712,168
----------- -----------
Total liabilities 3,705,944 4,800,007
=========== ===========
Shareholders' equity:
Preferred Stock Series "A" par value $ 1.00 - 0 - 326,530
8% Redeemable Convertible Preferred Stock Preferred stock,
par value $1.00; 1,000,000 shares authorized,
8% Convertible Redeemable Preferred Stock 6,500 6,500
Common stock, par value $.01; 35,000,000 shares
authorized, 5,331,670 shares issued and outstanding 67,695 53,317
on December 31, 1998, and 6,769,523 on March 31,1999
Additional paid-in capital 20,807,822 17,720,449
Accumulated deficit (10,915,010) (10,933,510)
----------- -----------
Total liabilities and shareholders' equity $13,672,951 $11,973,293
=========== ===========
</TABLE>
See notes to consolidated financial statements
2
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Acrodyne Communications, Inc.
Consolidated Statement of Operations
(Unaudited)
- --------------------------------------------------------------------------------
Three Months Ended March 31,
1999 1998
---- ----
Net Sales $ 3.023.092 $ 3,163,975
Cost of Sales 1,931,349 2,133,438
----------- -----------
Gross Profit 1,091,743 1,030,537
----------- -----------
Operating Expenses:
Engineering, R & D 224,479 219,437
Selling 351,192 337,836
Administration 428,112 385,434
Amortization of intangibles 57,874 57,874
----------- -----------
Total operating expenses 1,061,657 1,000,581
----------- -----------
Operating Profit $ 30,086 $ 29,956
Other income (expense)
Interest expense, net 11,919 5,674
Other income, net (332) - 0
Net income 18,499 35,630
Dividend on 8% Convertible Redeemable (14,028) (14,028)
Preferred Stock
Net income applicable to common shares $ 4,471 $ 21,602
=========== ===========
Net income per common share basic $ 0.0006 $ 0.004
=========== ===========
Weighted average shares outstanding basic 6,769,523 5,314,270
=========== ===========
Net income per common share diluted $ 0.0006 $ 0.004
=========== ===========
Weighted average shares outstanding diluted 6,320,572 5,528,805
=========== ===========
See notes to consolidated financial statements
3
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Acrodyne Communications, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended March 31,
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 18,499 $ 35,630
Adjustments to reconcile net income to net cash used
in operating activities:,
Depreciation and amortization 110,610 110,015
Changes in assets and liabilities:
Accounts receivable (803,671) (232,662)
Inventories (422,422) (700,922)
Prepaids and deposits 55,382 (14,569)
Accounts payable (941,815) (750,674)
Accrued expenses 138,195 (93,699)
Customer advances 3,973 (130,707)
----------- -----------
Net cash used in operating activities (1,841,249) (1,790,240)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (30,922) (144,937)
----------- -----------
Net cash used in investing activities (30,922) (144,937)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from warrant exercise - 0 - 93,379
Redemption of preferred stock, series A (1,030,780) - 0 -
Proceeds from line of credit borrowings (275,000) 500,000
Dividends on convertible preferred stock, net (14,028) (50,402)
Capital leases repayments (16,659) (23,039)
Repayments on other borrowings and non-compete liability (2,756) (6,724)
----------- -----------
Net cash provided by financing activities 2,496,203 310,714
----------- -----------
Net increase (decrease) in cash and cash equivalents 624,032 (1,624,463)
Cash and cash equivalents at beginning of period 963,695 3,921,544
----------- -----------
Cash and cash equivalents at end of period $ 1,587,727 $ 2,297,081
=========== ===========
Supplemental cash flow information:
Cash paid for interest $ 26,734 33,702
</TABLE>
See notes to consolidated financial statements
4
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Acrodyne Communications, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
1. Unaudited Consolidated Financial Statements
The accompanying consolidated balance sheet of Acrodyne Communications, Inc.
(the "Company") and its subsidiaries (collectively "Acrodyne") at March 31, 1999
and the related consolidated statements of operations and of cash flows for the
three months ended March 31, 1999 and 1998 have been prepared by management. In
the opinion of management, all adjustments (consisting of normal recurring
adjustments only) necessary to present fairly the financial position at March
31, 1999, and the results of operations
These consolidated financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1998 filed with the Securities
and Exchange Commission. The results of operations for interim periods are not
necessarily indicative of the results to be obtained for the entire year.
2. Inventories
Inventories comprise:
March 31, December 31,
1999 1998
---- ----
Raw materials $2,872,237 $2,779,646
Work in process 1,580,350 576,973
Finished goods 295,280 1,324,826
---------- ----------
$4,747,867 $4,325,445
========== ==========
3. Earnings Per Share
Basic earnings per share is computed by dividing net income available to common
shareholders by the weighted average number of shares outstanding. Diluted
earnings per share is computed using the weighted average number of shares
determined for the basic computations plus the number of shares of common stock
that would be issued assuming all contingently issuable shares having a dilutive
effect on earnings per share were outstanding.
5
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OVERVIEW
- --------
THE COMPANY. The business of Acrodyne Communications, Inc. (formerly Acrodyne
Holdings, Inc.), a Delaware corporation (the "Company"), is conducted through
its sole operating subsidiary Acrodyne Industries, Inc. ("Acrodyne"). Acrodyne
was acquired by the Company on October 24, 1994 (the "Acquisition"). Prior
thereto, the Company had no operations. The Company changed its name to Acrodyne
Communications, Inc. on June 9, 1995.
BUSINESS OF ACRODYNE. Acrodyne (together with its predecessor) has designed,
manufactured and marketed television transmitters and translators which have
been sold in the United States and internationally since 1971. The function of a
television transmitter is to broadcast on the air television signals to a
specific audience receiving such signals by regular antenna or by a local cable
company which then feeds the signal to their subscribers. Television
translators, which operate unattended, retransmit incoming signals from primary
stations on different channels within areas where direct reception of the
original signal may be limited by mountains or other geographic impediments.
ACRODYNE PRODUCTS AND SERVICES.
Acrodyne designs, manufactures and markets digital and analog television
broadcast transmitters and translators for domestic and international television
stations, broadcasters, government agencies, not-for-profit organizations and
educational institutions. The useful life of a television transmitter or
translator is approximately 20 years. Acrodyne's television transmitters, which
range in transmission power levels from one watt for localized applications to
tens of thousands of watts for large television broadcasters, have a modularized
design which permits Acrodyne to respond to specific customer requests. Acrodyne
classifies its transmitters into two categories based upon their power output.
Lower power transmitters and higher power transmitters each transmit signals in
both UHF and VHF frequency bands. The VHF band covers channels two through
thirteen and the UHF band covers channels above thirteen. Each transmitter
permits the sender to broadcast over one channel, except in the case of adjacent
channel assignments, for which the broadcaster transmits two television signals
on adjacent channels, one analog and one digital.
All of Acrodyne's television transmitters feature enhanced linear amplifiers.
Such units feature easy to read diagnostic displays and meters which clearly
indicate a unit's operating condition. Units automatically shut down for
self-protection if out-of-tolerance conditions are encountered. The Company
believes that Acrodyne's television transmitters are relatively easy to maintain
since they utilize common modules and parts. Other operating features include
full remote control. Telemetry and status functions, and a modular design which
allows for cost-effective expansion to higher output power levels.
6
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NEW PRODUCTS
Adjacent Channel Technology (ACT(TM))
The FCC's assignment for a broadcaster to transmit DTV in a channel adjacent to
its existing NTSC channel appeared to initially cause apprehension among
broadcasters allotted such assignments. These broadcasters believed that in the
case, at least, of DTV assignments above an NTSC channel (such assignments, the
"N + 1 Case"), there existed no practical, co-located solution for sharing a
single transmission line to a common antenna.
As a solution to the problems associated with the FCC's adjacent assignments,
Acrodyne's Engineering Department theorized and then confirmed that it is
possible to amplify both the NTSC and DTV signals through a single advanced
tetrode or diacrode high power amplifier since the cavity tuning of such
amplifiers could readily be made wide enough to carry both channels. It has been
shown by competing companies that this is not possible with any other vacuum
amplifying device such as the klystron, klystrode or IOT. It has been shown that
this technology works equally well for the N+1 case and the N-1 case having
delivered a transmitter of the N+1 case to KBLR in Las Vegas and one of the N-1
case to KCPT in Kansas City, MO. The ACT(TM) trademark has been obtained and
Acrodyne has applied for six U.S., six Mexican and six Canadian patents
pertaining to this new technology.
Because the market is so large (nearly 400 adjacent channel assignments) for
which the Company believes that Acrodyne alone has a technical solution,
management has refocused the majority of the Engineering Department's efforts
toward bringing ACT(TM) to fruition in 1998. This has been accomplished and the
product line is available.
The Acrodyne Renaissance Series (ARS) of transmitters
Affordability and Scalability
The FCC allows that every DTV transmitter turned on for broadcasting today has
the option to transmit an effective radiated power as high as 50 kW. This
translates to a transmitter power of about 2.5 kW. At some future date, most DTV
broadcasters will be allowed to upgrade to 1MW, a 20 times increase in effective
radiated power and transmitter power. The approach taken by Acrodyne in the
make-up of its line of high power DTV transmitters conforms to the minimum power
option now and the escalated power in the future. The present power requirement
is met by the purchase and installation of the driver section of a high power
transmitter. The driver, permanently installed with no obsolescence is
complemented by the purchase and installation of the high power amplifier in the
future when higher power becomes authorized. This scalability option saves the
broadcaster from investing in the complete high power transmitter at the
beginning of his DTV experience. Money saved by not spending now could earn a
significant amount toward the purchase of the high power amplifier at the future
full-power date. The affordability offered by this plan is meant to help
broadcasters get started.
Reliability
Reliability is enhanced by the recent introduction of built-in microprocessor
monitoring of all essential transmitter and antenna transmission line subsystem
performance. (The first delivered microprocessor
7
<PAGE>
monitored transmitter is the ACT transmitter at KCPT). Common modem interfacing
through a telephone line allows Acrodyne and station personnel to monitor the
transmitter and antenna performance on a remote personal computer with software
provided by Acrodyne. Built-in diagnostics provide for remote delayed
troubleshooting by analyzing data captured at the moment of a failure. It also
allows for constant remote monitoring of normal performance. The purpose of the
microprocessor is restricted to provide meaningful monitoring of transmitter and
antenna behavior and specifically not used to control anything.
The notions of affordability, reliability and scalability translate to the
Acrodyne Renaissance Series (ARS). This line has been totally restyled using the
most modern cabinetry available. The built-in computer based touch-screen and
modem provide for complete local and remote, but friendly access to monitored
data. This project has been completed and the product line is available.
8
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
The following compares the Company's summary results of operations for the three
months ended March 31, 1999 and 1998.
Three Months Ended
March 31,
(Unaudited)
1999 1998
---- ----
Net Sales $3,023,092 $3,163,975
Cost of Sales 1,931,349 2,133,438
--------- ---------
Gross Profit 1,091,743 1,030,537
Operating Expenses 1,061,657 1,000,581
--------- ---------
Operating profit 30,086 29,956
====== ======
Net sales for the three months ended March 31, 1999 showed a decrease of,
approximately 4.5% over net sales for the three months ended March 31, 1998.
Management believes that the issuance of final channel allocations relative to
Digital Television by the Federal Communications Commission was a significant
factor in the stability of sales volume from year to year, although actual
volume is still less than forecasted volume the Company's margin on sales
increased to 36.11% in the three months ended March 31, 1999, from 32.57% for
the three months ended March 31, 1998. This increase is directly attributable to
the sale of two High Power transmitters, an Acrodyne model number AU120D ,120kW
UHF TV Transmitter and an Acrodyne model number AU60D, 60kW UHF TV Transmitter,
shipped in the first quarter, which are less labor intensive and which produced
higher margins.
Operating expenses for the three months ended March 31, 1999 increased 6.1% to
$1,061,657 from $1,000,581 for the three months ended March 31, 1998. The
increase relates to administrative expense associated with additions in key
personnel. Interest expense decreased from $33,702 at March 31, 1998 to $26,734
at March 31, 199 mainly due to the interest associated with the payment of the
Senior Subordinated Note.
9
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LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Historically, Acrodyne has financed its activities primarily from operations,
borrowings and equity transactions and more recently through investment
transactions such as the Sinclair Investment. At March 31, 1999 the Company's
working capital increased by $2,849,390 to $5,808,670 as compared to $2,959,280
at December 31, 1998, mainly from the increase in Accounts Receivable and
Inventories and a decrease in Accounts Payable.
Accounts receivable at March 31, 1999 were $2,300,868 and reflected a $803,671
increase from December 31, 1998. This increase is due to the favorable credit
terms associated with the sale of the High Power transmitters sold in the first
quarter. The Company deviated from its standard credit terms as an inducement to
its customers. This practice, along with open account terms for government
contracts, the acceptance of letters of credit from customers and transactions
with leasing companies put a further strain on the Company's cash reserves. The
majority of the Company's sales of domestic transmitters require payment of a
non-refundable 30% deposit at the time of placing the order, 40% to 60% prior to
shipment and 10% to 30% net thirty days after shipment. The Company continues to
require an irrevocable letter of credit on international orders.
Inventories, net of reserves, in the amount of $360,000 increased to $4,747,867
at March 31, 1999 from $4,325,445 at December 31, 1998 due to slower than
anticipated shipments in the first quarter, principally relating to delay in
purchasing of Digital transmission equipment by broadcasters. The Company's
strategy has been to build up its inventories in an attempt to provide quick
turnaround to strengthen its market position and to acquire higher volume in
purchasing to take advantage of discount opportunities. The monetary exchange
issues and the unsettled economic environment, internationally, may have an
impact on bookings and sales for the balance of 1999.
In the third quarter of 1998 the Company and Acrodyne, as co-borrowers,
established a new $2,000,000 credit facility arrangement with a bank for working
capital purposes to replace its then existing bank credit facilities. The new
facility is now available on a standard formula basis involving qualified
Accounts Receivable and Inventory and contain certain covenants having to do
with financial ratios such as working capital and their debt to equity ratio. As
of December 31, 1998 the Company was not in compliance with the terms of the
line of credit with respect to their working capital ratio. The Company has
obtained a waiver for the 1998 event of default and has restructured its loan
agreement for 1999. The new credit facility is collateralized by the assignment
of a certificate of deposit in the amount of $750,000, maintained at the bank.
The interest rate of this facility is the bank's prime rate plus 1.5% on
borrowings up to $750,000 and at the bank's prime rate in excess of $750,000.
Borrowings under the line of credit totaled $1,275,000 and $1,000,000 at
December 31, 1998 and March 31, 1999, respectively. As of May 7, 1999 the
borrowings totaled $1,500,000.
The Company was obligated to pay the former majority shareholder of Acrodyne
quarterly installments of principal and interest over a five-year period under
the terms of a Senior Subordinated Note bearing interest at the rate of 9% per
annum. The first fifteen (15) quarterly payments totaling $1,415,183 (including
interest) under such note were made through July 23, 1998 pursuant to the
agreement. On October 23, 1998, the Company paid all remaining installments.
10
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The Company will need no provision for federal income tax, in that the tax loss
carryforwards, which begin to expire in 2011, totaled approximately $8,600,000
and $3,300,000 at December 31, 1998 and 1997, respectively.
Significant Events
Sinclair Investment
- -------------------
On January 27, 1999 Sinclair Broadcast Group ("Sinclair") acquired a significant
equity interest in Acrodyne.
Pursuant to the subscription agreement, Sinclair has made a cash infusion of
$4.3 million in Acrodyne in receipt of 1,431,333 shares of Acrodyne's common
stock and warrants to purchase up to an aggregate of 8,719,225 shares over a
term of seven years at prices ranging from $3.00 to $6.00 per share. Of such
warrants, 6,000,000 are exercisable only upon Acrodyne's achievement of
increased product sales or sales of products with new technology. Sinclair has
also acquired an additional 800,000 shares of common stock previously held by
the Scorpion/New Light investment group. Sinclair now holds an aggregate of
2,231,333 shares of Acrodyne, representing approximately 32.1% of issued common
stock, assuming no warrants are exercised. If Sinclair were to exercise all
warrants received pursuant to the Subscription Agreement, Sinclair would own
10,950,558 shares of Common Stock, representing 59.06% of all outstanding voting
stock on a fully diluted basis.
From the net proceeds of the transaction, $1,031,780 was used to retire all
Series A 8% Redeemable Convertible Preferred Stock issued in September 1998 to
the Scorpion/New Light investment group; $1,000,000 has been set aside to fund a
new research and development program; and the balance has been used to fund
working capital needs and general corporate purposes.
This transaction also included an investment agreement, dated as of January 27,
1999 among Sinclair, Acrodyne and Mr. Mancuso (the "Investment Agreement"), with
respect to Acrodyne's governance and providing for, among other things, the
composition of the board of directors, restrictions on certain corporate,
securities and affiliated party transactions, a standstill agreement by Sinclair
and an enhanced role for Acrodyne's independent directors.
As a condition to the Investment Agreement, Acrodyne's shareholders approved the
reconstitution of Acrodyne's board of directors to comprise 3 directors
nominated by Sinclair, including Nathaniel Ostroff as Chairman, 2 directors
nominated by Acrodyne's president and CEO, Robert Mancuso, and 2 independent
directors not affiliated with Sinclair or the Company. Mr. Ostroff will also
chair Acrodyne's management committee, which will include Mr. Mancuso and an
operating officer to be appointed.
As an additional condition to the Investment Agreement, on January 27, 1999,
Acrodyne and Mr. Mancuso entered into an employment agreement to retain the
services of Mr. Mancuso as President and Chief Executive Officer of Acrodyne.
11
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Amendments to Stock Options
- ---------------------------
In 1997, the Board of Directors approved the Company's 1997 stock option plan
with authorization to grant options with respect to an aggregate of up to
450,000 shares of the Company's common stock. On January 20, 1998 the stock
option plan was amended to add another 200,000 shares of the Company's common
stock. On June 8, 1998, the Board of Directors approved the granting of options
for 450,000 shares at an option price of $4.50 per share. On June 16, 1998, in a
response to the decline in public market price of Acrodyne's securities and the
public stock markets generally, the Board resolved to reprice such options to
$3.00 per share. The plan was further amended on November 19, 1998 to make
options exercisable for 10 years from the date of grant. The total grants from
the 1997 Stock Option Plan in 1998 were 475,000. In January 1999, Mr. Mancuso
received 175,000 stock options from the 1997 Stock Option Plan, at an exercise
price of $3.88 for his 1999 Employment Agreement.
In consideration for advisory services related to the Acrodyne acquisition, the
Company sold warrants to Alchemy Capital to purchase 170,000 shares of common
stock at an exercise price of $3.00 per share on October 24, 1994. As of
December 31, 1997, 20,000 of these warrants had been exercised, raising net
proceeds of $60,000. As a result of common stock issuances by the Company during
1997, the conversion price for warrants were reduced to $2.73. During 1998
13,000 warrants were exercised at $2.73. A cashless exercise was also executed
which converted 5,600 warrants into 4,400 shares of common stock. In the first
quarter of 1999, 13.480 warrants were converted into 6,520 shares of common
stock. There are 117,920 warrants remaining as of March 31, 1999.
12
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Changes in Securities and use of Proceeds
Two forms of 8-K/SB which are attached as exhibits to this quarterly report are
incorporated by reference and provide the necessary information covered under
this item.
Forward Looking Statements
Certain statements contained in this report that do not relate to historical
information are "forward looking statements" within the meaning of the United
States Private Securities Litigation Reform Act of 1995 and thus are
prospective. Such forward-looking statements are subject to risks, uncertainties
and other factors which could cause actual results to differ materially from
future results expressed, projected or implied by such forward-looking
statements. Such factors include, but are not limited to, economic, competitive,
and broadcast industry conditions. These factors are discussed in greater detail
in the Company's filings with the Canadian and United States Securities
regulators. The Company disclaims any responsibility to update any such
forward-looking statements.
Submission of matters to Vote of Security Holders
At a special meeting, on January 27, 1999, the shareholders of Acrodyne voted in
favor of three proposals. In the first proposal the majority of the shareholders
present at the meeting voted for the investment in Acrodyne by Sinclair. In the
second proposal, the majority of shareholders present at the meeting voted for
an amendment to Acrodyne's Certificate of Incorporation to increase the number
of authorized shares of Common Stock from 10,000,000 to 35,000,000. And in the
third proposal the majority of shareholders present at the meeting voted for the
election of five directors to Acrodyne's Board of Driectors, three of which have
been nominated by Sinclair and two of which were nominated by the president of
Acrodyne.
For the first proposal, 3,642,082 votes cast were in favor, 27,797 votes cast
were against and 8,209 abstained. For the second proposal, 5,339,215 votes cast
were in favor, 114,537 votes cast were against and 10,029 abstained. For the
third proposal, 5,426,719 votes were in favor, no votes cast were against and
37,062 abstained for all five nominees.
Year 2000
During 1998, Management of the Company and their staff completed their
assessment of the various computer software and hardware used in connection with
ongoing operations. This review indicated that significantly all of the computer
programs used by the Company are off the-shelf "packaged" computer programs
which are easily upgraded to be Year 2000 compliant. Management began to upgrade
those systems during the last quarter of 1998 and into the first quarter of
1999,and at present are Year 2000 compliant. To date, Management is not aware of
any external agent that would materially impact the results of operation,
liquidity or capital. However, Management has no means of ensuring that external
agents will be Year 2000 compliant.
13
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ACRODYNE COMMUNICATIONS, INC.
PART II. OTHER INFORMATION
- --------------------------------------------------------------------------------
Item 6. Exhibits and Reports on Form 8-KSB
----------------------------------
(a) Form 8-KSB was filed on November 23, 1998.
(b) Form 8-KSB was filed on May 5, 1999 and was further amended on
Form 8KSB/A on May 13, 1999.
14
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Acrodyne Communications, Inc.
-----------------------------
(Registrant)
Date: May 13, 1999 /s/ A. Robert Mancuso
------------------------------
A. Robert Mancuso
President and CEO
15
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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): NOVEMBER 23, 1998
ACRODYNE COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Commission file number
0-24886
Delaware 11-3067564
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
516 Township Line Road
Blue Bell, Pennsylvania 19422
----------------------- -----
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: 215-542-7000
NOT APPLICABLE
(Former name or former address, if changed from last report)
<PAGE>
Item 5. Other Events
On November 23, 1998 Acrodyne Communications, Inc. ("Acrodyne") entered
into an agreement with Sinclair Broadcast Group, Inc. ("Sinclair"), whereby
Sinclair agreed to acquire a significant equity interest in Acrodyne and appoint
certain members of Acrodyne's Board of Directors and senior management upon
consummation of the transaction.
Under the Agreement, Sinclair agreed to make a cash infusion of $4.3
million in Acrodyne in consideration for the issuance of 1,431,333 shares of
Acrodyne's common stock and the issuance of warrants to purchase up to an
aggregate of 8,713,100 shares over a term of seven years at prices ranging from
$3.00 to $6.00 per share. Of such warrants, 6,000,000 are exercisable only upon
the Company's achievement of increased product sales or sales of products with
new technology. Simultaneously with the closing of the transaction, Sinclair
agreed to acquire an additional 800,000 shares of common stock currently held by
the Scorpion/Newlight investment group. Immediately after the transaction,
Sinclair would hold an aggregate of 2,231,333 shares of Acrodyne, representing
approximately 31.8% of the then issued common stock, assuming no exercise of any
warrants.
At the closing of the transaction, Acrodyne's Board of Directors would
be reconstituted to comprise 3 directors nominated by Sinclair, 2 directors
nominated by the Company's President and CEO, A.Robert Mancuso, and 2
independent directors not affiliated with Sinclair or Acrodyne.
In connection with this investment, Sinclair, Acrodyne and Mr. Mancuso
have agreed to enter into an Investment Agreement with respect to Acrodyne's
governance and providing for, among other things, the composition of the Board
of Directors, restrictions on certain corporate securities and affiliated party
transactions, a standstill agreement and an enhanced role for the Company's
independent directors.
The consummation of the transaction with Sinclair is subject to the
approval of Acrodyne's stockholders and certain other customary closing
conditions. Acrodyne will convene a special meeting of stockholders and
circulate a proxy statement as required under the rules of the Securities and
Exchange Commission. Acrodyne intends to hold its stockholders meeting in
January 1999.
Exhibits
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Exhibit 1 Subscription Agreement dated November 23, 1998 with its exhibits.
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Acrodyne Communications, Inc.
-----------------------------
(Registrant)
/s/ A. Robert Mancuso
-----------------------------
A. Robert Mancuso
Chairman and President
<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): May 5, 1999
ACRODYNE COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Commission file number
0-24886
Delaware 11-3067564
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
516 Township Line Road
Blue Bell, Pennsylvania 19422
----------------------- ------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: 215-542-7000
NOT APPLICABLE
(Former name or former address, if changed from last report)
<PAGE>
Item 4. Changes in Registrant's Certifying Accountant.
On November 23, 1998 Acrodyne Communications, Inc. ("Acrodyne") entered
into an agreement with Sinclair Broadcast Group, Inc. ("Sinclair"), whereby
Sinclair agreed to acquire a significant equity interest in Acrodyne and appoint
certain members of Acrodyne's Board of Directors and senior management. Since
that time Acrodyne and Sinclair have begun Research and Development programs
together and have also begun the sharing of management personnel, technology and
industry associations.
The Board of Directors believes that for convenience and for better
financial planning and continuity, the Company would be better served under the
umbrella of one public accountant. Acrodyne's Board of Directors has dismissed
PricewaterhouseCoopers LLP, and has appointed Arthur Andersen LLP, subject to
shareholders approval. PricewaterhouseCoopers LLP, had served as the Company's
independent auditors since the Company's inception in May of 1991.
Contained in Acrodyne's Proxy Schedule 14A, which was filed with the
Securities and Exchange Commission ("SEC") on April 30, 1999, Acrodyne presented
this proposal to its shareholders. The engagement of another independent
accountant is subject to shareholders' approval. The Board of Directors has
recommended to its shareholders that they vote FOR the engagement of another
independent accountant as the Company's principal accountant.
PricewaterhouseCoopers LLP, and Arthur Andersen LLP, are planning to attend the
Annual Meeting of Shareholders and should be available to answer any questions
which may arise.
PricewaterhouseCoopers LLP, had audited the financial statements of the
Company and its wholly owned subsidiary, Acrodyne Industries Inc., for fiscal
year ending December 31, 1998 and had issued an unqualified report on March 31,
1999, on such financial statements. PricewaterhouseCoopers LLP had provided
other audit services to the Company in connection with filings with the SEC and
tax services. To the best of our knowledge, there were no disagreements on
financial or accounting matters between the Company and PricewaterhouseCoopers
LLP.
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Acrodyne Communications, Inc.
-----------------------------
(Registrant)
/s/ A. Robert Mancuso
-----------------------------
A. Robert Mancuso
President and CEO
