FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal quarter ended September 30, 2001
[ ] 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 000-29669
OnLine Power Supply, Inc.
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(Exact Name of Company as Specified in its Charter)
Nevada 84-1176494
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
8100 South Akron, # 308 Englewood, Colorado 80112
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(Address of principal executive offices) (Zip Code)
Company's telephone Number: (303) 741-5641
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Former Address through February 28, 2001: 6909 South Holly Circle #200
Englewood, Co 80112
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(Former name, former address and
former fiscal year, if changed since last report)
Check whether the Company: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Company 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 stock, as of the latest practicable date.
Class Outstanding at November 12, 2001
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Common stock, $.0001 par value 21,243,155 Shares
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
Except for historic financial information, all of the information that is
contained in this Form 10-QSB is comprised of forward-looking statements within
the meaning of the Securities and Exchange Act of 1934. Specifically, all
statements in the report, other than historical facts, regarding our financial
position, business strategy, and plans for future operations are
forward-looking. These statements are based on beliefs of management and are
subject to known and unknown risks. These risks involve present and future
economic conditions, market conditions for our existing and new products,
available financing when and if needed for operations, litigation and other
unknown business factors, all of which may change and produce risks and results
very different than those now affecting us. The words "anticipate", "believe",
"estimate", "expect", "will", "may", "continue", "intend", "could" and "should"
or other words and phrases similar to these are intended to caution the reader
of the forward-looking nature of their use. Statements containing these words
should be considered "cautionary". Management's statements in this report are
based on the most accurate assessment of the risks associated with the business
today; however, certain facts and assumptions may not be fully realized and the
actual future operating results may prove to be different than expected.
Although we believe our assumptions are reasonable, we are qualifying all
written statements attributed to management's estimates as cautionary and
forward-looking and accordingly expressly qualify their accuracy pending
substantial realization of the underlying estimates, conditions and assumptions.
2
OnLine Power Supply, Inc.
Index
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Balance Sheets
September 30, 2001 and December 31, 2000.........................4-5
Condensed Statements of Operations -
Three and Nine Months Ended
September 30, 2001 and September 30, 2000..........................6
Condensed Statements of Cash Flows - Nine Months Ended
September 30, 2001 and September 30, 2000..........................7
Notes to Condensed Financial Statements.........................8-10
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..................11-14
PART II. OTHER INFORMATION
ITEM 2. Changes in Securities ............................................14
ITEM 4. Submission of Matters to a Vote of Shareholders...................14
ITEM 6. Exhibits and Reports on Form 8-K..................................14
Signatures........................................................15
3
OnLine Power Supply, Inc.
Condensed Balance Sheets
September 30, December 31,
2001 2000
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(unaudited)
Assets
Current assets
Cash and cash equivalents $3,303,762 $3,181,728
Certificates of deposit 150,000 650,000
Short term investments 1,000,000 5,067,156
Accounts receivable, net 313,771 29,819
Accrued interest 35,020 50,239
Receivable from officers 108,780 40,050
Inventory, at lower of cost or market 233,515 79,643
Prepaid expenses 275,896 128,184
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Total current assets 5,420,744 9,226,819
Property and intangibles, net of depreciation and
amortization, and other assets
Property and equipment, net 944,326 434,437
Equipment under capital leases, net 53,376 72,976
Leasehold improvements, net 115,163 --
Goodwill 69,812 104,718
Acquired technology, net 31,850 50,960
Patents, net 66,358 58,582
Other assets -- 18,114
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Total property and other assets 1,280,885 739,787
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Total assets $6,701,629 $9,966,606
========== ==========
4
OnLine Power Supply, Inc.
Condensed Balance Sheets (Continued)
September 30, December 31,
2001 2000
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(unaudited)
Liabilities and shareholders' equity
Current liabilities
Accounts payable $ 475,988 $ 379,836
Accrued interest 19,063 19,063
Capital lease obligations, current maturity 39,060 31,212
Officer's retirement liability -- 108,000
Notes payable, current maturities 20,980 19,840
Accrued liabilities 34,212 --
Other 239,206 52,650
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Total current liabilities 828,509 610,601
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Long-term liabilities
Capital lease obligations, less current maturities 2,465 33,329
Note payable, less current maturities 7,346 23,226
Total long term liabilities 9,811 56,555
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Total liabilities 838,320 667,156
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Shareholders' equity
Preferred stock, $.0001 par value; 1,000,000 shares
authorized 2,800 shares issued and outstanding -- --
Common stock; $.0001 par value; 100,000,000
shares authorized; 21,243,155 shares issued
and outstanding 2,124 2,124
Stock option notes receivable (83,127) (83,127)
Additional paid-in capital 29,342,882 29,277,729
Accumulated (deficit) (23,398,570) (19,897,276)
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Total shareholders' equity 5,863,309 9,299,450
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Total liabilities and shareholders' equity $ 6,701,629 $ 9,966,606
============ ============
5
OnLine Power Supply, Inc.
Unaudited Condensed Statements of Operations
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2001 2000 2001 2000
------------ ------------ ------------ ------------
Revenue $ 946,734 $ 20,848 $ 1,895,974 $ 48,959
Cost of Revenue 717,073 28,634 1,793,857 42,162
------------ ------------ ------------ ------------
Gross profit (loss) 229,661 (7,786) 102,117 6,797
------------ ------------ ------------ ------------
Operating expenses:
Research and development 282,561 317,991 1,292,447 894,670
Stock based compensation -- 359,607 65,153 363,113
Sales and marketing 292,945 70,530 840,058 211,844
General and administrative 494,136 372,819 1,662,793 1,512,971
------------ ------------ ------------ ------------
Total operating expenses 1,069,642 1,120,947 3,860,451 2,982,598
(Loss) from operations (839,981) (1,128,733) (3,758,334) (2,975,801)
Interest & Investment Income 58,313 165,913 275,081 391,459
Interest (expense) (4,781) (6,343) (18,041) (29,960)
------------ ------------ ------------ ------------
Net $ 53,532 $ 159,570 $ 257,040 $ 361,499
Net (loss) $ (786,449) $ (969,163) $ (3,501,294) $ (2,614,302)
------------ ------------ ------------ ------------
Net loss per common share $ (.04) $ (.05) $ (.16) $ (.14)
============ ============ ============ ============
Weighted average shares
outstanding 21,243,155 19,808,175 21,243,255 18,404,254
6
OnLine Power Supply, Inc.
Unaudited Condensed Statements of Cash Flows
For the Nine Months Ended
September 30
-----------------------------
2001 2000
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Cash flows from operating activities
Net (Loss) $(3,501,294) $(2,614,302)
Adjustments to reconcile net loss to net cash:
Depreciation and amortization 261,544 142,124
Stock notes receivable -- (93,280)
Stock based compensation 65,153 363,113
Options issued for services -- 63,783
Common stock issued for services -- 219,997
Impairment loss on fixed assets -- 7,331
Changes in certain assets and liabilities
Receivables, inventory and other current assets (620,932) (549,274)
Accounts payable and other current liabilities 208,920 (119,767)
----------- -----------
Net cash provided by (used in) operating activities (3,586,609) (2,580,275)
----------- -----------
Cash flows from investing activities
Payment of leasehold improvements (132,230) --
Purchases of equipment (668,890) (232,080)
Payments to acquire patent (19,637) (37,220)
Maturity of certificates of deposit 500,000 450,000
Sale of short-term investments 5,067,156 --
Purchase of short-term investments (1,000,000) (4,959,182)
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Net cash provided by (used in) investing activities 3,746,399 (4,778,482)
----------- -----------
Cash flows from financing activities
Proceeds from sale of stock -- 8,792,417
Payments for offering costs -- (1,355,059)
Payments on capital leases (23,016) (20,705)
Payments on line of credit -- (731)
Principal debt repayments (14,740) --
Proceeds from long term debt -- 47,800
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Net cash provided by (used in) financing activities (37,756) 7,463,722
----------- -----------
Net increase in cash 122,034 104,965
Cash and cash equivalents- beginning of period 3,181,728 1,941,367
----------- -----------
Cash and cash equivalents- end of period $ 3,303,762 $ 2,046,332
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid for interest expense during the nine months ended September 30, 2001
and September 30, 2000 was $18,041 and $29,960 respectively.
7
ONLINE POWER SUPPLY, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ACCOUNTING POLICIES
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Basis of Presentation
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In the opinion of management, the accompanying balance sheets and related
interim statements of income and cash flows include all adjustments, consisting
only of normal recurring items, necessary for their fair presentation in
conformity with U.S. generally accepted accounting principles. Preparing
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenue and expenses. Actual
results may differ from these estimates and assumptions and interim results are
not necessarily indicative of the results for the full year.
Annual Versus Interim Statements
- --------------------------------
The interim financial statements are presented in accordance with the
requirements of SEC Form 10-QSB and therefore may not include all of the
disclosures made in the SEC Form 10-KSB annual report filing. These financial
statements should be read in conjunction with management's discussion and
financial analysis included in the SEC Form 10-QSB and the audited financial
statements and notes included in the 2000 SEC Form 10-KSB.
NOTE 2 - SHAREHOLDERS' EQUITY
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Qualified Stock Option Plan
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The shareholders approved a Qualified Incentive Stock Option Plan on December 7,
1999. The purpose for the plan is to have the ability to offer stock option
incentives to reward key employees for past performance and to attract the
best-qualified new employees through the use of stock options as an additional
means of compensation. A total of 3,500,000 common shares have been set aside
for this plan; no new stock options were granted during the current quarter
period.
Non Qualified Options:
- ---------------------
The company did not award any non-qualified stock option awards during this
current quarter.
Stock Option Plan for Non-Executive Directors
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The Board of Directors adopted a Directors' Non-Qualified Stock Option Plan in
August 2000 to provide for stock options to non-employee members serving on the
Board. The plan will be used to attract and retain the most qualified board
members by awarding them stock options as a form of compensation. 300,000 shares
of common stock are designated for future issuance on exercise of these options.
There were no new options granted this quarter and 30,000 options have been
issued to date from the plan to the three non-employee directors.
NOTE 3-STOCK OPTION NOTES RECEIVABLE
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The company's Incentive Stock Option Plan (ISOP) administrators allow (beginning
October 2000) employee ISOP participants to borrow funds from the company to
option common stock after the "cashless" method of exercise was eliminated from
the plan provisions. The stock purchase advances are evidenced by recourse notes
from the employee to the company bearing interest at 8% per annum. The
outstanding stock option exercise notes payable to the company at December 31,
2000 and September 30, 2001 total $83,127 plus interest.
8
NOTE 4 - INCOME TAXES
- ---------------------
A reconciliation of the US statutory federal income tax rate to the effective
rate follows:
September30, September 30,
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2001 2000
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U.S. statutory federal rate 34.00% 34.00%
State income tax rate, net of federal benefit 3.00% 3.00%
Provision for bad debts -- --
Net operating loss for which no tax benefit
is currently available (37.00%) (37.00%)
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-- % -- %
========= ==========
Deferred taxes consisted of:
September 30, September 30,
2001 2000
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Deferred tax asset as a result of a net operating
tax loss carry-forward (beginning 1996) $ 3,192,000 $ 1,748,290
Valuation allowance (3,192,000) (1,748,290)
Net deferred taxes $ -- $ --
The valuation allowance offsets the deferred tax assets for which there is no
assurance of recovery. The net operating losses prior to 1996 have been
permanently lost due to the significant changes in the business operations and
changes in ownership in 1996. The losses since 1996 may be limited, but not
lost, as a result of the significant changes in ownership during 1999 and 2000.
The available 1996 forward NOL is based on the estimated time during the year
2000 that the greater than 50% ownership change threshold occurred, thereby,
resulting in the loss being partially limited in its future use as a carry over
against current taxes due.
NOTE 5 - CONTINGENCIES AND COMMITMENTS
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Office and Laboratory Space
- ---------------------------
The company's headquarters is in the Highland Park business complex in
Englewood, Colorado in leased space subject to a five-year net lease expiring
February 28, 2006. Future minimum lease payments payable under the net lease are
$440,377 at $8,309 per month.
Performance Options
- -------------------
As part of their executive employment agreements, two officers (including the
retired CEO) shall become fully vested to receive options to purchase 150,000
shares each (300,000 in total) of the company's common stock upon achieving the
following performance goals: If the company's consolidated gross revenues exceed
$9,000,000 for the year ended December 31, 2001, the executives vest in the
options; if this event does not occur, the options will not be granted.
9
Manufacturing
- -------------
The company has entered into an arrangement with Saturn Electronics and
Engineering Inc. (Saturn) for the turnkey manufacture of the initial products
developed by the company. Saturn may, if requested by the company, assist us in
financing certain one time costs normally associated with the production ramp-up
process and be reimbursed prorata out of the proceeds of payments received by
the company. Subject to certain terms and conditions, Saturn has the right to
manufacture all of the products developed by OnLine through the end of their
first product development program.
NOTE 6- LITIGATION
- ------------------
The company has settled and satisfied all claims that have arisen from a prior
business endeavor except for one known as Max Music (claiming $390,000) that was
litigated with the Federal Magistrate's ruling given in favor of the company in
1999. The ruling is now being reviewed by the Federal District Court and the
final outcome is yet to be received. Management has been advised by counsel that
it is likely the company will prevail. However, as with all litigation results,
the actual outcome will not be known until the process is completed; in the
meantime, management believes that the eventual outcome will not have any
adverse financial effect on the company.
NOTE 7 - DEVELOPMENTAL TECHNOLOGY RISKS AND REVENUE GENERATION
- --------------------------------------------------------------
The company is bringing its proprietary power conversion technology to the
market in the form of the 48 volt, 500 watt to 1,000 watt line of products that
are expected to compete favorably against existing power supplies for certain
targeted applications and customers. Original equipment manufacturer (OEM)
customers have been targeted for our existing product and the upcoming 48 volt
power supplies soon to be released. The introduction process can be complex and
lengthy; however, significant customer interest is being shown as a result of
our marketing efforts. The company has aimed its product research and
development towards creating "more power in a smaller box"; customer feedback
indicates that this new discovery will allow them to design to the market
demands in the near future. Due to the uncertainties of introducing the new
product in an entrenched market, we are unable to predict with accuracy when, or
if, net sales revenues will be adequate to cover the operating overhead and
result in net profits.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
BUSINESS STRATEGY
The company is producing a power factor corrected front end module (PFC)
and delivering evaluation units to a wide array of potential customers for
various applications. One large customer is incorporating the PFC module as a
strategic component to power their wireless telecommunications equipment more
efficiently. The technology used to produce the proprietary PFC has been
incorporated into the 48 volt, 500 watt and 1,000 watt AC-DC power supplies
currently under development and being tested. The very favorable operating
characteristics shown by the PFC module is stimulating widespread advance
customer interest in the 48 volt power supply and its potential applications.
The goal of the company is to be the innovative leader in the power supply
industry by successfully introducing its proprietary power supply technology
thereby allowing original equipment manufacturer's (OEM) design engineers their
sought after advantage when incorporating the technology into new systems
design. The release of the PFC in late 2000 has permitted the company to
demonstrate the new technology, validate its design-in value, educate design
engineers and identify industry OEM's and other large-scale power supply users.
Most of the resulting PFC product interest is expected to flow through to the
applications for the 48 volt power supplies as well.
Substantial progress has been made towards the company's goal; however, it
should be noted that a greater than normal business risk is usually associated
with the process of introducing breakthrough product technology by an unknown
company in a market environment that has not seen significant product design
advancements for many years. The education of the market place has begun (in
1999 and 2000), but the acceptance exercise for many large OEM companies (our
target audience) is a very long, methodical, tedious and time-consuming process.
We are proud to report that a growing list of companies have invested the time
to understand the value of our upcoming 48 volt power supply and management
believes that prototype unit demonstrations in the fourth quarter, 2001 will
confirm these customers' interests and possibly generate significant orders for
product next year.
Recent extraordinary events, the general slowing of the worldwide economy
and the "near recession" levels of the United States economy have affected
OnLine Power Supply, Inc. and its potential customers. The result will be a
lowering of our revenue realization for the remainder of 2001. However,
management does not believe that the 48 volt power supply and PFC sales
expectations need to be lowered at this time for 2002 as the market conditions
are expected to improve and the demand for the 48 volt product, once released,
is more diverse and more immediate in nature. The company continues to position
itself for the release of the 48 volt products and is fully prepared to meet the
expected production demands by utilizing the turnkey, dedicated Saturn de
Monterrey, Mexico manufacturing facility already in place and producing the PFC
products.
RESULTS OF OPERATIONS
Revenues
- --------
Sales of GlitchMaster circuitry and customized components totaling $20,848
during the third quarter of 2000 was the result of the final sell-down of
discontinued items in inventory prior to the beginning of the sales of the new
power factor corrected front end modules in 2001. Sales of the new PFC began
slowly during the first quarter of this year and have been increasing in volume
quarter over quarter. Revenue from the sales of the new units totaled $946,734
in the third quarter 2001; however, the remainder of the year expectations are
now revised to produce a quarter over quarter drop in revenue (see footnote 7 to
financial statements: Market Risks). This decline in PFC sales began in
September, 2001 and will continue into the fourth quarter. It is partially due
to the extent of the worldwide economic downturn and more specifically, the push
out and cancellation of some orders of our telecommunications sector customer as
they transition from current product design to the next generation product
design.. As predicted, the improved gross profit of $229,661 from sales during
the third quarter was the direct result of more favorable product pricing and
the lowering of the overall manufacturing costs by Saturn, our manufacturer.
Research and Development Costs
- ------------------------------
An ongoing program to develop the existing power conversion technology
(PFC) into a series of commercially accepted products started early in 2000 and
continues at an accelerated pace today resulting in the release of the PFC
module in 2000 and the substantial completion of the 48 volt and 500 watt to
1,000 watt prototype power supply unit. Following in-house testing now underway
on the 48 volt supply, evaluation units will be delivered to a number of
potential customers for acceptance and compliance testing prior to their
specifying the product for their own system uses. Independent testing and
certification should be started and completed shortly on the final version of
the 48 volt power supply. Research and development costs typically include a)
salaries and benefits of engineers and technicians b) the cost of component
materials and supplies to build test models, c) costs of independent testing and
certification of the finished design and d) the direct cost of space and
equipment dedicated to the development effort. All indirect costs of the
laboratory operations that can be identified and attributed to the origin or
improvement of specific patents will be capitalized for accounting purposes.
Approximately 16-18 people are employed continuously in the effort underway in
our in-house laboratory facility. The financial impact of increasing the size of
the laboratory staff, adding much more testing equipment and more than doubling
the size of the physical space produced a year over year increase in operating
cost of approximately 44% from $894,670 to $1,292,447 for the respective nine
month periods ending September 30, 2000 and 2001.
General and Administrative Expenses
- -----------------------------------
The headquarters and laboratory facility were relocated in March 2001
to a space over twice as large as the former space and included the build out of
laboratory space more conducive to the level or research being done. For
example, an anti-conductive, anti-static tile floor was installed at significant
expense throughout the lab area and standardized workstations installed to
enable a more orderly and efficient arrangement of the work areas. This growth
and these improvements caused the general costs of the operations to increase,
but not proportional to the space size. Additional laboratory testing and design
equipment, new computer network capabilities and new voice and data
communications were incorporated into the design of the space to serve us
adequately for the foreseeable future. The total administrative costs for the
third quarter, 2000 were $372,819 compared to $494,136 for the third quarter,
2001, an increase of approximately 33% period over period. Following is a
schedule of the major expense increases that occurred this quarter as a result
of the relocation, expansion and upgrading of our facilities: office lease
expense $3,173, information technology services $27,590, telephone and internet
costs $6,069, and depreciation of leasehold costs and equipment $53,045.
Sales and Marketing
- -------------------
The greatest cost increases quarter over quarter and year over year
occurred in the sales and marketing area with the initiation of an advertising
and marketing campaign to brand the company and the technology that began fourth
quarter 2000. The total cost of sales and marketing expense for 2000 year to
date was $211,844 (prior to the new program impact) versus $840,058 for the
current year to date, a four-fold increase (as a result of the new campaign).
The in-house staff expanded from two sales person to two directors, a sales
associate and support staff
12
thereby causing an increase in salary expenses totaling $34,413 for the current
quarter. Direct print advertising costs increased by $93,790 this quarter and
sales commissions of $55,033 were paid this quarter this year compared to none
the previous year's quarter. The company's approach to sales and marketing has
been in place for approximately one year and involves outsourced advertising and
marketing support, direct and commissioned sales representatives, print
advertising, trade show participation, an internet website and a network of
power industry proven distributors world wide. The costs of maintaining this
professional sales and marketing program averages $200,000 to $250,000 per
quarter, fluctuating principally due to the amount of advertising and given the
existing program goals and parameters. Early results indicate that the focus of
the campaign has produced steady and acceptable results and should lead to
additional PFC orders and 48 volt customer leads during the remainder of 2001.
Also evident is the longer-term educational results for the potential OEM
customer to begin to think about adaptation of the new technology into their
long-term product planning processes.
FINANCIAL CONDITION
When the company was re-focused in 1999 and 2000 to its new technology
research for the power supply industry, it also successfully raised $ 14.2
million of new private equity capital to provide a solid financial foundation to
sustain a period of operational growth during which there would be insufficient
net operating revenues. The present cash resources of $4,450,000 represents
twelve months cash in the bank for the support of the company without any net
sales revenues and at the current burn rate. All cash resources (except the
checking account cash) are currently invested in institutional money market
accounts or equivalent liquid instruments. The interest earnings have been
reducing quarter over quarter due to the lowering of the investment interest
rates and the lowering of the amount of cash for investment.
Accounts receivable, all current and collectible, have increased as the
result of the growth of sales from $29,819 last year to $313,771 this year and
is principally from one large customer. Inventory consists of production parts
and other raw materials (components) to support the long lead manufacturing
supply for the out sourced manufacturing process. Prepaid expenses increased
from $128,814 to $275,896 year over year largely due to the costs associated
with the establishment of the automated manufacturing process, prepaid
insurance, and prepaid marketing expense, all of which will be recognized in a
future accounting period.
The current quick ratio (ability to pay bills on time) is 9.4 to 1.0 and
the overall current ratio (indicating liquidity) is 6.5 to 1.0, both measurement
results indicating excellent operational financial health at this time. The debt
to equity ratio is .14 to 1.0 which is superior to industry averages and
indicates a near term comfort level pending the expected creation of profitable
operations sometime within the next twelve months.
The company has not incurred any new debt this quarter and has routinely
paid down all of its note and finance lease obligations pursuant to their agreed
upon terms over the past quarter and nine months. All of our trade payables are
paid in the normal course of business and within pre-arranged credit terms;
accounts payable has increased slightly as the amount of business increases from
quarter to quarter.
Management has historically placed idle funds in cash equivalents, such as
institutional money market accounts, and other short term investments, such as
high grade commercial paper, to achieve the highest investment earnings within
the investment program. Consequently, the balance sheet shows cash equivalents
and short term investments in varying degrees. During this quarter, an
investment of $1,000,000 was placed into a short term government instrument
backed mutual fund to achieve higher earnings with the remainder of cash left in
the money market funds.
13
Based on our current business plan and operating strategy, management
believes that the current financial resources and potential borrowing capacity
are sufficient to fund the company's working capital, capital expenditures and
other normal cash requirements for the next twelve months. However, sustained
growth and the completion of the 48 volt product development followed by the
production ramp up process may require the company to seek a combination of debt
and additional equity capital to maintain operations into next year. Additional
funding, if required and provided, would likely improve the confidence level of
larger companies desiring to enter into a business relationship with OnLine
Power Supply, Inc.
Once the company owes income taxes, it will be able to use the offsetting
benefits of an estimated $8,000,000 net income tax loss carry forward (from 1996
forward) which can be applied to future income tax liabilities. However, the
loss may be limited in its use, by income tax regulations, and may expire over
time if not fully utilized. This NOL represents a significant potential economic
benefit to the company in the form of lower future income tax payments that
would otherwise be due and payable without the carry forward.
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
No activity to report for this current quarterly period.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits. None
(b) Reports on Form 8-K. The company did not file any reports on Form 8-K
during the quarter ended September 30, 2001.
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
ONLINE POWER SUPPLY INC.
(Company)
Date: November 12, 2001 By: /s/ Kris Budinger
------------------------------------
KRIS BUDINGER,
CEO and President
Date: November 12, 2001 By: /s/ Richard L. Millspaugh
------------------------------------
RICHARD L. MILLSPAUGH,
Chief Financial Officer
15