SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
(Mark One)
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ______________
Commission file number: 0-1921
POWER DESIGNS, INC.
(Name of Small Business Issuer as specified in its charter)
New York 11-1708714
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
14 Commerce Drive, Danbury, CT 06810
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(203) 748-7001
- --------------------------------------------------------------------------------
(Issuer's telephone number, Including Area Code)
250 Executive Drive, Edgewood, NY 11717
- --------------------------------------------------------------------------------
(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|
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 Section 12, 13 or 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 May 12 1997
Transitional Small Business Disclosure Format (Check one): Yes |_| No |X|
POWER DESIGNS, INC.
FORM 10-QSB/A FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996
INDEX
PART I - FINANCIAL INFORMATION Page No.
- ------------------------------ --------
Item 1. FINANCIAL STATEMENTS
Restated Condensed Consolidated Balance Sheet as of
December 31, 1996 and 1995 ...................................... 4
Restated Condensed Consolidated Statement of
Operations for the three and six months ended
December 31, 1996 and 1995 ...................................... 5
Restated Condensed Consolidated Statement of
Changes to Stockholders' Deficit for the three
and six months ended December 31, 1996 .......................... 6
Restated Condensed Consolidated Statement of
Cash Flows for the three and six months ended
December 31, 1996 and 1995 ...................................... 7
Notes to Condensed Consolidated Financial Statements ............ 8
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K ................................10
Signatures ..................................................................11
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
3
POWER DESIGNS, INC.
Restated Condensed Consolidated Balance Sheet
(Unaudited)
December 31, 1996 and 1995
1996 1995
----------- -----------
ASSETS
Current assets:
Cash $0 $4,148
Accounts receivable 1,100,315 17,392
Inventories 1,269,558 236,228
Prepaid expenses 5,571 3,953
----------- -----------
Total current assets 2,375,443 261,721
----------- -----------
Property and equipment, less
accumulated depreciation 536,092 6,132
----------- -----------
Other assets:
Acquisition deposit -- --
Investment in partnership 21,221 21,294
Security deposits 3,855 3,855
Goodwill 2,906,608 --
Financing fees and organizational costs 256,269 --
----------- -----------
3,187,953 25,149
----------- -----------
$6,099,489 $293,002
----------- -----------
LIABILITIES AND STOCKHOLDERS'
DEFICIT
Current liabilities:
Seller financing $2,750,000 $0
Cash overdraft 11,378 --
Accounts payable and accured expenses 1,454,687 193,975
Current portion of long-term debt -- 475,206
Payables related to reorganization,
including accured interest 143,609 59,375
----------- -----------
Total liabilities 4,359,674 728,556
----------- -----------
Long-term debt
Accrued liabilities - other -- 306,946
Notes payable - affiliates 4,112,986 --
----------- -----------
4,112,986 306,946
----------- -----------
Stockholders' deficit
Preferred stock 264,854 --
Common stock 240 218
Additional paid in capital 827,732 784,754
Deficit (3,465,999) (1,527,472)
----------- -----------
Total stockholders' deficit (2,373,173) (742,500)
----------- -----------
$6,099,489 $293,002
=========== ===========
4
POWER DESIGNS, INC.
Restated Condensed Consolidated Statement of Operations
(Unaudited)
For the Three and Six Months Ended December 31, 1996 and 1995
3 months ended 3 months ended 6 months ended 6 months ended
December 31, 1996 December 31, 1995 December 31, 1996 December 31, 1995
Net Sales $1,239,232 $175,763 $1,329,734 $318,094
Cost of Sales 997,556 91,709 1,077,198 200,140
------------ ---------- ------------ ----------
Gross profit 241,676 84,054 252,536 117,954
Selling, general and admin. expenses 1,330,992 87,028 1,439,312 157,322
------------ ---------- ------------ ----------
Net loss before other income (expenses) (1,089,316) (2,974) (1,186,776) (39,368)
------------ ---------- ------------ ----------
Other income (expense):
Investment income 500 -- 1,500 8,231
Interest expense (216,486) (27,928) (250,433) (44,403)
------------ ---------- ------------ ----------
(215,986) (27,928) (248,933) (36,172)
------------ ---------- ------------ ----------
Net loss ($1,305,302) ($30,902) ($1,435,709) ($75,540)
============ ========== ============ ==========
Net loss per share ($0.55) ($0.01) ($0.60) ($0.03)
============ ========== ============ ==========
5
POWER DESIGNS, INC.
Restated Condensed Consolidated Statement of Changes in Stockholders' Deficit
(Unaudited)
For the Three and Six Months Ended December 31, 1996 and 1995
Shares Shares
Preferred Common Additional
Stock Stock Preferred Common Paid In
Outstanding Outstanding Stock Stock Capital Deficit Total
----------- ----------- --------- ------ ----------- ------- -----
Balance, June 30, 1995 0 2,176,259 $ 0 $218 $784,754 ($1,451,932) ($ 666,960)
Net loss -- -- -- -- -- (44,638) (44,638)
Balance, September 30, 1995 -- 2,176,259 -- 218 784,754 (1,496,570) (711,598)
Net loss -- -- -- -- -- (30,902) (30,902)
------- --------- -------- ---- -------- ----------- ------------
Balance, December 31, 1995 0 2,176,259 $ 0 $218 $784,754 ($1,527,472) ($ 742,500)
======= ========= ======== ==== ======== =========== ===========
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 -- 2,391,493 -- 240 820,732 (2,155,871) (1,334,889)
Dividends accrued -- -- -- -- -- (4,826) (4,826)
Stock issuance 316,689 -- 264,854 -- 7,000 -- 271,854
Net loss -- -- -- -- -- (1,305,302) (1,305,302)
------- --------- -------- ---- -------- ----------- ------------
Balance, December 31, 1996 316,689 2,391,493 $264,854 $240 $827,732 ($3,465,999) ($2,373,173)
======= ========= ======== ==== ======== =========== ===========
6
POWER DESIGNS, INC.
Restated Condensed Consolidated Statement of Cash Flows
(Unaudited)
For the Three and Six Months Ended December 31, 1996 and 1995
3 months ended 3 months ended 6 months ended 6 months ended
December 31, 1996 December 31, 1995 December 31, 1996 December 31, 1995
Cash flows from operating activities:
Net loss ($1,305,302) ($30,902) ($1,435,709) ($75,540)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation 74,002 -- 74,253 --
(Increase) decrease in:
Accounts receivable (447,152) 17,682 (484,919) (4,613)
Inventories (111,032) (34,721) (143,843) (34,721)
Prepaid expenses (1,119) 126 (5,571) (230)
Other assets (35,165) -- (95,165) --
Increase (decrease) in:
Accounts payable and accrued expenses 759,573 27,734 792,743 20,840
Payables related to reorganization (117,922) (178,429) (118,046) (185,590)
----------- --------- ----------- ---------
Cash flows used in operating activities (1,184,117) (198,510) (1,416,257) (279,854)
----------- --------- ----------- ---------
Cash flows used investing activities:
Purchase of property and equipment (36,787) -- (36,787) --
----------- --------- ----------- ---------
Cash flows from (used in) financing activities:
Advances from affiliates 2,493,211 -- 2,421,960 (34,391)
Acquisition of Penril net assets* (1,546,558) -- (1,736,558) --
Cash received from long term financing -- 208,045 495,178 325,440
Cash received from stock issuance net of
declared dividends 267,027 -- 267,027 --
----------- --------- ----------- ---------
Cash flows provided by financing activities 1,213,680 208,045 1,447,607 291,049
----------- --------- ----------- ---------
Net Increase (decrease) in cash (7,224) 9,535 (5,437) 11,195
Cash (overdraft), beginning of period (4,153) (5,387) (5,940) (7,047)
----------- --------- ----------- ---------
Cash (overdraft), end of period ($11,377) $4,148 ($11,377) $4,148
=========== ========= =========== =========
* In addition the company received $2,750,000 in seller financing to
purchase assets and assume liabilities from Penril (see Note 2).
7
POWER DESIGNS, INC.
---------------
Notes To the Condensed Consolidated Financial Statements
For the Three and Six Months Ended December 31, 1996 and 1995
Note 1 - Basis of Presentation:
The condensed consolidated financial statements included herein have been
prepared by Power Designs, Inc. (hereinafter the "Company" or the "issuer"),
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures 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 and six months ended December 31, 1996
are not necessarily indicative of the results to be expected for the full year.
The consolidated statements of operations for the periods ended March 31, 1997
include the operations of PDIXF Acquisition Corporation (see Note 2) for the
period October 11, 1996 through December 31, 1996.
Note 2 - Significant Events:
On October 11, 1996, a wholly owned subsidiary of the Company, PDIXF Acquisition
Corporation, acquired, for approximately $4.4 million, 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 (financing and organizational) related to this
acquisition.
8
The following provided funding for the above-referenced acquisition (totaling
approximately $6,180,000):
316,743 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
Note payable to Inverness Corporation (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 has defaulted on the $2,750,000 note (secured by the majority of the
Company's assets), due to Penril at December 31, 1996. As a result of the
default, the Company is in breach of its asset purchase agreement with Penril
executed pursuant to the above-referenced acquisition. As of this date, the
Company and Penril are continuing discussions to cure the default but no
agreement has been reached. Although Penril has taken no action, they have also
failed to waive either the default or the consequent breach.
The Company is seeking to raise equity financing to provide the funds needed to
repay the balance of the $2,750,000 note due to Penril. The Company is
simultaneously working to arrange necessary bridge financing.
9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 Financial Data Schedule
10
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: June 17, 1997 POWER DESIGNS, INC.
Danbury, CT (Registrant)
By: /s/ Fred G. Basso
------------------------
Fred G. Basso, President
By: /s/ Anthony F. Intino II
------------------------
Anthony Intino,
Chief Financial Officer
(Chief Accounting Officer)
11