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 MARCH 31, 2002.
[ ] 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.
---------------
(Exact name of small business issuer as specified in its charter)
DELAWARE 22-3440510
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
59 LaGrange Street
Raritan, New Jersey 08869
--------------------------
(Address of principal executive offices)
(908) 253-6870
--------------
(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 April 30, 2002 was 9,668,341.
AMPLIDYNE, INC.
FORM 10-QSB
THREE MONTHS ENDED MARCH 31, 2002
TABLE OF CONTENTS
-----------------
PART I - FINANCIAL INFORMATION
----------------------
Item 1 Financial Statements (Unaudited):
---------------------
Balance Sheets . . . . . . . . . . . . . . . . . . . 1-2
Statements of Operations . . . . . . . . . . . . . . 3
Statement of Cash Flows . . . . . . . . . . . . . . 4
Statement of Changes in Stockholder's Equity. . . 5
Notes to Financial Statements . . . . . . . . . 6-11
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . 12-13
PART II - OTHER INFORMATION
--------------------
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . 14
Item 2. Change in Securities . . . . . . . . . . . . . . . 14
Signatures . .. . . . . . . . . . . . . . . . . . . . . . . . . . 15
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
AMPLIDYNE, INC.
BALANCE SHEETS
ASSETS
------
March 31, December 31,
2002 2001
----------- ----------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 828,443 $ 697,940
Accounts receivable, net of allowance
for doubtful accounts of $131,104 and $131,104 at
March 31, 2002 and December 31, 2001, respectively 527,280 449,190
Inventories 1,283,231 1,181,682
Loan receivable-officer 68,892 55,892
Prepaid expenses and other 24,040 23,464
---------- ----------
Total current assets 2,731,886 2,408,168
---------- ----------
PROPERTY AND EQUIPMENT - AT COST
Machinery and equipment 723,663 723,663
Furniture and fixtures 43,750 43,750
Autos and trucks 66,183 66,183
Leasehold improvements 8,141 8,141
---------- ----------
Total 841,737 841,737
Less: Accumulated depreciation and amortization 705,579 687,260
---------- ----------
Net property and equipment 136,158 154,477
---------- ----------
OTHER ASSETS
Security Deposits and other non-current assets 48,029 52,106
---------- ----------
TOTAL ASSETS $2,916,073 $2,614,751
========== ==========
The accompanying notes are an integral part of these financial statements
-1-
AMPLIDYNE, INC.
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
March 31, December
2002 31,
-------------- 2001
(Unaudited) -------------
CURRENT LIABILITIES
Current maturities of lease obligations $ 6,210 $ 9,271
Accounts payables 131,380 121,533
Accrued expenses 128,624 131,308
Accrued financing costs 80,000
Settlement of litigation 180,000 180,000
-------------- --------------
Total current liabilities 526,214 442,112
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Convertible Preferred stock - authorized 100,000 shares
of $.0001 par value; 0 and 55,000 shares issued and
outstanding at March 31, 2002 and December 31, 2001,
respectively (liquidation preference of $550,000 at
December 31, 2001) - 6
Common stock - authorized, 25,000,000 shares
of $.0001 par value; shares 9,668,341, and 7,892,661
shares
issued and outstanding at March 31, 2002 and
December 31, 2001, respectively. 967 790
Additional paid-in-capital 22,461,324 21,921,495
Subscriptions receivable - preferred stock - (180,000)
Accumulated deficit (20,072,432) (19,569,652)
-------------- --------------
Total stockholders' equity 2,389,859 2,172,639
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,916,073 $ 2,614,751
============== ==============
The accompanying notes are an integral part of these financial statements
-2-
AMPLIDYNE, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Three
Months Months
Ended Ended
March 31, March 31,
2002 2001
----------------- -----------
Net Sales $ 504,632 $ 467,306
Cost of goods sold 380,112 383,180
----------------- -----------
Gross profit 124,520 84,126
Operating expenses
Selling, general & administrative 485,333 393,430
Research, engineering and
development 144,239 136,279
Equity-based compensation charge - 140,000
----------------- -----------
Operating loss (505,052) (585,583)
Other non operating income (expenses)
Interest income 2,272 22,884
Interest expense - (494)
Litigation settlement costs - (550,000)
----------------- -----------
NET LOSS $ (502,780) $(1,113,193)
================= ============
Net loss per share - basic and diluted $ (.06) $ (.15)
================= ============
Weighted average number of shares
outstanding 8,327,232 7,465,054
================= ============
The accompanying notes are an integral part of these financial statements
-3-
AMPLIDYNE, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Three
Months Months
Ended Ended
March 31, March 31,
---------- ------------
2002 2001
---------- ------------
Cash flows from operating activities:
Net Loss $(502,780) $(1,113,193)
---------- ------------
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 18,319 32,805
Cost of Litigation - 550,000
Stock compensation charge - 140,000
Changes in assets and liabilities
Accounts receivable (78,090) (37,490)
Inventories (101,549) (147,387)
Prepaid expenses and other assets 3,501 79,485
Accounts payable and accrued expenses 7,163 (96,284)
---------- ------------
Total adjustments (150,656) 521,129
---------- ------------
Net cash used for operating activities (653,436) (592,064)
---------- ------------
Cash flows from investing activities:
Loan receivable - officer (13,000) (14,999)
Purchase of property and equipment - (2,360)
---------- ------------
Net cash used for investing activities (13,000) (17,359)
---------- ------------
Cash flows from financing activities:
Payment of lease obligations (3,061) (5,814)
Subscriptions receivable - preferred stock - net 180,000
Balance due on financing costs 80,000
Proceeds from issuance of stock and exercise of
options and warrants, net of costs 540,000 -
---------- ------------
Net cash provided by financing activities 796,939 (5,814)
---------- ------------
NET INCREASE (DECREASE) IN CASH 130,503 (615,237)
Cash at beginning of period 697,940 1,966,142
---------- ------------
Cash and cash equivalents at end of period $ 828,443 $ 1,350,905
========== ============
Supplemental disclosures of cash flow information
Cash paid for: Interest $ 576 $ 494
Income taxes - -
The accompanying notes are an integral part of these financial statements
-4-
AMPLIDYNE, INC.
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2001
AND THREE MONTHS ENDED MARCH 31, 2002
Preferred Stock Common Stock
---------------- -------------
Shares Par Value Shares Par Value
------- ----------- ---------- ----------
Balance at December 31, 2000 $ 7,463,841 $ 747
Net loss for the year ended December 31, 2001
Cost of litigation expected to be settled by the
issuance of common stock
Financing cost associated with warrants
extended and shares issued 1,820
Issuance of common stock, net of costs 415,000 42
Issuance of preferred stock net of costs 55,000 6
Issuance of common stock for services
rendered by third party 12,000 1
------- ----------- ---------- ----------
Balance at Dec. 31, 2001 55,000 6 7,892,661 790
Net loss for three months ended
March 31, 2002
Conversion of preferred stock to common stock (55,000) (6) 701,194 70
Issuance of common stock in settlement of class
action 324,486 32
Issuance of common stock, net of cost - - 750,000 75
------- ----------- ---------- ----------
Balance at March 31, 2002 - $ - 9,668,341 $ 967
======= =========== ========== ===========
Additional Accumulated Subscriptions
Paid-In-Capital (Deficit) Receivable Total
--------------- ------------- ---------- -----------
Balance at December 31, 2000 $20,212,154 $(17,544,770) - $ 2,668,131
Net loss for the year ended December 31, 2001 (2,024,882) (2,024,882)
Cost of litigation expected to be settled by the
issuance of common stocks 500,000 500,000
Financing cost associated with warrants
extended and shares issued 140,000 140,000
Issuance of common stock, net of costs 559,708 559,750
Issuance of preferred stock, net of costs 494,994 (180,000) 315,000
Issuance of common stock for services
rendered by third party 14,639 14,640
-------------- ------------- ---------- -----------
Balance at December 31, 2001 (180,000) 2,172,639
Loss for the 3 months ended March 31, 2002 21,921,495 (19,569,652) (502,780)
Collection of subscription receivable - net (502,780) 180,000 180,000
Conversion of preferred stock to common stock (64)
Issuance of common stock due in settlement of
class action (32) -
Issuance of common stock, net of costs 539,925 540,000
-------------- ------------- ---------- -----------
Balance at March 31, 2002 $ 22,461,324 $(20,072,432) - $ 2,389,859
=============== ============= ========= ============
The accompanying notes are an integral part of these financial statements
-5-
AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2002
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 month periods ended March 31, 2002 and March 31, 2001
(b) the financial position at March 31, 2002 (c) the statements of cash flows
for the three month period ended March 31, 2002 and March 31, 2001, and (d) the
changes in stockholders' equity for the three month period ended March 31, 2002
have been made. The results of operations for the three months ended March 31,
2002 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, 2001, included in the Company's Form 10-KSB filed with
the Securities and Exchange Commission on April 15, 2002.
NOTE C - STOCKHOLDERS' EQUITY
---------------------------------
At March 31, 2002, the following 1,257,500 warrants, remained outstanding:
67,500 exercisable at $2.50 through December 31, 2002, (2) 20,000 exercisable at
$1.00 through May 2010, (3) 20,000 exercisable at $7.00 through December 2004,
(4) 30,000 exercisable at $6.00 through November 2004, (5) 50,000 exercisable
at $2.00 through December 2004, (6) 50,000 exercisable at $4.00 through December
2004, (7) 141,000 exercisable at $1.75 (16,000 of which expire December 2004 and
125,000 of which expire December 2002), (8) 41,500 exercisable at $1.80 through
July 31, 2004, (9) 207,500 exercisable at $3.00 through July 31, 2004, (10)
55,000 exercisable at $1.20 through September 30, 2004, (11) 100,000 exercisable
at $3.00 through November 30, 2002, (12) 100,000 exercisable at $5.00 through
November 30, 2002, (13) 300,000 exercisable at $2.00 through December 31, 2005,
and (14) 75,000 exercisable at $.96 through March 2007.
-6-
AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2002
NOTE C - STOCKHOLDERS' EQUITY - CONTINUED
-----------------------------------------------
At March 31, 2002, the Company had employee stock options outstanding to acquire
2,001,000 shares of common stock at exercise prices of $1.04 to $4.00.
During the first quarter ended March 31, 2002, the Company issued 750,000 shares
of Common Stock, at $.80 per share (resulting in gross proceeds of $600,000), to
accredited investors. In connection with such private offering, the Company
paid commissions to NASD broker-dealers in the amount of $60,000 and issued to
such persons 75,000 warrants, which are exercisable at $.96 per share and expire
March 31, 2007.
During the first quarter ended March 31, 2002, the Company issued 701,194 shares
of Common Stock in connection with the conversion of all of the Company's Series
B Preferred Stock (which included shares of Common Stock issued in lieu of
accrued dividends thereon).
During the first quarter ended March 31, 2002, the Company issued 324,486 shares
of Common Stock to the members of the class action compliant, which was settled
in September 2001.
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 (see Note C) because they are
antidilutive.
NOTE E - LITIGATION
----------------------
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 below, the Company is not
aware of any pending litigation or proceedings that could have a material effect
on the Company's results of operations or financial condition.
-7-
AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2002
The Company is a party to the following matters:
1. AIRNET COMMUNICATIONS CORPORATION VS AMPLIDYNE, INC.
AirNet 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. During 2000, the Company settled with AirNet at a cost of $175,000;
$25,000 is to be paid quarterly over two years. $95,000 remained unpaid at March
31, 2002.
2. ENS ENGINEERING VS AMPLIDYNE, INC.
The Company was also a defendant in a complaint filed in the United States
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 oral settlement terms and,
based upon such oral settlement, the court dismissed the case in the first
quarter of 2000. The terms of the oral settlement called for the Company to pay
$85,000 in twelve equal monthly installments, none of which has been paid as of
December 31, 2000. The Company has not received any required documents and
releases from ENS. The financial statements do not include any provision for
this settlement.
3. CLASS ACTION LITIGATION
The Company was served with class action complaints on behalf of all purchasers
of the Company's common stock and warrants between September 9, 1999 and
September 14, 1999. By orders of the District Court for the District of New
Jersey, the actions were consolidated and lead plaintiffs were appointed. On or
about March 24, 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, 1999 and September 17, 1999. The complaint
alleged that the Company and other individuals violated the federal securities
laws by, among other things, the issuance of a press release on September 9,
1999. Although the Company believed that the complaint had no merit and had
vigorously contested it, the Company and the other parties to the class action
reached a settlement on May 2, 2001, which was approved by the District Court
for the District of New Jersey on August 14, 2001 (which became effective on
September 14, 2001). Pursuant to the settlement agreement, a settlement fund
consisting of $750,000 in cash ($50,000 of which was paid directly by the
Company) and 324,486 shares of common stock (which was valued at $500,000 as of
May 2, 2001) had been established for the benefit of members of the class. In
March 2002 the Company issued such shares.
-8-
AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2002
4. HIGH GAIN ANTENNA CO., LTD. OF KOREA
The Company (as well as an officer and director of the Company) is a defendant
in a complaint brought in the Superior Court of New Jersey, Law Division,
Somerset County, by High Gain Antenna Co., Ltd. of Korea in November 2000. The
complaint seeks damages for an alleged breach of a contract for the repair of
certain equipment purchased by plaintiff from a distributor of the Company's
products and the Company. The complaint does not specify the amount of damages
claimed. The Company has vigorously defended this action and has raised a
number of defenses including non payment of monies due to the Company by the
plaintiff and the lack of actual damages sustained by the plaintiff. Plaintiff
filed a motion for summary judgment as well as two requests for reconsideration,
all of which were denied by the Court. The case is scheduled for trial in May
2002. Notwithstanding the foregoing, the Company cannot predict the outcome of
such action and any judgment in favor of the plaintiff may have a material
adverse affect on the Company's financial position and its prospects. (See Note
I - Subsequent Event for unfavorable jury verdict).
NOTE F - ASSET ACQUISITION
------------------------------
In January 2002, the Company entered into an agreement to acquire certain assets
of Darwin Networks, Inc. ("Darwin") for $175,000 plus additional contingent
payments not to exceed $340,000. Darwin was in the business of installing and
maintaining high-speed Internet structures for hotels and residential
properties. The assets acquired included equipment not yet installed as well as
completed installations in a specified number of hotel properties. Pursuant to
the agreement, the Company has the sole and exclusive right (through July 31,
2002) to contact and negotiate with each property to either activate or remove
the equipment. After a specified number of locations are successfully negotiated
(which are covered in the initial purchase price) the Company may continue to
contact additional properties and must pay a specified sum for each successful
negotiation up to the $340,000 maximum. As of May 10, 2002, the Company has
successfully negotiated one property and has incurred no liability to pay any
additional sums under the contract.
NOTE G - LIQUIDITY
---------------------
The Company has incurred losses of $(502,780) for the three months ended March
31, 2002. The Company funded operations during this period primarily from the
proceeds from privately placed common and preferred stock. Historically, the
Company has also funded certain operating expenses through borrowings (in the
form of deferring salaries and cash advances) from officers and principal
shareholders. The Company has in the past issued its stock in lieu of cash
payments for compensation, sales commissions and consulting fees, wherever
possible.
-9-
AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2002
Management's plans for dealing with the foregoing matters include:
- Increasing sales of its high speed internet connectivity products through both
individual customers and strategic alliances;
- Decreasing the dependency on certain major customers by aggressively seeking
other customers in the multicarrier amplifier markets;
- Investigate potential revenue - sharing partnership in other markets, such as
the hospitality industry and multi-tenant buildings;
- Reducing costs through a more streamlined operation by using automated
machinery to produce components for our products;
- Funding operations in 2002 with the remaining cash that was received from the
2001 private placements, 2002 private placements, and the deferral of
payments of officers' salaries, as needed;
- Selling remaining net operating losses applicable to the State of New Jersey,
pursuant to a special government high-technology incentive program in order
to provide working capital, if possible;
- Reducing overhead costs and general expenditures if necessary.
NOTE H - SEGMENT INFORMATION
--------------------------------
The Company does not measure its business activities by segment. Information on
the Company's product lines are as follows:
Three Months Ended March 31,
------------------------- Year Ended
Sales-external 2002 2001 December 31, 2001
-------------- -------- --------------- -----------------
Amplifier $262,408 $ 389,701 $ 1,901,702
Internet business and
broadband solutions 242,224 77,605 303,727
-------- --------------- ------------------
$504,632 $ 467,306 $ 2,205,429
======== =============== ==================
Inventory March 31, 2002 December 31, 2001
----------
Amplifier $ 752,152 $ 802,964
Internet business and
broadband solutions 531,079 378,718
--------------- ------------------
Total $ 1,283,231 $ 1,181,682
=============== ==================
-10-
AMPLIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2002
NOTE I - SUBSEQUENT EVENT
-----------------------------
In connection with the complaint brought in the Superior Court of New Jersey,
Law Division, Somerset County, by High Gain Antenna Co., Ltd. of Korea, a trial
commenced on May 7, 2002, and on May 13, 2002, the jury brought in a verdict
against the Company for $400,000. The Company now intends to file a motion in
the Law Division for a new trial and, if the motion is denied, to file an appeal
of the verdict and judgment to the Superior Court of New Jersey, Appellate
Division. The Company, in its appeal, will argue that the verdict was against
the weight of the evidence and that the Court made a number of errors of law in
the conduct of the trial. Although the Company is confident in its position, it
cannot predict the outcome of the motion for a new trial or the outcome on
appeal. Failure by the Company to succeed on the motion for a new trial or on
appeal will have a material adverse effect on the Company's financial position
and prospects.
-11-
AMPLIDYNE, INC.
MARCH 31, 2002
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS-THREE MONTHS ENDED MARCH 31, 2002 COMPARED TO THREE MONTHS
ENDED MARCH 31, 2001.
Net sales for the three month period ended March 31, 2002 were $504,632 while
net sales for the three month period ended March 31, 2001 were $467,306.
Sales increased mainly due to the sales of high-speed wireless Internet products
and broadband solutions.
Sales of amplifiers were approximately 52% of total sales. The Ampwave
high-speed wireless Internet products and broadband solutions accounted for
approximately 48% of total sales.
Gross profit for the three months ended March 31, 2002 amounted to $124,520 (24%
of sales) compared to $84,126 (18% of sales) for the three months ended March
31, 2001. The increase in gross profit was principally attributable to sales of
high-speed wireless Internet products and broadband solutions, as well as
increased production efficiency. Gross margin decreased from the year ended
December 31, 2001 because of lower amplifier sales resulting in higher fixed
direct costs and lower margins for the high-speed wireless Internet products.
Selling, general and administrative expenses were $485,333 and $393,430 for the
three months ended March 31, 2002 and 2001, respectively. The increase of
$91,903 (23%) is mainly due to increases in staffing at the sales and executive
levels.
Research, engineering, and development costs remained relatively constant for
the three months ended March 31, 2002 ($144,239) from the corresponding three
month period of 2001 ($136,279).
The interest income decreased for the three months ended March 31, 2002
compared to the corresponding period of 2001. The decrease is due to a
reduction of funds available for short term investment.
As a result of the foregoing, the Company incurred net losses of ($502,780) or
($.06 per share and ($1,113,193) or ($.15) per share for the three months ended
March 31, 2002 and 2001, respectively.
-12-
AMPLIDYNE, INC.
MARCH 31, 2002
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2002, the Company had cash and cash equivalents of $788,443
principally due to the injection of private placement funds. Historically, the
Company issued its common stock in lieu of cash payments for compensation,
commissions, and consulting fees whenever possible. This trend is expected to
continue in the second quarter of 2002.
The Company believes that the net proceeds of the Company's private placements
will meet its working capital obligations and fund further development of its
business for the next twelve months. However, in order to execute our business
plans to expand product offerings and revenue generating opportunities, we will
likely require additional working capital. There can be no assurance that any
additional financing will be available to the Company on acceptable terms, or at
all. See also Note G regarding liquidity matters.
In connection with the complaint brought by High Gain Antenna Co., Ltd. of
Korea, on May 13, 2002 the jury brought in a verdict against the Company for
$400,000. The Company now intends to file a motion in the Law Division for a
new trial and, if the motion is denied, to file an appeal of the verdict and
judgment to the Superior Court of New Jersey, Appellate Division. The Company,
in its appeal, will argue that the verdict was against the weight of the
evidence and that the Court made a number of errors of law in the conduct of the
trial. Although the Company is confident in its position, it cannot predict the
outcome of the motion for a new trial or the outcome on appeal. Failure by the
Company to succeed on the motion for a new trial or on appeal will have a
material adverse effect on the Company's financial position and prospects. See
Part I - Notes E and I.
-13-
AMPLIDYNE, INC.
MARCH 31, 2002
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Although the Company believed that the complaint (see Part I - Note E) had no
merit and had vigorously contested it, the Company and the other parties to the
class action reached a settlement on May 2, 2001, which was approved by the
District Court for the District of New Jersey on August 14, 2001 (which became
effective on September 14, 2001). Pursuant to the settlement agreement, a
settlement fund consisting of $750,000 in cash ($50,000 of which was paid
directly by the Company) and 324,486 shares of common stock (which was valued at
$500,000 as of May 2, 2001) had been established for the benefit of members of
the class. In March 2002 the Company issued such shares.
See Notes E and I to the Company's financial statements set forth in Part I.
ITEM 2. CHANGE IN SECURITIES
During the first quarter ended March 31, 2002, the Company issued 750,000 shares
of Common Stock, at $.80 per share (resulting in gross proceeds of $600,000), to
accredited investors pursuant to Rule 506 of Regulation D of the Securities Act
of 1933, as amended (the "Act"). In connection with such private offering, the
Company paid commissions to NASD broker-dealers in the amount of $60,000 and
issued to such persons 75,000 warrants, which are exercisable at $.96 per share
and expire March 31, 2007.
During the first quarter ended March 31, 2002, the Company issued 701,194 shares
of Common Stock in connection with the conversion of all of the Company's Series
B Preferred Stock (which included shares of Common Stock issued in lieu of
accrued dividends thereon).
During the first quarter ended March 31, 2002, the Company issued 324,486 shares
of Common Stock to the members of the class action complaint, which was settled
in September 2001.
-14-
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: May 16, 2002 By: /s/ Devendar S. Bains
----------------------
Name: Devendar S. Bains
Title: Chief Executive Officer,
Treasurer,
Principal Accounting
Officer and Director
-15-