SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                             REPORT ON FORM 10-KSB-A

            [X] Annual Report pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                   For the fiscal year ended December 31, 2004

                           Commission File No. 0-21931

                                 AMPLIDYNE, INC.
             (Exact name of registrant as specified in its charter)

            Delaware                                        22-3440510
---------------------------------              ---------------------------------
 (State of or other jurisdiction               (IRS Employer Identification No.)
of incorporation or organization)

         59 LaGrange Street
         Raritan, New Jersey                                  08869
         ---------------------                              ----------
         (Address of Principal                              (Zip Code)
         Executive Offices)

Registrant's telephone number, including area code: (908) 253-6870

Securities registered pursuant to Section 12(b) of the Act: None.

Securities registered pursuant to Section 12 (g) of the Act:

                    Common Stock, par value $.0001 per share
                    ----------------------------------------
                                (Title of Class)

      Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 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 _

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of the Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB-A or any amendment to this Form 10-KSB-A. [X]

      Issuer's revenues for its most recent fiscal year were $743,790

      The aggregate market value of the voting stock held by non-affiliates of
the Registrant, computed by reference to the closing price of such stock as of
March 31, 2005, was approximately $160,000.

      Number of shares outstanding of the issuer's common stock, as of March 31,
2005 was 10,376,500

      Documents Incorporated by Reference: None


<PAGE>

                                     PART I

Item 1.   BUSINESS

General

Amplifier Products

      Amplidyne, Inc., a Delaware corporation ("Amplidyne" or the "Company")
designs, manufactures and sells ultra linear power amplifiers and related
subsystems to the worldwide wireless, local loop and satellite uplink
telecommunications market. These power amplifiers, which are a key component in
cellular base stations, increase the power of radio frequency ("RF") and
microwave signals with low distortion, enabling the user to significantly
increase the quality and quantity of calls processed by new and existing
cellular base stations. The Company's wireless telecommunications products
consist of solid-state, RF and microwave, single and multi-carrier power
amplifiers that support a broad range of analog and digital transmission
protocols including advanced mobile phone services ("AMPS"), code division
multiple access ("CDMA"), time division multiple access ("TDMA"), total access
communication systems ("TACS"), extended total access communication systems
("ETACS"), Nordic mobile telephone ("NMT"), global system for mobile
communications ("GSM"), digital communication service at 1800 MHz ("DCS-1800")
and wideband code division multiple access 3G communications ("W-CDMA"). The
products are marketed to the cellular, wireless local loop and personal
communication systems ("PCS") segments of the wireless telecommunications
industry.

      The Company continued to refine amplifier products for the 3.5 GHZ digital
data transmission systems that are presently being deployed by some major OEM's
in North America.. The Company is developing W-CDMA(Wide Band CDMA) 80 Watt
amplifier with Digital Signal Processing The Company has had its test site in
Sparta New Jersey under continuous operation for more than 5years. The Company
has been able to get reliable and successful service under various and severe
weather including rain and snow.

      In the year 2004, the Company experienced a considerable downturn in its
overall business due to the general decline in the Telecommunications Industry,
build up of inventory at its major customer ,as well as slow down in demand for
its High Speed Internet products, due to prevailing economic conditions. The
company made significant staff cutbacks in late 2002,which resulted in lower
overhead costs during 2004. The Company was able to raise some additional funds
to restructure its business and fund development of its W-CDMA amplifier and
digital signal processing techniques. However these funds are not sufficient and
as a result the Company has been operating under severe cash flow conditions for
most of 2004.These conditions have considerably limited the company's sales and
marketing efforts.

      Amplidyne has several products covered by a patent issued by the United
States Patent and Trademark Office for Pre-Distortion and Pre-Distortion
Linearization which, the Company believes, is very effective in reducing
distortion, in amplifiers. In addition to Company's product line of single
channel power amplifiers, which are currently utilized by the wireless
communications industry, the Company also develops, designs and manufactures
Multi-carrier Linear Power Amplifiers ("MCLPAs"). MCLPAs combine the performance
capabilities of many single carrier amplifiers into one unit, eliminating the
need for numerous single carrier amplifiers and the corresponding unnecessary
space occupied by the cavity filters encasing the amplifiers. Management
believes that with its (i) proprietary technology (which effectively reduces
distortion), (ii) technological expertise and (iii) established product line
consisting of ultra linear single channel power amplifiers, the Company can
achieve similar performance with its MCLPAs. The Company's linear power
amplifiers and MCLPAs utilizes the Company's patented predistortion and
proprietary feed forward technology, which amplifies many channels with minimal
distortion at the same time with one product. This capability is being enhanced
by development of the digital signal processing techniques.


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<PAGE>

High Speed Wireless Internet Products

      In 1999 the Company made its entry into the emerging wireless Internet
access market with new products in the ISM license exempt operating band (2.4 to
2.4835 GHz). The line of spread spectrum radio products has been expanded to
provide complete solutions, with designs for indoor, outdoor and hybrid
indoor/outdoor network coverage including point-to-point and
point-to-multi-point configurations.

      These products include ISP Base Stations, PCMCIA radio cards, modular
customer premise equipment (CPE), micro-cells, client base station, amplifiers,
and other network components to provide a turnkey network solution. These
products are IEEE 802.11 compliant and provide high-speed internet access and
private network access from any point in the network. The Company's capabilities
include engineering design to provide coverage over a wide area. Wireless
network elements therefore provide users access from anywhere in the wireless
network. Management believes that this type of design delivers high performance
and lower operating and maintenance costs, compared to a conventional wired
network. An additional value added to a network utility is full roaming access
for portable devices anywhere in the network.

      The Company designs outdoor solutions specifically targeted to the ISP
market which consist of point-to-point backbones for the networks and
point-to-multi-point access to wireless clients. ISP's can order complete
turnkey systems for various applications or components for expansion and
concentration of existing networks.

      In light of the events of 2004,particularly the downsizing of the Company
and serious cash flow constraints during the year, the Company is in the process
of re-evaluating its products and future marketing strategy during 2005.

Historical

      The Company was incorporated on December 14,1995 pursuant to the laws of
the State of Delaware as the successor to Amplidyne, Inc., a New Jersey
corporation ("Amplidyne-NJ"), which was incorporated in October 1988. The
Company was organized to effectuate a reincorporation of Amplidyne-NJ with and
into the Company on December 22, 1995. The Company maintains its executive
offices at 59 LaGrange Street, Raritan, NJ 08869 and its telephone number is
(908) 253-6870. The Company completed its initial public offering of 1,610,000
Units (each Unit consisting of one (1) share of Common Stock and one (1)
Redeemable Common Stock Purchase Warrant ("Warrants")) in January 1997 pursuant
to firm commitment underwritten offering. The offering price was $5.10 per Unit.
The Warrants were redeemed in May 2000. Prior to redemption, 124,871 Warrants
were exercised. The Common Stock trades on the NASD OTC Bulletin Board under the
symbol AMPD.OB.


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<PAGE>

Forward Looking Statements

      Certain information contained in this Annual Report is forward-looking
statements (within the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as amended).
Factors set forth that appear with the forward-looking statements, or in the
Company's other Securities and Exchange Commission filings, could affect the
Company's actual results and could cause the Company's actual results to differ
materially from those expressed in any forward-looking statements made by, or on
behalf of, the Company in this Annual Report. In addition to statements, that
explicitly describe such risks and uncertainties, readers are urged to consider
statements labeled with the terms "believes," "belief," "expects," "intends,"
"estimate," "project," "may," "will," "should," continue," "anticipates" or
"plans" to be uncertain and forward-looking. The forward-looking statements
contained herein are also subject generally to other risks and uncertainties
that are described from time to time in the Company's reports and registration
statements filed with the Securities and Exchange Commission, including the
risks described in Part I-Risk Factors. Such potential risks and uncertainties
include, but are not limited to: the ability to increase revenues and reduce
operating losses; the successful deployment and sale of products; the successful
distribution of our products in the marketplace; the successful expansion of
business with sales made by ISPs; managing expansion; dependence on a limited
number of customers; reductions, delays or cancellations in orders from new or
existing customers; potential deterioration of business and economic conditions
in the Company's customers marketplaces; new product development and product
obsolescence; potential deterioration of the Company's customers credit quality
due to deteriorating economic conditions in the Company's customers
marketplaces; a limited number of potential customers; intensely competitive
industry with increasing price competition; successful development of strategic
partnerships globally; reliance on certain key personnel; variability in gross
margins on new products and resulting impacts on operating results; continued
success in the design of new products and the ability to manufacture in quantity
such new products; continued favorable business conditions and growth in the
wireless communications market; and dependence on certain suppliers for
single-sourced components. In addition, prior financial performance and customer
orders are not necessarily indicative of the results that may be expected in the
future and the Company believes that such comparisons cannot be relied upon as
indicators of future performance. Due to the foregoing factors, the Company
believes that period-to-period comparisons of its operating results are not
necessarily meaningful and that such comparisons cannot be relied upon as
indicators of future performance. Additionally, the Company undertakes no
obligation to publicly release the results of any revisions to these
forward-looking statements which may be made to reflect events or circumstances
occurring after the date hereof or to reflect the occurrence of unanticipated
events.

Cellular Systems

      A cellular system consists of a number of cell sites that are networked to
form a cellular system operator's geographic coverage area. Each cell site has a
base station which houses the equipment that transmits and receives telephone
calls between the cellular subscriber within the cell and the switching office
of the local wireline telephone system. Such base station equipment includes an
antenna and a series of transceivers, power amplifiers and cavity filters. Large
cell sites, which generally cover a geographic area of up to five miles in
radius, are commonly referred to as "macrocells."


                                       4
<PAGE>

      The ability of cellular system operators to increase system capacity
through the use of microcells is largely dependent on their ability to broadcast
multiple signals with acceptable levels of interference and distortion. In
cellular systems, the amplifier is generally the greatest source of signal
interference and distortion, particularly with multi carrier high power
amplifiers. Consequently, obtaining amplifiers that can transmit and receive
multiple signals with low distortion or interference from adjacent signals
("high spectral purity") is critical to a cellular system operator's ability to
increase system capacity. Substantial resources and technical expertise are
required to design and manufacture multi carrier power amplifiers with high
spectral purity. To achieve high spectral purity, multi carrier amplifier
systems must have high interference cancellation properties.

      The Company believes that the potential opportunities for wireless
communication services in countries without reliable or extensive wireline
systems may be even greater than in countries with developed telecommunication
systems.

Company Strategy

      Utilizing its proprietary, patented technology and experience in
interference cancellation, the Company is pursuing a strategy, focused on
developing amplifier products required by telecommunication operators to address
the wide bandwidth requirement with digital signal processing capabilities. The
company is looking to broaden its offering by introducing filters, diplexers and
repeaters to its offering. The Company is developing W-CDMA 80 Watt amplifier
with Digital Signal Processing for introduction to the market place during
second quarter of 2005.

      The company is also planning to enhance its analog predistortion
technology by introducing digital predistortion correction techniques. The
Company's business strategy focuses primarily on the wireless communication
market and consists of the following elements:

      Wireless Internet Products. The Company's high-speed wireless Internet
products have been successfully deployed since 1999. Our wireless Internet
products are aimed at four market segments: (a) Hospitality and Multi-Dwelling
Units (MDU) including hotels and condominiums, (b) enterprise, corporate and
education campuses (c) Internet Service Provider (ISP) networks, (d) Small
Office/Home Office (SOHO), The Company will be developing amplifiers for the
forthcoming WiMAX systems.

      Increase Penetration of Wireless Equipment Manufacturers. Since 1991, the
Company has positioned itself as a supplier of amplifier products to large
wireless telecommunications OEMs. Amplidyne seeks to capitalize on its existing
customer relationships and become a more significant source of its customers'
amplifiers by working closely with OEM customers to offer innovative solutions
to technical requirements and problems. During 2005 company will use its W-CDMA
amplifier products as a major marketing and sales thrust both in US and Asian
markets. The Company is developing strategic relationship with Tek Ltd. an
established distributor in South Korea.

      Maintain a Technology Edge. In management's belief the Company, with its
innovative products, has been addressing the needs of its customers for products
that solve significant technical problems. The Company believes its interference
cancellation technologies are among the most advanced that are commercially
available in the industry, both in performance and diversity of methodology. The
Company utilizes proprietary and patented pre-distortion technology and
proprietary feed forward interference cancellation technology in its linear
power amplifiers and MCLPAs to enable the user to significantly increase the
quality and quantity of calls processed by new and existing cellular base
stations. The Company intends to continue to maintain resources in research and
development and continue the development of digital signal processing and
digital predistortion techniques.. Develop Innovative Proprietary Products. To
date, the Company has focused its efforts in the development of amplifier
products which are highly innovative, and which are not the standard "commodity"
type product. In addition, the Company believes that it has compiled an
extensive design library in the solid-state, high power amplifier industry
utilizing its proprietary and patented technology and expertise in interference
cancellation. The Company has developed and intends to continue to develop
products, which combine basic components in unique and high performance
configuration to command higher prices in the wireless communications market. In
addition, the Company has adapted this expertise for new commercial market
applications and is developing products For W-CDMA communications.


                                       5
<PAGE>

      Provide Support from Product Design through Installation and Operation.
The Company works with its customers throughout the design process to assist
them in refining and developing their amplifier specifications. Once the
specifications have been met and the product delivered, Amplidyne continues to
provide technical support to facilitate system integration, start-up and
continued operation. By providing customer support services from the product
design phase through installation and operation, management believes it fosters
increased levels of customer loyalty and satisfaction. In addition, through this
process, the Company believes it will develop new product definitions and
implementations to further enhance the strategic position of the Company in the
wireless market.

      Maintain Control of the Manufacturing Process. Amplidyne has consistently
analyzed in house automated manufacturing versus the use of subcontracted
manufacturers in order to control its production schedule. In certain instances,
Amplidyne has made the strategic decisions to select single or limited source
suppliers in order to obtain lower pricing, receive more timely delivery and
maintain quality control.

The Amplidyne Advantage

      The Company believes that its products have several features, which
differentiate them from those of its competitors, such as:

      The Predistortion Solution. Utilizing its proprietary technology the
Company can obtain significant distortion reduction in its core amplifiers. This
enables the pre-distorted amplifier to have feed forward correction (which is
described below, see "Technology") applied to it to achieve distortion
cancellation.

      Superior Distortion and Spurious Cancellation Resulting in Ultra Linear
High Power Amplifiers. The Company believes the use of MCLPAs is critical in the
implementation of new cellular systems and upgrade of older analog systems.
Cellular systems need to cover large areas with minimum hardware in order to
minimize cost per subscriber. Reduction of the distortion and spurious signals
from the amplifiers is a key enabling technology. Amplidyne has developed
proprietary interference cancellation technology using multiple methods to
achieve high suppression of spurious output and distortion typically associated
with higher power amplifiers. . The Company's single channel amplifiers have
also been well received in the industry, however, the Company has experienced
more competition in this area. The Company is seeking to position itself to be a
viable source in this area. The Company constantly monitors such situations and
will employ resources to explore such opportunities, as financing permits.


                                       6
<PAGE>

      By utilizing its proprietary and patented predistortion technology and its
proprietary feed forward technology, the MCLPAs amplification capacities of the
Company's amplifiers are, in management's belief, among the better products in
the industry.

      Linearity, Low Distortion and High Amplification. Wireless service
providers' ability to manage scarce spectrum resources more effectively and
accommodate large numbers of subscribers is largely dependent on their ability
to broadcast signals with high linearity, which pertains to the ability of a
component to amplify a wave form without altering its characteristics in
undesirable ways. Linear amplifiers allow signals to be amplified without
introducing spurious emissions that might interfere with adjacent channels.
Higher linearity increases the capacity of cellular systems by enabling a more
efficient use of digital transmission technologies, micro-cellular architectures
and adaptive channel allocation. In current cellular systems, the power
amplifier is generally the source of the greatest amount of signal distortion.
Consequently, obtaining power amplifiers with high linearity and low distortion
is critical to wireless service providers' ability to improve spectrum
efficiency.

      The Company has several products covered by a patent issued by the United
States Patent and Trademark Office, which we believe, gives us a significant
advantage over our competitors.

      Multicarrier Designs. Multicarrier amplification, in which all channels
are amplified together by a MCLPA, rather than each channel using a separate
amplifier, allows for instantaneous electronic channel allocation. Functionally,
it combines many single channel power amplifiers, into a single unit, thereby
eliminating the single channel power amplifiers and the corresponding tunable
cavity filters. MCLPAs require significantly higher linearity compared to single
channel designs.

      By virtue of the Company's high linearity products which incorporates
pre-distortion and feed forward technology achieving, in management's belief,
among the lowest distortion in the industry, the MCLPA amplified signal remains
within their prescribed band and spectrum with low interference of adjacent
channels thus providing flexibility to accommodate any frequency plan.

      Wireless Internet Products. One of the key components in the wireless
Internet access system is the bi-directional tower top amplifier. We also have
considerable experience in the design, development and deployment of fixed
broadband amplifier products. The amplifier has to operate reliably in an
outdoor application. Our expertise in this area is an advantage over competitors
who are required to purchase their amplifiers from outside sources.

      We also have considerable know-how of other related products such as
antennas, filters, power supplies and digital control circuits. We are therefore
able to offer a turnkey solution to ISP's, providing indoor and outdoor
networking support using our existing resources. We have a cost advantage
because we manufacture our own amplifiers, which we can, if necessary, rapidly
refine and change.

      We intend to refine our products as needed and in a timely fashion in
order to obtain market share.


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<PAGE>

      High Quality, Reliability and Customer Support. The Company believes that
the power amplifier in cell sites historically has been the single most common
point of equipment failure in wireless telecommunications networks. Increasingly
reliable power amplifiers, therefore, will improve the level of service offered
by wireless service providers, while reducing their operating costs. In
addition, MCLPAs eliminate the need for high-maintenance; tunable cavity filters
that should further reduce costs.

      The Company works closely with its customers throughout the design process
in refining and developing their amplifier specifications. The Company uses the
latest equipment and computer aided design and modeling, solid-state device
physics, advanced digital signal processing ("DSP") and digital control systems,
in the development of its products in their specialized engineering and research
departments. The integration of the Company's design and production is a factor
in the Company's ability to provide its customers with high reliability, low
distortion and low maintenance amplifiers.

Technology

      Wireless Transmit Technology. A typical wireless communications system
comprises a geographic region containing a number of cells, each with a base
station, which are networked to form a service provider's coverage area. Each
base station or cell site houses the equipment that transmits and receives
telephone calls to and from the cellular subscriber within the cell and the
switching office of the local wire line telephone system. Such equipment
includes a series of transceivers, power amplifiers, tunable cavity filters and
an antenna. In a single channel system, each channel requires a separate
transceiver, power amplifier and tunable cavity filter. The power amplifier
within the base station receives a relatively weak signal from the transceiver
and significantly boosts the power of the outgoing wireless signal so that it
can be broadcast throughout the cell. The radio power levels necessary to
transmit the signal over the required range must be achieved without distorting
the modulation characteristics of the signal. The signal must also be amplified
with linearity in order to remain in the assigned channel with low distortion or
interference with adjacent channels.

      Because cellular operators are allocated a small RF spectrum and certain
channels, it is necessary to make efficient use of the spectrum to enable
optimum system capacity. By amplifying all channels with minimum distortion at
the same time, rather than inefficient use of single channel amplification, one
obtains better system capacity. A MCLPA combines the performance capabilities of
many single carrier amplifiers into one unit, eliminating the need for numerous
single carrier amplifiers and their corresponding tunable cavity filters. These
MCLPAs require less space than multiple single channel amplifiers and their
corresponding tunable cavity filters, which reduce the size and cost of a base
station.

      MCLPAs create distortion products, which can cause adjacent channel
interference. The minimization of these distortion products requires
sophisticated technology. This is accomplished through interference cancellation
techniques such as "predistortion" and "feed forward" accompanied by highly
advanced control and processing technology. The Company has developed certain
proprietary technology and methods to achieve minimal distortion in its
amplifiers, technically called predistortion and feed forward correction. The
Company uses three distinct technologies (A) Linear class A and AB amplifiers,
(B) Predistorted class A and AB amplifiers and (C) Predistortion feed forward
amplifiers. The Company's proprietary leading edge products contain patented
predistortion and proprietary feed forward technology combined in a proprietary
automatic correction technique.


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<PAGE>

      All amplifiers create distortion when they are run at a high power level.
In an ideal case the output of the amplifier would faithfully reproduce the
input signal without any distortion. In real life, however, distortion
characteristics are produced. These distortion products can cause interference
with another caller's channel, which in turn produces poor call quality. By
using a simple, patented technology, Amplidyne recreates the distortion for the
amplifier in such a manner to cancel the interference signals.

      Feed forward cancellation involves taking the distortion created by the
amplifier and processing it in such a way that when it is added back into the
amplifier having been pre-distorted and combined with the feed forward
technology, distortion cancellation occurs. The Company believes that its
patented technology has the most unique and potent technology for distortion
cancellation. Furthermore, Amplidyne has selected linear class AB technology for
its base amplifier which it believes also has superior distortion
characteristics compared to other competitors because it is easier to
pre-distort. Thus the three key ingredients (a) Linear class A and AB
amplifiers, (b) Predistortion technology and (c) Feed forward technology enables
Amplidyne to produce MCLPAs for its major OEM customers.

      The Company's wireless Internet access products consist of point-to-point
and point to multipoint indoor and outdoor units that can be configured to
provide broad coverage over a city or region or to create coverage in an indoor
space with free roaming access.

      At the remote site an indoor or outdoor LAN system can be connected using
a single channel CPE or Access Point, with various antennae combinations.
Amplifiers are used for range extension purposes.

Markets

      The market for wireless communications services has grown substantially
during the past decade as cellular wireless local loop, 3G and other new and
emerging applications (such as W-CDMA) have become increasingly accessible and
affordable to growing numbers of consumers.

      Cellular Market. The market for cellular communications still accounts for
a fairly large portion of the wireless services. The general downturn in this
segment decreased demand for amplifier products during 20043.

      Wireless Local Loop. Wireless local loop systems are increasingly being
adopted in developing markets to more quickly implement telephone and Data
communication services. In certain developing countries, wireless local loop
systems provide an attractive alternative to copper and fiber optic cable based
systems, with the potential to be implemented more quickly and at lower cost
than wireline telephone systems. The Company designs, manufactures and markets
MCLPAs and single channel amplifiers for infrastructure equipment systems in the
wireless local loop market in the 2 and 3.5 GHz bands.

      Wireless Internet Access Market. The Company's products are aimed at four
market segments: (a) Hospitality and Multi-Dwelling Units (MDU) including hotels
and condominiums, (b) enterprise, corporate and education campuses (c) Internet
Service Provider (ISP) networks, (d) Small Office/Home Office (SOHO).


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<PAGE>

      Custom Communications and Other Markets. The custom communications market
consists of small niche segments within the larger communications market:
long-haul radio communications, land mobile communications, surveillance
communications, ground-to-air communications, microwave communications,
broadband communications and telemetry tracking. The Company sells custom
amplifiers and related products to these segments.

Products

      The Company designs and sells multi-carrier transmit amplifiers and low
noise receive amplifiers for the cellular communications market, as well as the
PCS and wireless local loop segments of the wireless communications industry.
The Company also provides a large number of catalog and custom amplifiers to
OEMs and to other customers in the communications market in general. In
addition, the Company also sells a complete line of fixed broadband wireless
networking and LAN products for private networks, virtual private networks and
Internet access.

o Multicarrier Linear Power Amplifiers (MCLPAs). When a cellular or PCS user
places a call, the call is processed through a base station, amplified, and then
transmitted on to the person receiving the call. Therefore, all base stations
require amplifiers (MCLPAs) whether they are being used for cellular, PCS or 3G
(Third Generation) local loop applications. Amplidyne designs and manufactures
these amplifiers. The objective is to provide a quality product at a good price
and to have exemplary reliability. Management believes that Amplidyne's products
with its patented pre-distortion technology; core linear amplifier technology
and proprietary feed forward technology achieve all of the objectives mentioned
above. Amplidyne's MCLPAs are a unique line of ultra linear devices, which
utilize a proprietary pre-distortion and phase locked feed forward architecture.

o Wireless Internet Products. The Company's wireless Internet products operate
in the 2.4 GHz ISM band using Direct Sequencing Spread Spectrum technology.

o High Power Linear Amplifiers. Amplidyne's product line of linear amplifiers
have a high third order intercept point, which translates to better call
quality. These high power amplifiers are supplied as modules or plug in
enclosures. The communication bands available are NMT-450, AMPS, TACS, ETACS, 3G
and PCS. The output power ranges from 1 to 200 Watts. These amplifiers can be
used in instances where service providers only need a single transmit channel.

o W-CDMA Amplifier Development. The Company is developing a wide band 80W MCLPA
with Digital Signal Processing technology.

o Local Loop and Mini Cell Amplifiers. Local loop and mini cell amplifiers are
designed with a proprietary circuit to achieve a high IMD specification, which
translates to better call quality through the mini cell. These amplifiers can be
ordered as modules or in a rack configuration.


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<PAGE>

o Low Noise Amplifier, Cellular, PCN, PCS, GSM. Amplidyne's low noise amplifiers
are manufactured with a mix of silicon and GaAsFET devices. These amplifiers
offer the user the lowest noise and the highest intercept point, while
maintaining good efficiency. Received calls at a base station are low in level
due to the fact that hand held cellular phones typically operate at half a watt
power level. This weak signal has to be amplified clearly which is done by using
Amplidyne's low noise amplifier. All amplifiers undergo a 72-hour burn-in period
to ensure reliable filed operation.

o Communication Amplifiers. These amplifiers are designed for cellular and
PCN/PCS applications and use GaAs or Silicon Bipolar FET devices. The transmit
amplifiers are optimized for low distortion products. Custom configurations are
available for all communication amplifiers. This line of products is aimed at
the single channel base station users employing the digital cellular standards
(CDMA, 3G and TDMA).

      The Company's wireless telecommunications amplifiers can be configured as
modules separate plug-in amplifier units or integrated subsystems. The Company's
products are integrated into systems by OEM customers, and therefore must be
engineered to be compatible with industry standards and with certain customer
specifications, such as frequency, power, linearity and built-in test (BIT) for
automatic fault diagnostics.

Product Warranty

      The Company warrants new products against defects in materials and
workmanship generally for a period of one (1) year from the date of shipment. To
date, the Company has not experienced a material amount of warranty claims.

Backlog/Future Orders

      The Company regularly reviews its backlog (which includes projected future
orders from customers) that it expects to ship over the next 12 months. We have
had to change schedules and delay orders depending on customer needs. Customer
schedules or requirements may frequently change and in some cases result in
cancellation of orders, in response to which the Company has to change its
production schedule. Changes and cancellations exist since, among other matters,
the wireless communications industry is characterized by rapid technological
change, new product development, product obsolescence and evolving industry
standards. In addition, the decline in the Telecommunications industry resulted
in low activity during most of 2004. . The outlook for 2005 remains uncertain.
This uncertainty may lead to postponement or cancellation of future or current
orders. In addition, as technology changes, corporations are frequently
requested to update and provide new prototypes in accordance with new
specifications if products become obsolete or inferior. Therefore, the Company
has been focusing on strategic partnerships to provide better quality solutions
to our partners with higher margin sales opportunities.

      The Company has orders worth approximately $400,000 and expects to ship
these products during the first and second quarter of 2005. In the present state
of the Telecommunications Industry there is a reluctance of companies to commit
to large blanket orders. We expect to see this trend, of just in time orders, to
continue during 2005. The Company would like to stress, although useful for
scheduling production, backlog as of any particular date may not be a reliable
indicator of sales for any future period.


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<PAGE>

Customers, Sales & Marketing

      Customers. The Company markets its products worldwide generally to
wireless communications manufacturers (OEMs) and communications system
operators. The table below indicates net revenues derived from customers in the
Company's markets in 2003 and 2004.

                        Net Revenues By Market Categories
                                 (In thousands)

                                                             Year Ended
                                                             December 31,
                                                         --------------------
                                                         2004            2003
                                                         ----            ----
Amplifier Markets
-----------------
 Cellular  Analog and  digital . . . . . . . . . . . . .    $            $415

 Wireless  Telephony . . . . . . . . . . . . . . . . . .  656             653

Satellite Communications, Custom and other Products . . .                  60

Ampwave Market
--------------
 Wireless Internet Products.  And Broadband  solutions .   88             223
                                                           --             ---

         Total  .  . . . . . . . . . . . . . . . . . . . $744          $1,351
                                                         ====          ======

            * Wireless Telephony. Sales to the wireless telephone segments of
            the wireless communications industry have increased from
            approximately 83% of total revenues for fiscal year end 2003 to
            approximately 88% of total revenue for the fiscal year end 2004.

            * Wireless Internet and Broadband solutions. The Company shipped
            products to its customers in 2004 with total sales for the year of
            $88,111 which accounts for approximately 12% of total revenues. The
            Company sold all of its Darwin inventory during 2004.

            * International Sales. Sales of wireless products outside the United
            States (primarily to Western Europe and Canada represented
            approximately 81% and 100% of net sales during fiscal 2003 and
            fiscal 2004, respectively.

            * Sales and Marketing. The Company reduced its sales and marketing
            force considerably during 2003. The Company's officers and sales and
            marketing consultants maintain significant contact with key
            customers, ensuring close technical liaison with customer engineers
            and purchasing managers.


                                       12
<PAGE>

Competition

Amplifier Products

      The ability of the Company to compete successfully and operate profitably
depends in part upon the rate of which OEM customers incorporate the Company's
products into their systems. The Company believes that a substantial majority of
the present worldwide production of power amplifiers is captive within the
manufacturing operations of a small number of wireless telecommunications OEMs
and offered for sale as part of their wireless telecommunications systems. The
Company's future success is dependent upon the extent to which these OEMs elect
to purchase from outside sources rather than manufacture their own amplification
products. There can be no assurance that OEM customers will incorporate the
Company's products into their systems or that in general OEM customers will
continue to rely, or expand their reliance, on external sources of supply for
their power amplification products. Since each OEM product involves a separate
proposal by the amplifier supplier, there can be no assurance that the Company's
current OEM customers will not rely upon internal production capabilities or a
non-captive competitor for future amplifier product needs. The Company's OEM
customers continuously evaluate whether to manufacture their own amplification
products or purchase them from outside sources. These OEM customers are large
manufacturers of wireless telecommunications equipment who could elect to enter
the non-captive market and compete directly with the Company. Such increased
competition could materially adversely affect the Company's business, financial
condition and results of operations.

      Certain of the Company's competitors have substantially greater technical,
financial, sales and marketing, distribution and other resources than the
Company and have greater name recognition and market acceptance of their
products and technologies. In addition, certain of these competitors are already
established in the wireless amplification market, but the Company believes it
can compete with them effectively. No assurance can be given that the Company's
competitors will not develop new technologies or enhancements to existing
products or introduce new products that will offer superior price or performance
features. To the extent that OEMs increase their reliance on external sources
for their power amplification needs more competitors could be attracted to the
market.

      The Company expects its competitors to offer new and existing products at
prices necessary to gain or retain market share. The Company expects to
experience significant price competition, which could have a materially adverse
effect on gross margins. Certain of the Company's competitors have substantial
financial resources, which may enable them to withstand sustained price
competition or downturns in the power amplification market. Currently, the
Company competes primarily with non-captive suppliers of power amplification
products. The Company believes that its competition, and ultimately the success
of the Company, will be based primarily upon service, pricing, reputation and
the ability to meet the delivery schedules of its customers. During 2003 the
Company has been operating under severe cash flow circumstances, which has
restricted the Company's sales and marketing efforts.


                                       13
<PAGE>

High Speed Wireless Internet Products and broadband solutions

      The Company has targeted its products to segments: (a) Hospitality and
Multi-Dwelling Units (MDU) including hotels and condominiums, (b) enterprise,
corporate and education campuses (c) Internet Service Provider (ISP) networks,
and (d) Small Office/Home Office (SOHO). The Company's revenues from these
products during 2003, and this market accounted for approximately 16% of the
total sales for the year 2003.

The Company has relied on being able to work strategically with its partners and
consultants, as well as its own engineers to develop and refine its products.
The Company has taken some risks in introducing products to certain sectors by
providing samples and system trials, which in certain cases may not result in
revenues. The vast majority of ISP's are in need of capital to grow their
businesses and in certain cases may not be able to obtain such financing.

Manufacturing

      The Company assembles, tests, packages, and ships its products at its
manufacturing facilities located in Raritan, New Jersey. This facility includes
a separate assembly and test facility for various custom products.

      The Company's manufacturing process consists of purchasing components,
assembling and testing components and subassemblies, integrating the
subassemblies into a final product and testing the product. The Company's
amplifiers consist of a variety of subassemblies and components designed or
specified by the Company including housings, harnesses, cables, packaged RF
power transistors, integrated circuits and printed circuit boards. Most of these
components are manufactured by others and are shipped to the Company for final
assembly. Each of the Company's products receives extensive in process and final
quality inspections and tests.

      The Company's devices, components and other electrical and mechanical
subcomponents are generally purchased from multiple suppliers. The Company does
not have any written agreement with any of its suppliers. The Company has
followed a general policy of multiple sourcing for most of its suppliers in
order to assure a continuous flow of such supplies. However, the Company does
purchase certain transistors produced by a single manufacturer because of the
high quality of its components. The Company believes it is unlikely that such
transistors would become unavailable, however, if that were to occur, there are
multiple manufacturers of generally comparable transistors. The Company would
require a period of time to "return" its products to function properly with the
replacement transistors. The Company believes that the distributors of such
transistors maintain adequate inventory levels, which would mitigate any adverse
effect on the Company's production in the event unavailability or shortage of
such transistors. If for any reason the Company could not obtain comparable
replacement transistors or could not return its products to operate with the
replacement transistors, the Company's business, financial condition and results
of operations could be adversely affected.


                                       14
<PAGE>

      The Company currently utilizes discrete circuit technology on printed
circuit boards, which are designed by the Company and provided by suppliers to
the Company's specifications. All transistors and other semiconductor devices
are purchased in sealed packages ready for assembly and testing. Others also
manufacture other components such as resistors, capacitors, connectors or
mechanical supported subassemblies. Components are ordered from suppliers under
master purchase orders with deliveries timed to meet the Company's production
schedules. As a result, the Company maintains a low inventory of components,
which could result in delay in production in the event of delays in such
deliveries.

      The Company purchased automated surface mount machinery ("SMT") to enhance
its manufacturing ability for amplifiers as well as wireless internet products,
which was installed during the first quarter of 2000. The equipment has provided
improved efficiency in production and faster turn around for certain products.
The Company has started to manufacture some of the products for its High Speed
Wireless Internet products.

      The Company manufacturers some of its High Speed Wireless Internet
products and amplifiers in its New Jersey facility and the rest in offshore
facilities, which are ISO 9001, certified.

Research, Engineering and Development

      The Company's research, engineering and development efforts are focused on
the design of amplifiers for new protocols, the improvement of existing product
performance, cost reductions and improvements in the manufacturability of
existing products.

      The Company has historically devoted a significant portion of its
resources to research, engineering and development programs The Company's
research, engineering and development expenses in fiscal 2003 and 2004 were
approximately $287,629 and $256,175 respectively, and represented approximately
21% and 34%, respectively, of net revenues. These efforts were primarily
dedicated to the development of the linear feed forward, high power, low
distortion amplifiers, resulting in the Company's models for 3G and refinements
to its bi-directional amplifier, Client Premise equipment, and Microcell for its
wireless internet systems and other high speed wireless internet products.
During 2004 the Company has been operating with fewer staff than 2003 as a
result of the cost cutting in late 2002.

      During most of 2004, the Company was able to maintain its research and
development costs by being able to develop significant products in house,
thereby, minimizing commitments to outside suppliers and consultants. The
Company did, however, incur consulting fees regarding the development of the
Digital Signal Processing Software.

      The Company uses the latest equipment and computer aided design and
modeling, solid-state device physics, advanced digital signal processing ("DSP")
and digital control systems, in the development of its products in the
specialized engineering and research departments.

      The Company uses a CAD environment employing networked workstations to
model and test new circuits. This design environment, together with the
Company's experience in interference cancellation technology and modular product
architecture, allows the Company to rapidly define, develop and deliver new and
enhanced products and subsystems sought by its customers.


                                       15
<PAGE>

      The markets in which the Company and OEM customers compete are
characterized by rapidly changing technology, evolving industry standards and
continuous improvements in products and services.

Patents, Proprietary Technology and Other Intellectual Property

      The Company's ability to compete successfully and achieve future revenue
growth will depend, in part, on its ability to protect its proprietary
technology and operate without infringing the rights of others. The Company has
a policy of seeking patents, when appropriate, on inventions resulting from its
ongoing research and development and manufacturing activities.

      Presently, the Company has been granted a patent (No. 5,606,286) by the
United States Patent and Trademark Office with respect to its Pre-Distortion and
Pre-Distortion Linearization technology which, the Company believes, is more
effective in reducing distortion then other currently available technology.
There can be no assurance that the Company's patent will not be challenged or
circumvented by competitors.

      Notwithstanding the Company's active pursuit of patent protection, the
Company believes that the success of its amplifier business depends more on its
specifications, CAE/CAD design and modeling tools, technical processes and
employee expertise than on patent protection. The Company generally enters into
confidentiality and non-disclosure agreements with its employees and limits
access to and distribution of its proprietary technology. The Company may in the
future be notified that it is infringing certain patent and/or other
intellectual property rights of others. Although there are no such pending
lawsuits against the Company or unresolved notices that the Company is
infringing intellectual property rights of others, there can be no assurance
that litigation or infringement claims will not occur in the future. The
Company's wireless internet access products are marketed under the trademark
Ampwave(TM)

Governmental Regulations

      The Company's customers must obtain regulatory approval to operate their
base stations. The United States Federal Communications Commission ("FCC") has
regulations that impose more stringent RF and microwave emissions standards on
the telecommunications industry. There can be no assurance that the Company's
customers will comply with such regulations, which could materially adversely
affect the Company's business, financial condition and results of operations.
The Company manufactures its products according to specifications provided by
its customers, which specifications are given to comply with applicable
regulations. The Company does not believe that costs involved with manufacturing
to meet specifications will have a material impact on its operations. There can
be no assurances that the adoption of future regulations would not have a
material adverse affect on the Company's business.

Employees

      As of December 31, 2004, the Company had a total of 14 employees, 9 in
operations, 2 in engineering, 3 in administration; the Company employs 1
consultant in sales and marketing. . The Company believes its future performance
will depend in large part on its ability to retain highly skilled employees.
None of the Company's employees is represented by a labor union and the Company
has not experienced any work stoppages. The Company considers its employee
relations to be good.


                                       16
<PAGE>

Environmental Regulations

      The Company is subject to Federal, state and local governmental
regulations relating to the storage, discharge, handling, emissions, generation,
manufacture and disposal of toxic or other hazardous substances used to
manufacture the Company's products. The Company believes that it is currently in
compliance in all material respects with such regulations. Failure to comply
with current or future regulations could result in the imposition of substantial
fines on the Company, suspension of production, alteration of its manufacturing
process, cessation of operations or other actions which could materially and
adversely affect the Company's business, financial condition and results of
operations.


                                       17
<PAGE>

      In addition to other information in this Annual Report, the following
important factors should be carefully considered in evaluating the Company and
its business because such factors currently have a significant impact on the
Company's business, prospects, financial condition and results of operations.

                                  RISK FACTORS

      You should carefully consider the risks described below before investing
in our company. The risks and uncertainties described below are not the only
ones facing our company. Other risks and uncertainties that we have not
predicted or assessed may also adversely affect our company.

      Some of the information in this Annual Report contains forward-looking
statements that involve substantial risks and uncertainties. You can identify
these statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe,' "intend," "estimate," and "continue" or other similar
words. You should read statements that contain these words carefully for the
following reasons:

      o     the statements may discuss our future expectations;

      o     the statements may contain projections of our future earnings or of
            our financial condition; and

      o     the statements may state other "forward-looking" information.

      We believe it is important to communicate our expectations to our
investors. There may be events in the future, however, that we are not
accurately able to predict or over which we have no control. The risk factors
listed below, as well as any cautionary language in or incorporated by reference
into this Annual Report, provide examples of risks, uncertainties and events
that may cause our actual results to differ materially from the expectations we
describe in our forward-looking statements. Before you invest in our company,
you should be aware that the occurrence of any of the events described in the
risk factors below, elsewhere in or incorporated by reference into this Annual
Report and other events that we have not predicted or assessed could have a
material adverse effect on our earnings, financial condition or business. In
such case, the trading price of our securities could decline and you may lose
all or part of your investment.

We Have a Recent History of Losses and Expect Losses to Continue. We have
incurred net losses of $910,434 and $768,878 for the years ended December 31,
2003 and 2004, respectively. These losses were due primarily to substantially
reduced sales, against which our cost cutting efforts have yielded minimal
results. We have made commitments to vendors to purchase hardware for use in our
wireless internet systems. We may need to cancel such orders, and the inability
to do so may result in material losses to the company. We expected to have
increased sales in this area to compensate for the expenses, however we have
reduced staff levels, therefore there is no guarantee that this will happen. The
need for high bandwidth products may lead to rapid product obsolescence. With
our reduced staff levels, we may not be able to compete. Further, we have not
generated sufficient sales volume to cover our overhead costs and generate
profits. We have minimized losses by staff reduction; this could result in loss
of market share from which we may not be able to recover. We expect that our
losses will increase and will continue until such time, if ever, as we are able
to successfully manufacture and market our products on a larger scale and
therefore generate higher profit margins. We will need to generate a substantial
increase in revenues to become profitable. Accordingly, we cannot assure you
that we will ever become or remain profitable. In addition, we had an
accumulated deficit $23,764,836 as of December 31,2004.


                                       18
<PAGE>

      Other factors may cause us to incur additional losses. We have experienced
a down turn in our amplifier and High Speed Wireless Internet Access business
due to the worldwide recession in the telecommunications market, and general
lack of funding to Wisp's and corporate spending restraints. We need to update
our high speed wireless internet access products and amplifier products, but may
not be able to accomplish this given the losses we have sustained and the
capital that is required. Finally, do not expect to be able to collect most of
our receivables as of December 31, 2004, which has caused us to sustain
additional losses. In addition, we lost a lawsuit in May 2002 (See Risk Factors)
- We lost a lawsuit which brought a jury verdict against us and needed to use
funds to make the required settlement payments, which had an adverse effect on
our cash position.

The report from our independent auditors includes an explanatory paragraph
regarding the doubt of the Company to continue as a going concern. The auditors'
report on the Company's financial statements for the year ended December 31,
2004 includes an explanatory paragraph stating that our losses, lack of cash and
otherwise limited financial resources raise substantial doubt about our ability
to continue as a going concern. The risk that we may not be able to continue in
existence may limit our ability to access certain types of financing, or may
prevent us from obtaining financing on acceptable terms.

We Will Require Additional Financing. We believe that collections of sales to be
made in 2005, together with additional financing will be adequate to fund our
operations for at least six months. However, we will require additional
financing during fiscal 2005. We have considerable accounts payable and accrued
professional fees, which have aged considerably and need to be paid to avoid
further undesirable collection action by vendors or even litigation. Many of
these vendors have in fact obtained default judgments against us in uncontested
litigation. We have in the past, issued our common stock, when available to us,
in lieu of cash payment of officer's salaries, commissions and consulting fees,
although we expect not to be able to continue this practice for the foreseeable
future. If additional financing is needed, we cannot be sure that sufficient
financing will be available to us on acceptable terms or at all. If adequate
funds are not available, we will have to further reduce our operations,
resulting in delays, scale back or elimination of our research, engineering and
development or manufacturing programs, or we may have to cease operation
entirely. To raise funds through arrangements with partners or others may
require us to relinquish rights to certain of our technologies, potential
products or other assets. Thus, our inability to obtain the necessary financing
will have a material adverse effect on our business, financial condition and
operations.

Terrorist Attacks Or Acts Of War May Seriously Harm Our Business. Terrorist
attacks or acts of war may impact our revenues, expenses and financial
condition. The terrorist attacks that took place in the United States on
September 11, 2001 were unprecedented events that have created many economic and
political uncertainties, some of which may materially and adversely affect our
business, results of operations, and financial condition. The potential for
future terrorist attacks, the national and international responses to terrorist
attacks, and other acts of war or hostility have created many economic and
political uncertainties, which could materially and adversely affect our
business, results of operations, and financial condition in ways that we
currently cannot predict.


                                       19
<PAGE>

We Lost a Lawsuit, Which Brought a Jury Verdict Against Us. 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 us for
$400,000. A settlement was reached, whereby we agreed to pay $200,000 in cash
and to issue 700,000 shares of common stock. $125,000 has been paid to date and
$25,000 was required to be paid quarterly until the balance is paid in full. We
paid off the balance of $75,000 in 2004 and received a satisfaction of judgment
thereon.

      Our Success Relies Upon The Growth of Wireless Telecommunications
Services. The demand for our products will depend in large part upon continued
and growing demand within the wireless telecommunications industry for power
amplifiers and our high speed wireless internet access products. During 2002 and
2003, a major downturn occurred in the Telecommunications market and recovery
may not occur for a year or two, therefore the demand for our products will
remain subject to great uncertainty from quarter to quarter.

      Our Limited Lack of Automated Manufacturing Processes and Our Dependence
on Third Party Manufacturers Could Adversely Affect Our Business. We have
consistently reviewed our automated manufacturing needs in order to control our
production schedule. To date, we have not established a fully automated
manufacturing facility although we have purchased an automated surface mount
machine and reflow process oven. Our wireless internet products are manufactured
at offshore facilities, which are our sole suppliers. Until such time as we are
able to establish such facilities, we expect to be dependent on third party
manufacturers. We cannot be sure that these third party manufacturers will be
able to fulfill our production commitment. Furthermore, we do not have written
agreements with these manufacturers. Our inability to obtain timely deliveries
of acceptable assemblies could delay our ability to deliver products to our
customers, and would have a material adverse effect on our business, financial
condition and results of operations. In addition, if these manufacturers
increase their production costs, we may not be able to recover such cost
increases under the fixed price commitments with our customers.

      Our Limited Number of Suppliers Could Adversely Affect Our Business. Power
transistors and certain other key components used in our products for our
amplifiers, as well as our wireless internet business are currently available
from only a limited number of suppliers. Certain of our suppliers have limited
operating histories and limited financial and other resources. Our suppliers may
prove to be unreliable sources of certain components. Furthermore, we have no
written agreements with our suppliers. In the past, we have not purchased key
components in large volumes but anticipate that our need for component parts
will increase. If we are unable to obtain sufficient quantities of components,
particularly power transistors, we could experience delays or reductions in
product shipments. Such delays or reductions could have a material adverse
effect on our business, financial condition and results of operations.
Additionally, such delays or reductions may have a material adverse effect on
our relationships with customers and result in the termination of existing
orders and/or a permanent loss in our future sales. Our wireless internet
products are manufactured at offshore facilities. The lack of supply from this
source due to any reason could adversely impact our business.


                                       20
<PAGE>

      Our Success Will Rely On Our Ability To Enter Into Strategic Partnerships.
We are currently developing and expect to continue to develop strategic
partnerships and other relationships in order to expand our business. The
failure to successfully develop such relationships could have a material adverse
effect on our business, financial condition and result of operations.

      Our Success Relies on a Small Number of Customers and Our Sales Orders
Have Had a High Degree of Delays and Cancelled Orders. In 2003, two customers
accounted for 80% of net sales (49% and 31%). In 2004, one customer accounted
for 95% of our sales and 100% of our accounts receivable. In the past few years
we have experienced reductions, delays and cancellations in orders from our new
and existing customers and we have lost important North American customers. We
anticipate that sales of our products to relatively few customers will account
for a majority of our 2005 revenues. The reduction, delay or cancellation of
orders from one or more of our significant customers would materially and
adversely affect our financial condition and results of operation. Moreover, we
may experience significant fluctuations in net sales, gross margins and
operating results in the future as a result of the uncertainty of such sales.

      Our Limited Marketing Experience (Particularly for our High Speed Wireless
Internet Products), May Adversely Affect Our Business. We are not sure whether
our marketing efforts will be successful or that we will be able to maintain
competitive sales and distribution capabilities. In addition, we have limited
experience in the marketing and sales of our wireless internet products, and
cannot be certain that this sector will grow in revenue as expected,
particularly with our reduced staff levels.

      Management of our Company Owns a Significant Amount of our Outstanding
Common Stock. Our officers, directors and persons who may be deemed our
affiliates beneficially own, in the aggregate, and have the right to vote
approximately 30% of our issued and outstanding common stock, not including
common stock options they may own. . In 2004, this control shifted to John Lee,
who loaned the Company $500,000 in connection with a Note Purchase Agreement,
with promissory notes which are convertible into Series C shares representing
approximately 80% of the Company's outstanding stock on a fully diluted basis.
Accordingly, such holders may be in a position to affect the election of all of
our directors and control the company.

      We May Not Be Able To Comply In A Timely Manner With All Of The Recently
Enacted Or Proposed Corporate Governance Provisions. Beginning with the
enactment of the Sarbanes-Oxley Act of 2002 in July 2002, a significant number
of new corporate governance requirements have been adopted or proposed. Although
we currently expect to comply with all current and future requirements, we may
not be successful in complying with these requirements at all times in the
future. In addition, certain of these requirements will require us to make
changes to our corporate governance practices. For example, one NASDAQ proposal
(which may become applicable to companies listed on the OTC Bulletin Board, or
its successor, the BBX Exchange) under review by the Securities and Exchange
Commission will require that a majority of our Board of Directors be composed of
independent directors by our 2004 Annual Meeting of Stockholders. Currently, two
of the members of our Board of Directors are considered to be independent. We
may not be able to attract a sufficient number of directors in the future to
satisfy this requirement, if enacted and if it becomes applicable to our
Company. Additionally, the Commission recently passed a final rule that requires
companies to disclose whether a member of their Audit Committee satisfies
certain criteria as a "financial expert" We currently do not have an Audit
Committee member that satisfies this requirement and, we may not be able to
satisfy this, or other, corporate governance requirements at all times in the
future, and our failure to do so could cause the Commission or NASDAQ to take
disciplinary actions against us, including an action to delist our stock from
the OTC Bulletin Board or any other exchange or electronic trading system where
our shares of common stock trade.


                                       21
<PAGE>

      Our Success Depends on Our Ability to Manage the Size of Our Operations.
We downsized some of our operations in order to maintain competitiveness and
reduce our operating losses. We have also explored joint ventures and mergers in
order to achieve these results, but have not consummated any such transaction.
If we do not increase our sales, decrease overhead expenditure or do not
adequately manage the size of our operations, our results of operations will be
materially adversely affected.

      Declining Average Sales Prices Could Adversely Affect Our Business. If
wireless internet and telecommunications customers come under increasing price
pressure from service providers, we could expect to experience downward pricing
pressure on our products. In addition, competition among non-captive amplifier
suppliers could increase the downward pricing pressure on our amplifier
products. To date, we have not experienced such pressure. As our customers
frequently negotiate supply arrangements with us far in advance of product
delivery dates, we often must commit to price reductions before we can determine
whether cost reductions can be obtained. If we are unable to achieve cost
reductions, our gross margins will decline and our business, financial condition
and results of operations could be materially and adversely affected.

      Rapid Technological Change and Intense Competition Could Adversely Affect
Our Business. The wireless internet and telecommunications equipment industry is
extremely competitive and is characterized by rapid technological change, new
product development, product obsolescence and evolving industry standards. In
addition, price competition in this market is intense and characterized by
significant price erosion over the life of a product. Currently, we compete
primarily with non-captive suppliers of power amplification products. We believe
that our success will be based primarily upon service, pricing, reputation, and
our ability to meet product delivery schedules. Our existing and potential
customers continuously evaluate whether to manufacture their own amplification
products or to purchase such products from outside sources. These customers and
other large manufacturers of wireless telecommunications equipment could elect
to enter the market and compete directly with us. Many of our competitors have
significantly greater financial, technical, manufacturing, sales and marketing
capabilities and research and development personnel and other resources than us
and have achieved greater name recognition of their existing products and
technologies. In order for us to successfully compete, we must continue to
develop new products, keep pace with advancing technologies and competitive
innovations and successfully market our products. Our inability to successfully
compete against our larger competitors will have a materially adverse affect on
our business, financial condition and operations.

      In addition, we are not sure whether new products or alternative
technology will render our current or planned products obsolete or inferior.
Rapid technological development by others may result in our products becoming
obsolete before we recover a significant portion of the research, development
and commercialization expenses we incurred with respect to those products.

      Our Business Will Be Adversely Affected if We Do Not Keep Up With the
Internet's Rapid Technological Change, Evolving Industry Standards and Changing
User Requirements. To be successful, we must adapt to our rapidly changing
market by continually enhancing the technologies used for Internet access. If we
are unable, for technical, legal, financial or other reasons, to adapt in a
timely manner in response to changing market conditions or user requirements,
our business could be materially adversely affected. Significant issues
concerning the commercial use of Internet technologies, including security,
reliability, cost, ease of use and quality of service, remain unresolved and may
inhibit the growth of businesses relying on the Internet. Our future success
will depend, in part, on our ability to meet these challenges. Among the most
important challenges facing us is the need to:


                                       22
<PAGE>

      o     effectively use established technologies;

      o     continue to develop our technical expertise; and

      o     respond to emerging industry standards and other technical changes.

      All of these changes must be met in a timely and cost-effective manner. We
cannot assure you that we will succeed in effectively meeting these challenges
and our failure to do so could materially and adversely affect our business.

      Risks Associated with Sales Outside of the United States May Adversely
Affect Our Business. International sales represented approximately 85% and 95%
of our net revenues for the years ended December 31, 2003 and 2004,
respectively. We expect that international sales will continue to account for a
significant portion of our net revenues in the future. To the extent that we do
not achieve and maintain substantial international sales, our business, results
of operations and financial condition could be materially and adversely
affected.

      Sales of our products outside of the United States are denominated in US
dollars. An increase in the value of the U.S. dollar relative to foreign
currencies would make our products more expensive and, therefore, potentially
less competitive outside the United States. Additional risks inherent in our
sales abroad include:

      o     the impact of recessionary environments in economies outside the
            United States;

      o     generally longer receivables collection periods;

      o     unexpected changes in regulatory requirements;

      o     tariffs and other trade barriers;

      o     potentially adverse tax consequences;

      o     reduced protection for intellectual property rights in some
            countries;

      o     the burdens of complying with a wide variety of foreign laws.

      These factors may have an adverse effect on our future international sales
and, consequently, on our business, financial condition and results of
operations.

      Our Operating Results May Vary From Quarter to Quarter in Future Periods,
and As A Result, Our Stock Price May Fluctuate or Decline. Our quarterly
operating results may fluctuate significantly in the future due to a variety of
factors that could affect our revenues or our expenses in any particular
quarter. Factors that may affect our quarterly results include:

      o     our ability to attract and retain customers;

      o     development of competitive products;


                                       23
<PAGE>

      o     the short term nature of manufacturing and engineering orders to
            date;

      o     unforeseen changes in operating expenses;

      o     the loss of key employees; and

      o     unexpected revenue shortfalls.

      A substantial portion of our operating expenses is related to personnel
costs and overhead, which we cannot adjust quickly and are therefore relatively
fixed in the short term. Our operating expense levels are based, in significant
part, on our expectations of future revenues on a quarterly basis. If actual
revenues are below our expectations, our results of operations and financial
condition would be materially and adversely affected because a relatively small
amount of our costs and expenses are proportionate with revenues in the short
term.

      Due to all of the foregoing factors and the other risks discussed in this
Annual Report, it is possible that in some future periods our results of
operations may be below the expectations of investors and public market analysts
which may cause our stock price to fluctuate or decline.

      We Are Dependent Upon Management and Technical Personnel.

      Due to the specialized nature of our business, we are highly dependent on
the continued service of, and on our ability to attract and retain, qualified
technical and marketing personnel, particularly those involved in the
development of new products and processes and the manufacture and enhancement of
our existing products. In addition, as part of our team-based sales approach, we
dedicate specific design engineers to service the requirements of individual
customers. The loss of any such engineer could adversely affect our ability to
obtain future purchase orders from the customers to which such engineer was
dedicated. We have employment or non-competition agreements with most of our
current design engineers and test technicians. The competition for such
personnel is intense, and the loss of any such persons, as well as the failure
to recruit additional key technical personnel in a timely manner, could have a
material adverse effect on our business, financial condition and results of
operations.

      We rely on the Ability to Protect Proprietary Technology; Risk of Third
Party Claims of Infringement May Affect Our Business. Our ability to compete
successfully and achieve future revenue growth will depend, in part, on our
ability to protect proprietary technology and operate without infringing upon
the rights of others. Although there are no pending lawsuits regarding our
technology or notices that we are infringing upon intellectual property rights
of others, litigation or infringement claims may occur in the future. Such
litigation or claims could result in substantial costs, and diversion of
resources and could have a material adverse effect on our business, financial
condition, and results of operations. We generally enter into confidentiality
and non-disclosure agreements with our employees and limit access to and
distribution of proprietary information. However, we cannot be sure whether such
measures will provide adequate protection for our trade secrets or other
proprietary information, or whether our trade secrets or proprietary technology
will otherwise become known or independently developed by our competitors. Our
failure to protect proprietary technology could have a material adverse effect
on our business, financial condition and results of operations.


                                       24
<PAGE>

      We Do Not Plan To Pay Dividends On Our Common Stock. We have never paid
any dividends on our common stock and do not intend to pay dividends on our
common stock in the foreseeable future. Any earnings that we may realize in the
foreseeable future will be retained to finance our growth.

      Governmental Regulations and Environmental Regulations Can Have a Large
Impact on Our Business. Our customers must obtain regulatory approval to operate
their base stations. The United States Federal Communications Commission has
regulations that impose stringent radio frequency and microwave emissions
standards on the telecommunications industry. Our customers are required to
comply with such regulations. The failure of our customers to comply with these
regulations could materially adversely affect our business, financial condition
and results of operations. We manufacture products according to specifications
provided by our customers, which specifications are required to comply with
applicable regulations. We do not believe that costs involved with manufacturing
to meet specifications will have a material impact on our operations. We cannot
be sure whether the adoption of future regulations would have a material adverse
affect on our business.

      We are subject to Federal, state and local governmental regulations
relating to the storage, discharge, handling, emissions, generation, manufacture
and disposal of toxic or other hazardous substances used to manufacture our
products. We believe that we are currently in compliance in all material
respects with such regulations. Failure to comply with current or future
regulations could result in the imposition of substantial fines on our company,
suspension of our production, alteration of our manufacturing process, cessation
of our operations or other actions, which could materially and adversely affect
our business, financial condition and results of operations.

      The Limited Public Market and Trading Market May Cause Volatility in Our
Stock Price. There has only been a public market for our common stock since
January 1997 and we are not sure whether an active trading market in our common
stock will ever be maintained. In the absence of such a market, you may find it
more difficult to sell our common stock. In addition, the stock market in recent
years has experienced extreme price and volume fluctuations that have
particularly affected the market prices of many smaller and technology based
companies. The trading price of our common stock is expected to be subject to
significant fluctuations in response to variations in our quarterly operating
results; changes in analysts' earnings estimates regarding our Company;
announcements of technological innovations by us or our competitors; and general
conditions in the wireless communications industry and other factors. These
fluctuations, as well as general economic and market conditions, may have a
material adverse effect on the market price of our common stock.

      Penny Stock Regulations May Impose Certain Restrictions on Marketability
of Our Securities. The SEC has adopted regulations which generally define a
"penny stock" to be any equity security that has a market price of less than
$5.00 per share or an exercise price of less than $5.00 per share, subject to
certain exceptions. Since our common stock is listed on The NASD OTC Electronic
Bulletin Board, it is subject to the definition of "penny stock and is subject
to the "penny stock" rules. These rules impose additional sales practice
requirements on broker-dealers who sell such securities to persons other than
established customers and accredited investors (generally those with assets in
excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together
with their spouse). For transactions covered by these rules, the broker-dealer
must:


                                       25
<PAGE>

      o     Make a special suitability determination with respect to each
            purchaser of securities;

      o     Receive the purchaser's written consent to the transaction prior to
            the purchase;

      o     Deliver, prior to the purchase, a risk disclosure document mandated
            by the SEC relating to the penny stock market;

      o     Disclose the commission payable to both the broker-dealer and the
            registered representative;

      o     Disclose current quotations for such securities;

      o     Disclose whether the broker-dealer has control over the particular
            market; and

      o     Deliver monthly statements disclosing recent price information for
            the securities and information on the limited market in penny
            stocks.

      Consequently, the "penny stock" rules may restrict the ability of
broker-dealers to sell our securities and adversely affect your ability to sell
our securities in the secondary market and the price of our securities in the
secondary market.

      There Are Risks Associated With Our Stock Trading On The NASD OTC Bulletin
Board Rather Than A National Exchange. There are significant consequences
associated with our stock trading on the NASD OTC Bulletin Board rather than a
national exchange. The effects of not being able to list our securities on a
national exchange include:

      o     Limited release of the market prices of our securities;

      o     Limited news coverage of us;

      o     Limited interest by investors in our securities;

      o     Volatility of our stock price due to low trading volume;

      o     Increased difficulty in selling our securities in certain states due
            to "blue sky" restrictions;

      o     Limited ability to issue additional securities or to secure
            financing.

      Anti-Takeover Provisions May Adversely Affect the Value of Our Outstanding
Securities. Pursuant to our Certificate of Incorporation, our Board of Directors
may issue up to 1,000,000 shares of preferred stock in the future with such
preferences, limitations and relative rights as they may determine without
stockholder approval. The rights of the holders of our common stock will be
subject to, and may be adversely affected by, the rights of the holders of any
preferred stock outstanding or that may we may issue in the future. The issuance
of preferred stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of delaying or
preventing a change in control of our company without further action by the
stockholders. In addition, we are subject to the anti-takeover provisions of
Section 203 of the Delaware General Corporation Law. Section 203 prohibits us
from engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the persons
became an interested stockholder, unless the business combination is approved in
a prescribed manner. The application of Section 203 also could have the effect
of delaying or preventing a change of control of our company.


                                       26
<PAGE>

      Additional Authorized Shares of Common Stock and Preferred Stock Available
for Issuance May Adversely Affect the Market. We are authorized to issue
25,000,000 shares of our common stock. As of December 31, 2004, there were
10,376,500 shares of our common stock issued and outstanding, which amount does
not include:

      o     (1) 20,000 exercisable at $1.00 through May 2010

      o     (2) 300,000 exercisable at $2.00 through December 31, 2005

      o     (3) 75,000 exercisable at $.96 through March 2007

      370,000 shares of our common stock issuable upon exercise of options
      granted to our employees and Directors at exercise prices ranging from
      $0.20 to $1.50 per share.

      As of December 31, 2004, after reserving a total of 765,000 shares of our
common stock for issuance upon the exercise of all options and warrants
described above, we will have at least 13,858,500 shares of authorized but
unissued common stock available for issuance without further shareholder
approval. Any issuance of additional shares of our common stock may cause our
current shareholders to suffer significant dilution, which may adversely affect
the market for our securities.

      In addition, we have 1,000,000 shares of authorized preferred stock. While
we have no present plans to issue any additional shares of preferred stock, our
Board of Directors has the authority, without shareholder approval, to create
and issue one or more series of such preferred stock and to determine the
voting, dividend and other rights of holders of such preferred stock. The
issuance of any of our preferred stock could have an adverse effect on the
holders of our common stock. The Company delivered convertible promissory notes
to John Lee which are convertible into Series C shares representing
approximately 80% of the Company's outstanding stock on a fully diluted basis.
Such conversion will take place at such time as the Company is able to do so. If
not converted, the notes are payable on demand, provided that demand cannot be
made before December 31, 2004, unless the Company is in default of the Note
Purchase Agreement. No conversions to the Series C shares, pursuant to the Lee
financing, have been made as of December 31, 2004 and to the date of the
issuance of the current year's financial statements. In addition, no demand for
payment has been made by Lee as of December 31, 2004 and to the date of the
issuance of the current year's financial statements.

      Shares Eligible for Future Sale May Adversely Affect the Market. As of
December 31, 2004 we had 10,376,500 shares of our common stock issued and
outstanding. Of these 10,376,500 shares of issued and outstanding common stock,
approximately 2,351,441 shares are considered "restricted securities". These
"restricted securities" may be sold pursuant to Rule 144 of the Securities Act
of 1933 as follows:

      o     Approximately 2,351,441 shares of our common stock may currently be
            sold pursuant to Rule 144;

      Rule 144 provides, in essence, that a person holding "restricted
securities" for a period of one year may sell only an amount every three months
equal to the greater of:


                                       27
<PAGE>

      (a)   One percent of the Company's issued and outstanding shares; or

      (b)   The average weekly volume of sales during the four calendar weeks
            preceding the sale.

      The amount of "restricted securities" which a person who is not an
affiliate of our company may sell is not so limited. Non-affiliates may sell
without volume limitation their shares held for two years if there is adequate
current public information available concerning our company.

      The sale in the public market of our common stock may adversely affect
prevailing market prices of our common stock.

      The Exercise of Outstanding Options and Warrants May Adversely Affect the
Market for Our Common Stock. As of December 31, 2003, we had the following
outstanding stock options and warrants to purchase shares of our common stock:

      (1)   20,000 exercisable at $1.00 through May 2010

      (2)   300,000 exercisable at $2.00 through December 31, 2005

      (3)   75,000 exercisable at $.96 through March 2007

      In addition, we have reserved 370,000 shares of our common stock for
issuance pursuant to outstanding employee stock options. The exercise of our
outstanding options and warrants will dilute the percentage ownership of our
stockholders. Sales in the public market of our common stock underlying such
options or warrants may adversely affect prevailing market prices for our common
stock. Moreover, the terms upon which we will be able to obtain additional
equity capital may be adversely affected since the holders of such outstanding
securities can be expected to exercise their respective rights therein at a time
when we would, in all likelihood, be able to obtain any needed capital on terms
more favorable to us those provided in such securities.

      Limitation on Director Liability May Adversely Affect the Value of our
Common Stock. As permitted by Delaware law, our Certificate of Incorporation
limits the liability of our directors for monetary damages for breach of their
fiduciary duty except for liability in certain instances. As a result of our
charter provision and Delaware law, you may have limited rights to recover
against our directors for breach of their fiduciary duty.

Item 2.  PROPERTIES.

      The Company leases (from an unaffiliated party) approximately 11,000
square feet, at 59 LaGrange Street, Raritan, NJ 08869, which serves as the
Company's executive offices and manufacturing facility. The lease term expired
on July 13, 2004 and we are currently occupying the premises on a month to month
basis. The annual rental is $71,250 plus the Company's share of real estate
taxes and other occupancy costs.


                                       28
<PAGE>

Item 3.  LEGAL PROCEEDINGS

      Other than as set forth below, the Company is not a party to any material
pending litigation or governmental proceedings that, management believes, would
result in judgments or fines that would have a material adverse effect on the
Company.

The Company is or was a party to the following matters:

1. A customer 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 that customer at a cost of
$175,000; $25,000 is to be paid quarterly over two years. $95,000 remained
unpaid at December 31, 2004.

2. 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
South Korean sales rep. 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 a total of
$85,000 in twelve equal monthly installments, none of which has been paid to
date. The Company has not received any required documents and releases from the
plaintiff and management believes that the possibility of any further assertion
in this matter is remote. Accordingly, the provision for litigation settlement
costs for the year ended December 31, 2002, reflected a reduction for the
estimated liability in this matter as of December 31, 2001. As of December 31,
2004, the status of this matter remains unchanged.

3. The Company was subject to a SEC formal order of investigation relating to
the subject matter of the Class Action Lawsuit that was commenced in 1999 and
settled in 2001. On May 22, 2003, the Commission filed a settled action in the
United States District Court for the District of New Jersey against Amplidyne,
Inc. ("Amplidyne") and its President, Chairman and Chief Executive Officer,
Devendar S. Bains ("Bains"). The Commission's Complaint alleges that Amplidyne
and Bains violated the anti-fraud provision of the federal securities laws by
making false statements concerning Amplidyne's purported entry into the high
speed Internet wireless access market. Simultaneously with the filing of the
Complaint, Amplidyne and Bains, without admitting or denying the allegations in
the Complaint, consented to the entry of a final judgment permanently enjoining
both from violating Section 10(b) of the Securities Exchange Act of 1934 and
Rule 10(b)-5 thereunder. In addition, Bains agreed to pay a civil penalty of
$50,000.

4. The Company (as well as an officer and director of the Company) was 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 sought 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. 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 had filed a motion in the Law Division for a new trial, which was denied
and gave notice of appeal to file an appeal of the verdict and judgment to the
Superior Court of New Jersey, Appellate Division. Management latter determined
that pursuing the appeal would not be in the best interest of the Company and
its shareholders.


                                       29
<PAGE>

In January 2003, the Company entered into a Stipulation of Settlement and
Release before the Superior Court of New Jersey, Somerset County. The settlement
stipulates that the Company pay a total of $200,000 plus 700,000 shares of
restricted common stock of the Company valued by the agreement at $105,000
(management has determined that the discounted value of the 700,000 restricted
shares was $29,400 as of February 4, 2003 based on quoted market price of $0.07
per share discounted for lack of marketability). Accordingly, a provision for
litigation settlement costs of $229,400 for the year ended December 31, 2002,
was made to reflect an estimated liability for it at that date. The stipulation
called for an initial payment of $75,000 (paid in March 2003) with the remaining
balance payable in $25,000 increments on the following dates: June 2, 2003,
August 31, 2003, November 29, 2003, February 27, 2004 and May 28, 2004. The
record judgment of $400,000 shall remain until the payment obligations are made
in full. In the event of default, the plaintiff shall have the right to execute
the judgment after crediting $105,000 for the agreed value of the shares issued
plus any payments made pursuant to the settlement. As of December 31, 2003, the
balance due in connection with this matter was $75,000. the amount was paid in
its entirety in 2004. The Company has fulfilled its obligations and has received
a warrant of satisfaction of judgment from opposing counsel dated June 6, 2004.

5. On May 30, 2002, the Company filed a two-count lawsuit in the Superior Court
of New Jersey, Law Division, Somerset County, seeking, among other things,
declaratory relief that the Company is not obligated to pay a finders fee (in
connection with the Company's purchase of the Darwin Assets), and that the
Company is entitled to monetary damages as a result of defendant's false
misrepresentations. On July 10, 2002, the matter was removed to the United
States District Court of New Jersey but later transferred back to the United
States Bankruptcy Court and then transferred to the United States District Court
of New Jersey. On July 29, 2002, defendants filed a counterclaim seeking
$200,000 in damages as a result of a finders fee agreement. In January 2003, the
matter was transferred to the United States District Court for the Middle
District of Florida. The defendants sought a further transfer to the United
States Bankruptcy Court for the Middle District of Florida, but such motion was
denied. In June 2004, the Company entered into a Settlement Agreement with the
plaintiff before the United states District court in Tampa, Florida. The
settlement provides for the following obligations by the Company to Mr. Fogel:
(1) payment of $12,000 by July 14, 2004; (2) issuance of 250,000 shares of
restricted common stock by July 14, 2004 and; (3) the shipment of specified
items of inventory valued at approximately $22,000. The agreement further calls
for the issuance of common stock of one share for each $1 of inventory not
delivered in lieu of the inventory in the event the company cannot deliver.
Since non-delivery of the specified items is definite, the financial statements
provide for the issuance of 22,000 additional shares. All shares in connection
with this transaction are valued at the publicly traded market value of $.05 on
the date of the transaction, less a discount of 40% for the restriction on sale.

6. The Company (as well as an officer and director of the Company) is a
defendant in a complaint brought in November 2003 in the Circuit Court of the
State of Florida (17th Judicial District, Broward County) alleging fraud and
seeking relief for unspecified damages and costs associated with an aborted plan
of merger. Management has been in settlement discussions with the plaintiff, but
to date has not reached an accord. On June 29, 2004, the Company filed a Motion
to Dismiss the lawsuit against the Company.


                                       30
<PAGE>

Item 4. Submission Of Matters To A Vote Of Security Holders

There were no matters submitted to a vote of stockholders in 2004.


                                       31
<PAGE>

                                     PART II

Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS.

      The Company's Common Stock and Warrants commenced trading on the NASDAQ
Small Cap Market on January 22, 1997. The Warrants were redeemed in May 2000.
The Common Stock was regularly quoted and traded on the NASDAQ Small Cap Market
under the symbol AMPD, through January 13, 2003. Since January 14, 2003, the
common stock trades on the NASD OTC Bulletin Board under the symbol AMPD.OB.

      The following table sets forth the range of high and low closing prices
for the Company's Common Stock for fiscal years 2003 and 2004 and for the period
of January 1, 2005 up to March 31, 2005 as reported by the NASDAQ SmallCap
Market, or the NASD OTCBB, as the case may be. The trading volume of the
Company's securities fluctuates and may be limited during certain periods. As a
result, the liquidity of an investment in the Common Stock may be adversely
affected.

Common Stock
------------

      2003 Calendar Year
      ------------------

      January 1 - March 31                        .18              .05
      April 1-June 30                             .14              .05
      July1-September 30                          .15              .07
      October 1-December 31                       .14              .04

      2004 Calendar Year
      ------------------

      January 1-March 31                          .20              .04
      April 1-June 30                             .12              .04
      July 1-September 30                         .09              .05
      October 1-December 31                       .08              .03

      2005 Calendar Year

      January 1-March 31                          .04              .02

On March 31, 2005, the closing price of the Common Stock as reported on the NASD
OTCBB was $.02. On March 31, 2005 there were 10,376,500 shares of Common Stock
outstanding, held of record by approximately 80 record holders (with over 2,300
beneficial owners).


                                       32
<PAGE>

Item 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Results of Operations - Fiscal Year ended December 31, 2004 compared to Fiscal
Year ended December 31, 2003.

Revenues for the fiscal year ended December 31, 2004 decreased by $607,438 from
$1,351,228 to $743,790, or 45% compared to the fiscal year ended December 31,
2003. This was due to build up of inventory during the previous year at our
major customer. The decline is largely represented by the decrease in sales to
North American customers, which went down to $NIL in 2004 from $618,532 in 2003,
a decrease of $618,532 or 100%. Sales substantially declined in the fourth
quarter of 2004. Fourth quarter sales represented only approximately 10% of the
total sales for the year ($73,229).

According to our observation of the microwave amplifiers industry, the
manufacturers thereof generally derive most of their revenues from two or three
customers. There is a qualification process which can take years, and most OEM's
(Original Equipment Manufacturers) purchase their microwave amplifiers from
larger companies with a more secure and stable financial condition. Most OEM's
outside the U.S. domestic market tend to be less discriminating in their
qualification process. Amplidyne has an eleven year relationship with its
European customer. The downturn in the U.S. telecommunications industry has made
it more difficult for us to cultivate a domestic customer base. We are working
on developing new and improved products which may be attractive to potential
domestic customers in the hope that they will look beyond our financial
condition in making their purchasing decisions.

The majority of the amplifier sales for the year ended December 31, 2004 were
obtained from the Wireless Local Loop amplifier products to its European
customer.

The Company is developing W-CDMA amplifier for planned release in the second
quarter of 2005.

Cost of sales as restated was $770,157 or 104% of sales (including an inventory
write-down of $101,039) during the year ended December 31, 2004, compared to
101% during the same period for 2003 as restated. Our fixed overhead costs are
relatively high for our current sales volume. Excluding the inventory
write-down, the cost of sales for the year ended December 31, 2004 as restated
was $669,118 or 90% of sales. The decline in gross margin was principally
attributable to pricing pressures caused by business conditions in the
telecommunications industry and a write-down of obsolete inventory of $101,039.
Gross margin was about the same compared to the year ended December 31, 2003.
The Company is continuing to assess cost reduction of its products and sales
volume increases to improve gross margins in 2005.

Selling, general and administrative expenses as restated decreased in 2004 by
$293,622 to $529,829 from $823,451, as restated in 2003. Expressed as a
percentage of sales, the selling, general and administrative expenses as
restated (excluding stock based compensation) were 71% in 2004 and 61% in 2003.
The principal factors contributing to the decrease in selling, general and
administrative expenses were related to labor cutbacks and general cost cutting
throughout the year.


                                       33
<PAGE>

Research, engineering and development expenses were 34% of net sales in 2004
compared to 21% in 2003. In 2004 and 2003, the principal activity of the
business related to the design and production of product for OEM manufacturers,
particularly for the W-CDMA amplifier and 3.5 GHz single channel products and
refinements to the High Speed Internet products. The research, engineering and
development expenses consist principally of salary cost for engineers and the
expenses of equipment purchases specifically for the design and testing of the
prototype products. The Company's research and development efforts are
influenced by available funds and the level of effort required by the
engineering staff on customer specific projects.

The Company had interest income in 2003 of $3. Interest income was $4,535 in
2004 primarily because the landlord of our operating premises gave us back our
security deposit with interest. The Company also sold New Jersey Net operating
loss carryforwards pursuant to the New Jersey Technology Certificate Transfer
Program, receiving $129,317 in 2004 and $180,316 in 2003.

Interest expense was $1,200 in 2004 compared to $3,657 in 2003 . The decrease
related to paying off capital leases. The interest for 2004 relates to accruals
on a convertible promissory note with a principal balance of $20,000.

Actual and estimated litigation settlement costs (see financial statement Note I
- Litigation) have been provided in both 2004 and 2003, to reflect our known
exposure in litigation against the Company, as well as the actual cost of the
settlement of the following matters:

o The 2003 settlement of the High Gain Antenna matter for $200,000 plus 700,000
shares of restricted common stock of the Company (total charge $229,400).

o In 2004, we settled the Fogel matter for which we provided a charge of
$20,460.

There was no stock compensation cost for 2004 or 2003.

As a result of the foregoing, the Company incurred net losses as restated of
$768,878 or $0.07 per share for the year ended December 31, 2004 compared with
net losses as restated of $910,434 or $0.09 per share for the same period in
2003.

Results of Operations - Fiscal Year ended December 31, 2003 compared to Fiscal
Year ended December 31, 2002.

Revenues for the fiscal year ended December 31, 2003 decreased by $262,509 from
$1,613,734 to $1,351,225, or 16% compared to the fiscal year ended December 31,
2002. The primary reason for the decrease was the general decline in purchasing
of equipment by the telecommunications industry. The decline is largely
represented by the decrease in sales to United States customers, which went down
to $201,087 in 2003 from $572,084 in 2002, a decrease of $370,997 or 65%. Sales
substantially declined in the fourth quarter of 2003. Fourth quarter sales
represented only approximately 9% of the total sales for the year ($120,881).


                                       34
<PAGE>

The majority of the amplifier sales for the year ended December 31, 2003 were
obtained from the Wireless Local Loop amplifier products to a major European
customer. The Company has also supplied 3.5GHz linear amplifiers to its major
North American customer.

The Company has continued to develop its IMT 2000 amplifiers for the worldwide
3G market, however, deployment of this technology has been delayed. The Company
has focused its sales and marketing efforts in the more stable United States,
European and Canadian markets.

Cost of sales as restated was $1,371,044 or 101% of sales (including an
inventory write-down of $164,672) during the year ended December 31, 2003,
compared to 94% during the same period for 2002. Our fixed overhead costs are
relatively high for our current sales volume. Excluding the inventory
write-down, the cost of sales as restated for the year ended December 31, 2003
was $1,206,372 or 89% of sales. The decline in gross margin was principally
attributable to pricing pressures caused by business conditions in the
telecommunications industry and a write-down of obsolete inventory of $164,672.

Selling, general and administrative expenses as restated decreased in 2003 by
$1,264,982 to $823,451 from $2,088,433, in 2002. Expressed as a percentage of
sales, the selling, general and administrative expenses (excluding stock based
compensation) as restated were 61% in 2003 and 129% in 2002. The principal
factors contributing to the increase in selling, general and administrative
expenses were related to labor cutbacks and general cost cutting throughout the
year.

Research, engineering and development expenses were 21% of net sales in 2003
compared to 25% in 2002. In 2003 and 2002, the principal activity of the
business related to the design and production of product for OEM manufacturers,
particularly for the IMT 2000 and 3.5 GHz single channel products and
refinements to the High Speed Internet products. The research, engineering and
development expenses consist principally of salary cost for engineers and the
expenses of equipment purchases specifically for the design and testing of the
prototype products. The Company's research and development efforts are
influenced by available funds and the level of effort required by the
engineering staff on customer specific projects.

The Company had interest income and other income in 2002 of $3,170 due to influx
of new capital during 2000 and 2001 from our private placements and exercise of
warrants and options. Interest income went down to $3 in 2003 because we no
longer have any interest bearing temporary investments. Interest income declined
by $3,167 or approximately 100%, which is consistent with the steady decline in
cash balances and interest rates in 2003. The Company also sold New Jersey Net
operating loss carryforwards pursuant to the New Jersey Technology Certificate
Transfer Program, receiving $180,316 in 2003 and $163,687 in 2002.

Interest expense was $3,657 in 2003 compared to $932 in 2002 and principally
related to balances due on capitalized leases for testing equipment.

Actual and estimated litigation settlement costs (see financial statement Note I
? Litigation) have been provided in both 2003 and 2002, to reflect our known
exposure in litigation against the Company, as well as the actual cost of the
settlement of the following matters:


                                       35
<PAGE>

o Settlement of the High Gain Antenna matter for $200,000 plus 700,000 shares of
restricted common stock of the Company (total charge $229,400).

o Because of the remoteness of any further assertions in another matter, we
determined that the charge of $85,000 from 2001 should be reversed in 2002.

There was no stock compensation cost for 2003 or 2002.

As a result of the foregoing, the Company incurred net losses as restated of
$910,434 or $0.09 per share for the year ended December 31, 2003 compared with
net losses of $2,380,026 or $0.25 per share for the same period in 2002.

Liquidity and Capital Resources

Liquidity refers to our ability to generate adequate amounts of cash to meet our
needs. We have been generating the cash necessary to fund our operations from
continual loans from the John Lee. We have incurred a loss in each year since
inception.. It is possible that we will incur further losses, that the losses
may fluctuate, and that such fluctuations may be substantial. As of December 31,
2004, we had an accumulated deficit as restated of $23,628,989. We have no
immediate sources of liquidity. Another potential source of liquidity is the
sale of restricted shares of our common stock, but there are no immediate plans
for such sale.

As of December 31, 2004, our current liabilities as restated exceeded our cash
and receivables by $1,436,317. Our current ratio was 0.28 to 1.00, but our ratio
of accounts receivable to current liabilities was only 0.09 to 1.00. This
indicates that we will have difficulty meeting our obligations as they come due.
Because of the lead times in our manufacturing process, we will likely need to
replenish many items before we use everything we now have in stock. Accordingly,
we will need more cash to replenish our component parts inventory before we are
able realize cash from all of our existing inventories.

As of December 31, 2004, we had cash in banks of $122,234 compared to an
overdraft of $17,855 at December 31, 2003. Overall our cash position improved by
$140,089 during 2004, largely due to the receipt of the New Jersey tax credit
proceeds of $129,317 close to the end of the year. We have since used up those
balances Our cash used for operating activities as restated was $424,620,
excluding the benefit of salary deferrals by officer/stockholders of $74,217.
This was principally funded by officer and investor loans aggregating
approximately $486,000.

The allowance for doubtful accounts on trade receivables increased form $251,000
(73% of accounts receivable of $342,482) in 2003 to $NIL in 2004 because we
wrote off many accounts that we had reserved against in 2002. Because of our
relatively small number of customers and low sales volume, accounts receivable
balances and allowances for doubtful accounts do not reflect a consistent
relationship to sales. We determine our allowance for doubtful accounts based on
a specific customer-by-customer review of collectiblity. In 2003, we had several
large outstanding balances that we had doubt we would collect. In 2004, we
determined that only one customer's balance would actually be collectible. We
further wrote off additional customer balances aggregating $92,114. These write
offs were all for customer shipments that were made in good faith with no
specific return rights. Prior to 2003, we had many small customers related to
our internet business, to whom we shipped our products on 30-day terms after
normal credit checking procedures, expecting to be paid in the normal course of
business. Later, we did not make timely follow-ups on collection which caused us
to miss the opportunities to collect. Provision for doubtful accounts decreased
from $108,000 in 2003 to $21,260 in 2004.


                                       36
<PAGE>

Our inventories decreased by $98,076 to $309,633 in 2004 compared to $407,709 in
2003, a decrease of 24% We believe that the reasons for the decreased
inventories primarily due to write-downs and distress sales of parts to generate
cash.

Although the Company did not convert salaries to officers through the issuance
of Common Stock in 2004 or 2003, it may to do so in 2005. To help alleviate the
cash flow difficulties, officers agreed to defer an aggregate of approximately
$74,000 of salaries.

The Company continues to explore strategic relationships with ISP's, customers
and others, which could involve jointly developed products, revenue-sharing
models, investments in or by the Company, or other arrangements. There can be no
assurance that a strategic relationship can be consummated.

In 2003, the Company settled a litigation matter for cash payments aggregating
$200,000 plus 700,000 shares of restricted common stock, with a down payment of
$75,000 in March 2003 and $25,000 per quarter from June 2003 through May 2004.
The balance of $75,000 which was due at December 31, 2003, was paid in full in
2004.

In the past, the officers of the Company have deferred a portion of their
salaries or provided loans to the Company to meet short-term liquidity
requirements. Where possible, the Company has issued stock or granted warrants
to certain vendors in lieu of cash payments, and may do so in the future. There
can be no assurance that any additional financing will be available to the
Company on acceptable terms, or at all. If adequate funds are not available, the
Company may be required to delay, scale back or eliminate its research,
engineering and development or manufacturing programs or obtain funds through
arrangements with partners or others that may require the Company to relinquish
rights to certain of its technologies or potential products or other assets.
Accordingly, the inability to obtain such financing could have a material
adverse effect on the Company's business, financial condition and results of
operations.

Having used up substantially all of our cash since December 31, 2004 and with no
near term prospects of private placements, options or warrant exercises and
reduced revenues, we believe that we will have great difficulty meeting our
working capital obligations over the next 12 months. We are presently dependent
on cash flows generated from sales and loans from officers and investors to meet
our obligations. While the Company has obtained financing through the issuance
of Series C Convertible Preferred Stock in 2004, our inability to substantially
improve our revenues will have serious adverse consequences and, accordingly,
there is substantial doubt in our ability to remain in business over the next 12
months. There can be no assurance that sufficient financing will be available to
the Company on acceptable terms, or at all. If adequate funds are not available,
the Company may be required to delay, scale back or eliminate its research,
engineering and development or manufacturing programs or obtain funds through
arrangements with partners or others that may require the Company to relinquish
rights to certain of its technologies or potential products or other assets.
Accordingly, the inability to obtain such financing could have a material
adverse effect on the Company's business, financial condition and results of
operations.


                                       37
<PAGE>

Critical Accounting Policies

1. REVENUE RECOGNITION

Revenue is recognized upon shipment of products to customers because our
shipping terms are F.O.B. shipping point. And there are generally no rights of
return, customer acceptance protocols, installation or any other post-shipment
obligations. All of our products are custom built to customer specifications. We
provide an industry standard one-year limited warranty under which the customer
may return the defective product for repair or replacement.

Returns received under warranty are not material relative to sales, nor are the
costs to repair. All sales are final, except for warranty repair/replacement and
there is no price protection. In addition, the only company post-shipment
obligation is for warranty repair and replacement. Finally, we do not install
product or provide services for a fee.

2. INVENTORIES

Inventories are stated at the lower of cost or market; cost is determined using
the first/in, first/out method. As virtually all of our products are made to
customer specifications, we do not keep finished goods in stock except for
completed customer orders that have not been shipped. Our work-in-progress
generally consists of customer orders that are in the process of manufacture but
are not yet complete at the period end date. We review all of our components for
obsolescence and excess quantities on a periodic basis and make the necessary
adjustments to net realizable value as deemed necessary.

3. ALLOWANCE FOR DOUBTFUL ACCOUNTS

Because of our small customer base, we determine our allowance for doubtful
accounts based on a specific customer-by-customer review of collectiblity.
Therefore, our allowance for doubtful accounts and our provision for doubtful
accounts may not bear a consistent relationship to sales but we believe that
this is the most accurate and conservative approach under our circumstances.

4. USE OF ESTIMATES

In preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and revenues and expenses during the reporting
period. Actual results could differ from those estimates. The principal areas
that we use estimates in are: allowance for doubtful accounts; work-in-process
percentage of completion; accounting for stock based employee compensation; and
inventory net realizable values.


                                       38
<PAGE>

5. STOCK-BASED EMPLOYEE COMPENSATION

Stock-based employee compensation is accounted for under the intrinsic value
based method as prescribed by Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations as
clarified by Financial Interpretation No. 44 (FIN 44), Accounting for Certain
Transactions Involving Stock Compensation.

Under the fair value method, the Company's net loss and loss per share would
have been as follows:

                                         2004              2003
                                 ------------      ------------
Net loss                         $   (917,223)     $ (1,197,411)
Loss per share                   $      (0.09)     $      (0.12)

6. LOSS PER SHARE

Statement of Financial Accounting Standards No.128 (SFAS No. 128), Earnings per
Share, specifies the computation, 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 shares of common stock outstanding. Net
loss per common share - diluted does not include potential common shares derived
from stock options and warrants because they are antidilutive.

7. SEGMENT INFORMATION

The Company commenced its wireless Internet connectivity business in the summer
of 2000. The Company does not measure its operating results, assets or
liabilities by segment. We presented certain segment information representing
sales and inventories for our amplifier and internet segments. However, this
information is becoming less relevant as we begin to move away from the internet
business and concentrate on our core competence, which is in the amplifier
business.


                                       39
<PAGE>

Item 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

      See financial statements following Item 13 of this Annual Report on Form
10-KSB-A.

Item 8.  CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

      None.


                                       40
<PAGE>

Item 8a: CONTROLS AND PROCEDURES

(a)   Evaluation of Disclosure Controls and Procedures:

      1.    Management is responsible for establishing and maintaining adequate
            disclosure controls and procedures.

      2.    Amplidyne, Inc. carried out an evaluation, under the supervision and
            with the participation of the Company's management, including the
            Company's Chief Executive and Principal Accounting Officer, of the
            effectiveness of the design and operation of the Company's
            disclosure controls and procedures pursuant to Exchange Act Rule
            13a-14. Based upon that evaluation, the Chief Executive and
            Principal Accounting Officer concluded that the Company's disclosure
            controls and procedures were not effective as of the original filing
            of the December 31, 2004 Form 10KSB in timely alerting him to
            material information required to be included in the Company's
            periodic SEC filings relating to the Company. Our conclusions
            regarding the deficiencies appear in the next item.

      3.    Our controls relating to disclosure and related assertions in the
            financial statements, particularly in the area of non-routine and
            non-systematic transactions were not adequate. We further found that
            while the controls over initiating and recording transactions were
            adequate, we had inadequate procedures to determine the continued
            existence of recorded balances in the area of trade accounts
            payable. The finding of this weakness resulted in the restatement of
            the Company's annual 2003 and 2004 financial statements to correct
            for previously recorded liabilities that were no longer due and
            payable that should have already been written off in those years. We
            believe that we have corrected this deficiency and will continue to
            carefully monitor the proper application of this control.

            The liabilities written off in some cases represented amounts where
            the creditor failed to or elected not to pursue collection from the
            Company in its strained financial circumstances. For example,
            certain legal and consulting fees incurred were not paid. In other
            cases, amounts related to erroneously recorded premiums for
            cancelled employee healthcare benefit and other policies were not
            paid.

(b)   Changes in Internal Controls Over Financial Reporting:

      1.    Effective with the Company's filing of a Form 10QSB for the six
            months ended June 30, 2005 made on August 22, 2005, we changed the
            procedures management now uses to determine and evaluate the
            continued existence of liabilities to assure that the financial
            statements present only those liabilities that are properly due and
            payable.

      2.    Controls essentially put in place, effective August 22, 2005,
            require careful review of Accounts Payable aging reports by the
            Company's Controller on at least a quarterly basis, coincident to
            the Company filing Forms 10KSB and 10QSB, specifically for vendor
            amounts that remain unpaid for periods approaching or exceeding 90
            days from the date incurred.

      3.    There were no changes in Internal Controls put in place during the
            fourth quarter of the year ended December 31, 2004. That is because
            the weakness identified related to evaluation of recorded trade
            accounts payable was not identified until the filing of the
            Company's 10QSB for the three months ended March 31, 2005, and we
            determined the appropriate controls necessary to respond to this
            weakness after carefully completing our investigation of the facts
            related thereto in conjunction with filing Form 10QSB for the six
            months ended June 30, 2005. Based on the nature of the weakness we
            believe the controls put in placed will satisfactorily remediate
            them for the Company going forward.


                                       41
<PAGE>

                                    PART III

Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT OF THE REGISTRANT

      The names and ages of the directors and executive officers of the Company
as of the date of this filing are set forth below:

Name                        Age          Position(s) with the Company

Tarlochan Bains*            55           Chief Executive Officer, Treasurer and
                                         Director.

John Lee                    76           Director

Jessica Lee                 36           Secretary/Director

Mikio Tajima                72           Director

*  Member of the Compensation Committee and Audit Committee.

Background of Executive Officers and Directors

Tarlochan Bains has been Chief Executive Officer, Treasurer since September,
2004. From 1991 through March 2000, he was the Company's Vice President of Sales
and Marketing. Previously, Mr. Bains was Technical Manager at Land Rover in
Solihull, England. He has a Higher National Diploma in Mechanical Engineering
from Hatfield Polytechnic, England and a Masters Degree in Automotive
Engineering from Cranfield Institute of Technology, England. Mr. Bains is the
brother of Devendar S. Bains and the brother-in-law of Nirmal Bains.

Devendar S. Bains was previously Chairman of the Board, Chief Executive Officer,
Treasurer and a director of the Company since its inception in 1988. He is now
Company's Chief Technology Officer. He was also President of the Company from
inception through September 2001. From 1983 to 1988 Mr. Bains was Group Project
Leader of Amplifier division of Microwave Semiconductor Corporation. Previously,
Mr. Bains was employed at G.E.C. in Coventry, England. Mr. Bains received a
Bachelors Degree in Electronic Engineering from Sheffield University, England,
and a Masters Degree in Microwave Communications from the University of Leeds
and Sheffield, England. Mr. Bains is the brother of Tarlochan Bains and the
husband of Nirmal Bains.

Nirmal Bains was Secretary of the Company from 1989 through 2004. She has a
degree in Computer Programming from Cittone Institute in New Jersey. Mrs. Bains
is the wife of Devendar S. Bains and the sister-in-law of Tarlochan Bains.

John Lee with three Masters (M. Div from Princeton Seminary, M.A. from U of
Oregon, and MCRP from Rutgers University)has had many and diverse executive
positions and business ownership experiences. John Lee is President of Tek Ltd.
a distribution Company doing most of its business in South Korea.


                                       42
<PAGE>

Mikio Tajima with his college education in Economics and International Relations
both in Japan and UC in Berkeley, CA and a Masters from Columbia University in
International Administration and Organization has worked for United Nations for
33 years in many different fields and capacities. Last post he held was Director
of Economic Policy and Social Development at UN HQs.

Jessica Lee: with a BA from Yonsei University in Seoul, Korea and an MBA from
Rutgers University has been working in accounting and finance for number of
companies in New Jersey and has been managing and operating her own accounting
firm in Princeton, NJ since 1996. She will be the Secretary of the Board.

      The audit committee reviews, among other matters, the professional
services provided by the Company's independent auditors, the independence of
such auditors from management of the Company, the annual financial statements of
the Company and the Company's system of internal accounting controls. The audit
committee also reviews such other matters with respect to the accounting,
auditing and financial reporting practices and procedures of the Company as it
may find appropriate or as may be brought to its attention. The audit committee
adopted an audit committee charter in 2002 and intends to adopt a new charter,
which conforms to the requirements of the Sarbanes-Oxley Act of 2002.

      The audit committee has reviewed and discussed the audited financial
statements included in the Company's Annual Report on Form 10-KSB-A for the
fiscal year ended December 31, 2004.

      For the year ended December 31, 2004, the Company incurred professional
fees to its auditors in the amount of $27,278, all (except for $1,250 for tax
return preparation) of which related to auditing and quarterly review services.
No non-audit services (except for tax return preparation) have been provided to
the Company by its current auditor.

      Each non-employee director of the Company is entitled to receive
reasonable out-of-pocket expenses incurred in attending meetings of the Board of
Directors of the Company. Directors who are employees of the Company are not
paid any fees or other remuneration for service on the Board or any of the
committees. Each non-employee director may receive options to purchase Common
Stock or other remuneration. The members of the Board of Directors intend to
meet at least quarterly during the Company's fiscal year, and at such other
times duly called.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

      Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent (10%) of a registered class of the Company's equity
securities, to file with the Securities and Exchange Commission (the "SEC")
initial reports of ownership and reports of changes in ownership of common stock
and other equity securities of the Company. Officers, directors and greater than
ten percent stockholders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file.

      To the Company's knowledge, There have been no filings made under Section
16(a).


                                       43
<PAGE>

Item 10. Executive Compensation

Compensation of Directors and Executive Officers

Summary Compensation Table

      The following table sets forth the aggregate compensation paid by the
Company for the years ended December 31, 2002, 2003 and 2004 for its Chief
Executive Officer and Vice President, respectively. Each non-employee director
of the Company is entitled to receive reasonable out-of-pocket expenses incurred
in attending meetings of the Board of Directors of the Company.

<TABLE>
<CAPTION>
                                                                                                               Long-Term
                                                                                                              Compensation
                                                                                                       Awards              Payouts
                                                                                                       ------              -------
                                                                                                           Securities
                                                             Annual Compensation              Restricted   Underlying          All
Name and Principal Position                Year        Salary ($) Bonus ($) Other Annual     Stock Awards   Options/   LTIP    Other
---------------------------                ----        ---------------------------------     ------------   --------   ----    -----
                                                                                                            SARS (#)  Payouts  Comp
                                                                                                            --------  -------  ----
                                                                    Compensation
<S>                                       <C>     <C>                   <C>       <C>
Devendar S. Bains,                        2004    $ 140,250(7)          ---
                                          2003    $ 162,000(4)          ---       $20,000 (1)
Chief technology officer                  2002    $ 162,000(2)          ---       $20,000 (1)

Tarlochan Bains,                          2004    $ 100,000(6)          ---
Chief executive Officer                   2003    $ 100,000(5)          ---
and Director                              2002    $ 100,000             ---
</TABLE>

(1)   Represents payment for health insurance and automobile insurance lease
      payments on behalf of such individual but does not include deferred
      compensation.

(2)   Includes $54,000 accrued but unpaid at December 31, 2002. The accrued
      amount was paid in 2003.

(3)   Includes $20,000 accrued but unpaid at December 31, 2002. The accrued
      amount was paid in 2003.

(4)   Of the salary, $22,293 was paid and $139,707 was accrued but not paid in
      the year ended December 31, 2003. Does not include $50,000 paid to Nirmal
      Bains, the wife of Devendar Bains.

(5)   Of the salary, $55,719 was paid and $44,281 was accrued but not paid in
      the year ended December 31, 2003. Does not include $50,000 paid to Nirmal
      Bains, the wife of Devendar Bains.

(6)   Of the salary, $9,331 was accrued but unpaid at December 31, 2004 .

(7)  Of the salary, $58,000 was accrued but unpaid at December 31, 2004. Does
     not include $50,000 paid to Nirmal Bains, the wife of Devendar Bains.

Employment Agreements

      The Company entered into employment agreements with each of Devendar Bains
(Chairman, Chief Executive Officer and Treasurer), Tarlochan Bains (Vice
President - Operations), and Nirmal Bains (Secretary), which, as extended, now
expire on April 30, 2005. The employment agreements provide for annual base
salaries of $162,000, $100,000 and $50,000 with respect to Devendar Bains,
Tarlochan Bains and Nirmal Bains, respectively. The employment agreements
provide for discretionary bonuses to be determined in the sole discretion of the
Board of Directors and contain covenants not to compete with the Company
following termination of employment.


                                       44
<PAGE>

      In June 1998, the Company issued 40,000 shares of Common Stock to Devendar
S. Bains, the Company's President and Chief Executive Officer, in consideration
of the forgiveness by Mr. Bains of $50,000 of accrued salary owed to him.

      On December 31, 1998, accrued and unpaid salary in the aggregate amount of
$195,000 owed as of September 30, 1998 to Devendar S. Bains ($117,000),
Tarlochan Bains ($54,600) and Nirmal Bains ($23,400), were forgiven. In
consideration of such forgiveness of accrued salary, the Company issued 104,000,
48,533 and 20,800 shares, respectively, to such persons (based upon the closing
sales price of the Common Stock as of September 30, 1998).

      On March 31, 1999, accrued and unpaid salary in the aggregate amount of
$20,717 owed as of December 31, 1998 to Devendar S. Bains ($10,566), Tarlochan
Bains ($6,629) and Nirmal Bains ($3,522) were forgiven. In consideration of such
forgiveness of accrued salary, the Company issued 4,025, 2,526 and 1,342 shares,
respectively, to such persons (based upon the closing sales price of the Common
Stock as of March 31, 1999).

      On March 31, 1999, accrued and unpaid salary in the aggregate amount of
$41,920 owed as of March 31, 1999 to Devendar S. Bains ($14,346), Tarlochan
Bains ($25,474) and Nirmal Bains ($2,100) were forgiven. In consideration of
such forgiveness of accrued salary, the Company issued 5,465, 9,704 and 800
shares, respectively, to such persons (based upon the closing sales price of the
Common Stock as of March 31, 1999).

      On June 30, 1999, accrued and unpaid salary in the aggregate amount of
$57,546 owed as of June 30, 1999 to Devendar S. Bains ($27,424), Tarlochan Bains
($22,822) and Nirmal Bains ($7,300) were forgiven. In consideration of such
forgiveness of accrued salary, the Company issued 15,398, 12,815 and 4,099
shares, respectively, to such persons (based upon the closing sales price of the
Common Stock as of June 30, 1999).

      On September 30, 1999, accrued and unpaid salary in the aggregate amount
of $38,541 owed as of September 30, 1999 to Devendar S. Bains ($20,885),
Tarlochan Bains ($12,986) and Nirmal Bains ($4,700), were forgiven. In
consideration of such forgiveness of accrued salary, the Company issued 3,358,
2,088 and 756 shares, respectively, to such persons (based upon the closing
sales price of the Common Stock on September 29, 1999).

      On December 31, 1999, accrued and unpaid salary in the aggregate amount of
$22,369 owed as of December 31, 1999 to Devendar S. Bains ($14,346), Tarlochan
Bains ($5,923) and Nirmal Bains ($2,100), were forgiven. In consideration of
such forgiveness of accrued salary, the Company issued 3,566, 1,060 and 376
shares, respectively, to such persons (based upon the closing sales price of the
Common Stock on December 31, 1999).

      There was no conversion of unpaid salary into equity from 2000 to 2004.


                                       45
<PAGE>

Stock Option Plans and Agreements

      Option Plan - In May 1996, the Directors of the Company adopted and the
stockholders of the Company approved the adoption of the Company's 1996 Stock
Option Plan (as amended, the "Option Plan"). The purpose of the Option Plan is
to enable the Company to encourage key employees and Directors to contribute to
the success of the Company by granting such employees and Directors incentive
stock options ("ISOs") or non-qualified stock options ("NQOs").

      The Option Plan will be administered by the Board of Directors or a
committee appointed by the Board of Directors (the "Committee") which will
determine, in its discretion, among other things, the recipients of grants,
whether a grant will consist of ISOs, NQOs or a combination thereof, and the
number of shares to be subject to such options.

      The Option Plan provides for the granting of ISOs or NQOs to purchase
Common Stock at an exercise price to be determined by the Board of Directors or
the Committee not less than the fair market value of the Common Stock on the
date the option is granted.

      The total number of shares with respect to which options may be granted
under the Option Plan is currently 2,225,000. Options may not be granted to an
individual to the extent that in the calendar year in which such options first
become exercisable the shares subject to such options have a fair market value
on the date of grant in excess of $100,000. No option may be granted under the
Option Plan after May 2006 and no option may be outstanding for more than ten
years after its grant. Additionally, no option can be granted for more than five
(5) years to a stockholder owning 10% or more of the Company's outstanding
Common Stock and such options must have an exercise price of not less than 110%
of the fair market value on the date of grant.

      Upon the exercise of an option, the holder must make payment of the full
exercise price. Such payment may be made in cash or in shares of Common Stock,
or in a combination of both. The Company may lend to the holder of an option
funds sufficient to pay the exercise price, subject to certain limitations.

      The Option Plan may be terminated or amended at any time by the Board of
Directors, except that, without stockholder approval, the Option Plan may not be
amended to increase the number of shares subject to the Option Plan, change the
class of persons eligible to receive options under the Option Plan or materially
increase the benefits of participants.

      As of December 31, 2004, 370,000 options to purchase Common Stock under
the Option Plan were granted and/or reserved to certain employees The options
are exercisable at between $0.20 and $1.50 and expire on at various dates
through 2010. No determinations have been made regarding the persons to whom
options will be granted in the future, the number of shares which will be
subject to such options or the exercise prices to be fixed with respect to any
option.


                                       46
<PAGE>

Other Options

      Pursuant to the terms a former employee's employment agreement employment
agreement, the Company issued 300,000 options to purchase Common Stock
exercisable at $1.50 per share. The options are fully vested and expire December
31, 2005.

Audit Committee

The Audit Committee does not have a financial expert. The Board has been unable
to find a suitable expert to fill that position.

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
         OWNERS AND MANAGEMENT

      The following table sets forth certain information, as of March 31, 2005
with respect to the beneficial ownership of the outstanding Common Stock by (i)
any holder of more than five percent (5%); (ii) each of the Company's officers
and directors; and (iii) the directors and officers of the company as a group:

Name of Beneficial                   Number of Shares          Percentage (%) of
Owner*                               of Common Stock(1)        Ownership
------                               ------------------        ---------

Devendar S. Bains(2)                    2,272,985                 21.91

Tarlochan Bains(3)                        (78,456)                   .76

Nirmal Bains(2)                         2,272,985                (21.91)

John Lee(8)

Joseph Giamanco (6)                       584,674                  5.63

Jerome Belson (7)                         808,402                  7.79

All Officers and Directors
  As a group (5 persons)                2,351,441                 22.66

* Unless otherwise indicated, the address of all persons listed in this
section is c/o Amplidyne, Inc., 59 LaGrange Street, Raritan, NJ 08869.

(1)   Beneficial ownership as reported in the table above has been determined in
      accordance with Instruction (4) to Item 403 of Regulation S-B of the
      Exchange Act.

(2)   Mr. Devendar Bains is the husband of Mrs. Nirmal Bains and the brother of
      Mr. Tarlochan Bains. Mr. Devendar Bains is the record holder of 2,194,812
      of such shares and Mrs. Nirmal Bains is the record holder of 28,173 of
      such shares. Includes 1,000,000 stock options, which were granted to Mr.
      Devendar Bains. Includes 50,000 stock options, which were granted to Ms.
      Nirmal Bains. See "Executive Compensation-Stock Option Plans and
      Agreements."


                                       47
<PAGE>

(3)   Mr. Tarlochan Bains is the brother of Mr. Devendar Bains. Mr. Tarlochan
      Bains is the record holder of 78,456 of such shares. Includes 100,000
      stock options. See "Executive Compensation - Stock Option Plans
      and Agreements."

(4)   The address for such person is 92 Parker Road, Long Valley, NJ 07853.
      Includes 160,000 stock options. See "Executive Compensation - Stock Option
      Plans and Agreements."

(5)   The address for such person is 2001 Buckingham Dr., Jamison, PA, 18929.
      Includes 160,000 stock options. See "Executive Compensation - Stock Option
      Plans and Agreements."

(6)   Based upon a Schedule 13G filed with the SEC on February 2, 2001 and other
      information provided to the Company by such stockholder. The address for
      this stockholder is c/o G.H.M., Inc., 74 Trinity Place, New York, NY
      10006. Includes 25,000 shares of Common Stock that are issuable upon
      exercise of warrants owned by such stockholder that are exercisable at
      $3.00 per share and expire on July 31, 2004.

(7)   Based upon a Schedule 13D filed with the SEC on August 27, 2001 and other
      information provided to the Company by such stockholder. The address for
      this stockholder is c/o Jerome Belson Associates, Inc., 495 Broadway, New
      York, NY 10012. Includes 670,402 shares owned by Mr. Belson and 88,000
      shares owned by the Jerome Belson Foundation, a charitable corporation of
      which Mr. Belson is the President and, as a result, may be deemed to have
      voting and investment power over such shares. Also includes 50,000 shares
      that are issuable upon exercise of warrants owned by Mr. Belson that are
      exercisable at $3.00 per share and expire on July 31, 2004. Does not
      include an additional 135,400 shares of Common Stock held by certain
      members of Mr. Belson's family. All of such persons may be deemed to be
      members of a group within the meaning of Section 13(d) of the Exchange Act
      that owns 9.71% of the Company's outstanding Common Stock.

(8)   John Lee holds promissory notes aggregating $500,000 convertible into
      Series C voting stock representing approximately 80% of the Company's
      outstanding stock on a fully diluted basis.

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      The now former Chief Executive Officer agreed to defer $74,000 (2003) and
$58,000 (2004) of salaries to help the Company with its cash flow. The current
Chief executive Officer (formerly the Vice President of Operations) and the
Secretary each also agreed to defer $9,331 and $2,885 of salaries, respectively.
In 2004, the now former Chief Executive Officer and principal shareholder loaned
the Company an additional $37,991 and was repaid $4,500. As of December 31,
2004, the Company owed $295,207 to the now former Chief Executive Officer for
loans ($97,501) and accrued salaries ($197,706) and owed other officers an
aggregate of $73,499 for accrued salaries. The total due to all officers
combined at December 31, 2004 was $368,706.

      See "Management - Employment Agreement" for issuances to officers and
directors.

      The Company intends to indemnify its officers and directors to the full
extent permitted by Delaware law. Under Delaware law, a corporation may
indemnify its agents for expenses and amounts paid in third party actions and,
upon court approval in derivative actions, if the agents acted in good faith and
with reasonable care. A majority vote of the Board of Directors, approval of the
stockholder or court approval is required to effectuate indemnification.


                                       48
<PAGE>

      Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to officers, directors or persons
controlling the Company, the Company has been advised that, in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in such Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by an officer, director or
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such officer, director or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in such Act and will
be governed by the final adjudication of such issue.

      Transactions between the Company and its officers, directors, employees
and affiliates will be on terms no less favorable to the Company than can be
obtained from unaffiliated parties. Any such transactions will be subject to the
approval of a majority of the disinterested members of the Board of Directors.


                                       49
<PAGE>

                                     PART IV

Item 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)(1)  Financial Statements.

        The following financial statements are included in Part II, Item 7:

                                                                      Page

Report of Independent Certified Public Accountants                    F-2

Financial Statements

         Balance Sheets                                               F-3 - F-4

         Statements of Operations                                     F-5 - F-6

         Statement of Stockholders' Deficiency                        F-6

         Statements of Cash Flows                                     F-7  - F8

         Notes to Financial Statements                                F-9 - F-22

(a) (2) Exhibits

 1.1*   Form of Underwriting Agreement
 1.2*   Form of Selected Dealer Agreement
 1.3*   Form of Agreement Among Underwriters
 3.1*   Certificate of Incorporation of the Company
 3.2*   Certificate of Merger (Delaware)
 3.3*   Certificate of Merger (New Jersey)
 3.4*   Agreement and Plan of Merger
 3.5*   By-Laws of the Company
 3.6**  Certificate of Designation of Series A Preferred Stock
 4.1*   Specimen Certificate for shares of Common Stock
 4.2*   Specimen Certificate for Warrants
 4.3*   Form of Underwriter's Purchase Option
 4.4*   Form of Warrant Agreement
10.1*   1996 Incentive Stock Option Plan
10.2*   Employment Agreement between the Company and Devendar S. Bains
10.3*   Employment Agreement between the Company and Tarlochan Bains


                                       50
<PAGE>

10.4*   Employment Agreement between the Company and Nirmal Bains
10.5    Agreements and notes in connection with the financing of Lee and
        associates
10.6    Intentionally Omitted
10.7*   Agreement between the Company and Electronic Marketing Associates, Inc.
10.8*   Agreement between the Company and Link Microtek Limited.
10.9*   Agreement between the Company and ENS Engineering.23.1

* Incorporated by Reference to the Company's Registration Statement on Form
SB-2, No. 333-11015.

** Incorporated by Reference to the Company's Form 8-K filed on August 3, 1999.

(b)   Reports on Form 8-K

The Company did not file any reports on Form 8-K during the fourth quarter of
fiscal 2004. The Company did not file any reports on Form 8-K in the first
quarter of 2005.


                                       51
<PAGE>

                                 Amplidyne, Inc.

                          INDEX TO FINANCIAL STATEMENTS

                                                                      Page

Report of Independent Certified Public Accountants                    F-2

Financial Statements

         Balance Sheets                                               F-3 - F-4

         Statements of Operations                                     F-5 - F-6

         Statement of Stockholders' Deficiency                        F-6

         Statements of Cash Flows                                     F-7  - F8

         Notes to Financial Statements                                F-9 - F-23


                                      -F1-
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

AMPLIDYNE, INC.

We have audited the accompanying balance sheet of Amplidyne, Inc. as of December
31, 2004 and 2003, and the related statements of operations, stockholders'
deficiency, and cash flows for the years then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Amplidyne, Inc., as of December
31, 2004 and 2003, and the results of its operations and its cash flows for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.

As further discussed in Note B. 11. to the financial statements, there were
certain errors made by the Company in overstating accounts payable for the years
ended December 31, 2004 and 2003. The overstatement of accounts payable resulted
in the overstatement of the previously reported net loss for the years ended
December 31, 2004 and 2003 by $65,785 and $70,062 respectively. These errors
also resulted in an overstatement of previously reported total liabilities at
December 31, 2004 by $135,847 and an overstatement of accumulated deficit in the
same amount. At December 31, 2003, these errors resulted in an overstatement of
previously reported total liabilities at December 31, 2003 by $70,062 and an
overstatement of accumulated deficit in the same amount. As such, the accounts
payable as now reflected at December 31, 2004 and 2003, based on this
restatement of the financial statements for the years ended December 31, 2004
and 2003, is $135,847 and $70,062 lower than previously reported, respectively,
as is the accumulated deficit at each of those dates. These errors were
discovered by the management of the Company in conjunction with a detailed
review of outstanding vendor accounts in preparation for the issuance of the
financial statements for the quarter ended March 31, 2005.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note A to the
financial statements, the Company suffered losses from operations, has no cash
and otherwise limited financial resources, raising substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note A. The financial statements do not include
any adjustments relating to the recoverability and classification of asset
carrying amounts or the amounts and classifications of liabilities that might
result should the Company be unable to continue as a going concern.

KAHN BOYD LEVYCHIN, LLP

Forest Hills, New York

April 12, 2005 except for information restated to correct for the overstatements
of accounts payable as of December 31, 2004 and 2003, as to which the date is
December 22, 2005 (See Note B. 11.).


                                      -F2-
<PAGE>

                                 Amplidyne, Inc.
                            BALANCE SHEETS - RESTATED
                                  December 31,

<TABLE>
<CAPTION>
ASSETS - PLEDGED
                                                                              2004            2003
                                                                          ------------    ------------

CURRENT ASSETS
<S>                                                                       <C>             <C>
         Cash and cash equivalents                                        $    122,234    $         --
         Accounts receivable, net of allowance for doubtful accounts of
           $NIL (restated) and  $251,000 in 2004 and 2003, respectively         15,597          91,482
         Inventories                                                           309,633         407,709
         Prepaid expenses and other                                                 --          12,307
                                                                          ------------    ------------

                  Total current assets                                         447,464         511,498
                                                                          ------------    ------------

PROPERTY AND EQUIPMENT - AT COST
         Machinery and equipment                                               565,629         565,629
         Furniture and fixtures                                                 43,750          43,750
         Autos and trucks                                                       66,183          66,183
         Leasehold improvements                                                  8,141           8,141
                                                                          ------------    ------------
                                                                               683,703         683,703
         Less accumulated depreciation and amortization                       (681,956)       (646,627)
                                                                          ------------    ------------
                                                                                 1,747          37,076
                                                                          ------------    ------------

SECURITY DEPOSITS AND OTHER NON-CURRENT ASSETS                                      --          35,625
                                                                          ------------    ------------

                                                                          $    449,211    $    584,199
                                                                          ============    ============
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS


                                      -F3-
<PAGE>

                                 Amplidyne, Inc.
                            BALANCE SHEETS - RESTATED
                                  December 31,

<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS'  (DEFICIENCY)                                      2004            2003
                                                                             ------------    ------------

CURRENT LIABILITIES
<S>                                                                          <C>             <C>
         Overdraft                                                           $         --    $     17,855
         Secured note payable in connection with Phoenix investor
                   rescinded agreement - payment default effective
                           March 31, 2005                                          40,000              --
         Convertible notes payable pursuant to Lee financing
                  agreement, including temporary additional advance
                           by Lee of $6,000 (restated)                            406,000              --
         Notes payable to business associates of Lee (restated)                   100,000              --
         Accounts payable (restated)                                              321,063         341,109
         Other convertible  notes payable - payment default effective
                  March 31, 2005                                                   22,173              --
         Accrued expenses and other current liabilities (including                199,198          81,486
                  delinquent federal payroll taxes, penalties and interest
                           aggregating $81,353)
         Accrued settlement of litigation                                          95,000         170,000
         Advances from customers                                                   22,008          60,000
         Loans payable - officers                                                 368,706         256,997
                                                                             ------------    ------------
                                    Total current liabilities                   1,574,148         927,447

Other convertible  notes payable                                                       --          20,973
                                                                             ------------    ------------

                           TOTAL LIABILITIES                                    1,574,148         948,420
                                                                             ------------    ------------

COMMITMENTS AND OTHER COMMENTS - NOTE F
RELATED PARTY TRANSACTIONS - NOTE G
LITIGATION - NOTE H
SUBSEQUENT EVENTS - NOTE I

STOCKHOLDERS' (DEFICIENCY)

         Common stock - authorized, 25,000,000 shares of $.0001 par value;
                  shares 10,376,500 and 10,376,500 shares issued
                  and outstanding at December 31, 2004 and 2003,                    1,038           1,038
                  respectively
         Additional paid-in capital                                            22,503,014      22,494,854
         Accumulated deficit (restated)                                       (23,628,989)    (22,860,113)
                                                                             ------------    ------------
                                                                               (1,124,937)       (364,221)
                                                                             ------------    ------------

                                                                             $    449,211    $    584,199
                                                                             ============    ============
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS


                                      -F4-
<PAGE>

                                 Amplidyne, Inc.
                       STATEMENTS OF OPERATIONS - RESTATED
                             Year ended December 31,

<TABLE>
<CAPTION>
                                                                    2004            2003
                                                                ------------    ------------
<S>                                                             <C>             <C>
Net sales                                                       $    743,790    $  1,351,226
Cost of goods sold  (including inventory write-down
         of $101,039 in 2004 and $164,672 in 2003) (restated)        770,157       1,371,044
                                                                ------------    ------------

                  Gross loss                                         (26,367)        (19,818)

Operating expenses
         Selling, general and administrative (restated)              529,829         823,451
         Research, engineering and development                       256,175         287,629
                                                                ------------    ------------
                                                                     786,004       1,111,080
                                                                ------------    ------------

                  Operating loss                                    (812,371)     (1,130,898)

Nonoperating income (expenses)
         Interest income and other income                              4,535               3
         Loss incurred on rescission  of prior year
            agreements with Phoenix to invest in the
            Company                                                  (40,780)             --
         Interest expense                                             (1,200)         (3,657)
         Federal tax penalties and interest                          (11,684)             --
         Litigation settlement costs                                 (20,460)             --
         Gain on sale of property & equipment                          4,000          44,500
         Sale of New Jersey tax benefits                             129,317         180,316
                                                                ------------    ------------

                  Loss before income taxes (restated)               (748,643)       (909,736)

Provision for income taxes                                            20,235             698
                                                                ------------    ------------

                  NET LOSS (restated)                           $   (768,878)   $   (910,434)
                                                                ============    ============

Net loss per share - basic and diluted                          $      (0.07)   $      (0.09)
                                                                ============    ============

Weighted average number of shares outstanding                     10,376,500      10,318,167
                                                                ============    ============
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS


                                      -F5-

<PAGE>

                                 Amplidyne, Inc.
                STATEMENT OF STOCKHOLDERS' DEFICIENCY - RESTATED
                     Years Ended December 31, 2004 and 2003

<TABLE>
<CAPTION>
                                                                     Preferred Stock                Common Stock
                                                               ---------------------------    ---------------------------
                                                                  Shares       Par Value         Shares       Par Value
                                                               ------------   ------------    ------------   ------------
<S>                                                            <C>            <C>             <C>            <C>
BALANCE AT DECEMBER 31, 2002                                             --   $         --       9,676,500   $        968

Net loss for the year ended December 31, 2003 (restated)
Issuance of common stock in connection with
litigation settled in the year ended December 31, 2002                                             700,000             70
                                                               ------------   ------------    ------------   ------------

BALANCE AT DECEMBER 31, 2003  (restated)                                 --             --      10,376,500          1,038

Net loss for the year ended December 31, 2004 (restated)
Litigation settlement to be paid through the issuance
of common stock
                                                               ------------   ------------    ------------   ------------

BALANCE AT DECEMBER 31, 2004  (restated)                                 --   $         --      10,376,500   $      1,038
                                                               ============   ============    ============   ============

=========================================================================================================================

                                                                Additional
                                                                  Paid-In     Accumulated    Subscriptions
                                                                  Capital        Deficit       Receivable       Total
                                                               ------------   ------------    ------------   ------------
BALANCE AT DECEMBER 31, 2002                                   $ 22,494,924   $(21,949,679)   $         --   $    546,213

Net loss for the year ended December 31, 2003 (restated)                          (910,434)                      (910,434)
Issuance of common stock in connection with
litigation settled in the year ended December 31, 2002                  (70)                                          --
                                                               ------------   ------------    ------------   ------------

BALANCE AT DECEMBER 31, 2003 (restated)                          22,494,854    (22,860,113)             --       (364,221)

Net loss for the year ended December 31, 2004. (restated)                         (768,876)                      (768,876)
Litigation settlement to be paid through the
issuance of common stock                                              8,160                                         8,160
                                                               ------------   ------------    ------------   ------------

BALANCE AT DECEMBER 31, 2004. (restated)                       $ 22,503,014   $(23,628,989)   $         --   $ (1,124,937)
                                                               ============   ============    ============   ============
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS


                                      -F6-
<PAGE>

                                 Amplidyne, Inc.
                            STATEMENTS OF CASH FLOWS
                             Year ended December 31,

<TABLE>
<CAPTION>
                                                                                                    2004            2003
                                                                                                ------------    ------------
Cash flows from operating activities:
<S>                                                                                             <C>             <C>
Net Loss                                                                                        $   (768,878)   $   (910,434)
                                                                                                ------------    ------------
Adjustments to reconcile net loss to net cash used in operating activities
                  Provision for doubtful accounts receivable                                          21,260         108,000
                  Gain on sale of property & equipment                                                (4,000)        (44,500)
                  Loss on write-down of long-term financed receivables                                    --          30,058
                  Salary deferrals added to officer loans                                             74,217         109,988
                  Issuance of secured promissory note in connection with loss incurred on
                            rescission of agreements with Phoenix to invest in the Company            40,000              --
                  Provision for inventory write-down                                                 101,039         164,672
                  Depreciation and amortization                                                       35,329          45,994
                  Provision for litigation settlements                                                20,460              --
                  Litigation settlements paid in cash                                                (42,000)       (125,000)
                  Interest accrued on other convertible promissory notes                               1,200             973
                  Return of security deposits                                                         35,625              --
                  Payment of legal fees by Lee on behalf of the Company                               12,000              --
                  Changes in assets and liabilities
                           Accounts receivable                                                        54,626         241,024
                           Inventories                                                                (2,963)        354,332
                           Prepaid expenses and other assets                                          12,307          (8,307)
                           Accounts payable and accrued expense (restated)                            97,367        (142,876)
                           Advances from customer                                                    (37,992)         60,000
                                                                                                ------------    ------------
                                    Total adjustments (restated)                                     418,475         794,358
                                                                                                ------------    ------------
                   Net cash (used for) operating activities (restated)                              (350,403)       (116,076)
                                                                                                ------------    ------------

Cash flows from investing activities:

         Proceeds from sale of property and equipment                                                  4,000          44,500
                                                                                                ------------    ------------
         Net cash provided by investing activities                                                     4,000          44,500
                                                                                                ------------    ------------

Cash flows from financing activities:

         (Decrease) increase in overdraft                                                            (17,855)          5,916
         Proceeds from other  convertible promissory notes                                                --          20,000
         Proceeds of stock purchase and financing agreements by Phoenix, deal subsequently
                   rescinded repaid  by Lee on behalf of the Company                                 100,000              --
         Proceeds from convertible notes received directly in cash  pursuant to Lee financing        243,000              --
                   (restated)
         Proceeds of temporary additional advance from Lee                                             6,000              --
         Proceeds from notes payable to business associates of Lee (restated)                        100,000              --
         Proceeds of loans from officer                                                               37,492          47,701
          Payment of capital lease obligations                                                            --          (2,041)
                                                                                                ------------    ------------
                  Net cash provided by financing activities                                          468,637          71,576
                                                                                                ------------    ------------
                           NET INCREASE IN CASH                                                      122,234              --

Cash and cash equivalents at beginning year                                                               --
                                                                                                ------------    ------------
Cash and cash equivalents at end year                                                           $    122,234    $         --
                                                                                                ============    ============
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS


                                      -F7-
<PAGE>

                                 Amplidyne, Inc.
                            STATEMENTS OF CASH FLOWS
                             Year ended December 31,

<TABLE>
<CAPTION>
Supplemental disclosures of cash flow information:
<S>                                                                                <C>            <C>
         Cash paid for: Interest                                                   $         --   $      3,657
                        Income taxes                                               $     20,235   $        698
Noncash financing activities:

         Convertible notes issued by Company pursuant to Lee financing agreement   $    500,000   $         --
         Less: Proceeds received directly in cash by Company                            343,000             --
                                                                                   ------------   ------------
         Payment of Company obligations by lender in connection with
                  financing agreement in exchange for convertible notes            $    157,000   $         --
                                                                                   ============   ============
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS


                                      -F8-
<PAGE>

                                 Amplidyne, Inc.
                     Notes to Restated Financial Statements
                           December 31, 2004 and 2003

NOTE A - NATURE OF OPERATIONS AND LIQUIDITY

Amplidyne, Inc. (the Company) has historically operated in one segment, which is
the design, manufacture and selling of ultra linear power amplifiers and related
subsystems to the worldwide wireless, local loop and satellite uplink
telecommunications market. The Company has introduced products which offer
high-speed wireless internet connectivity to residential and business clients of
internet service providers. These products are sold under the AmpWave(TM) name.

The Company's financial statements have been presented on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. The liquidity of the Company has been
adversely affected in recent years by significant losses from operations. The
Company has incurred losses of $768,878 and $910,434 in 2004 and 2003,
respectively.

With no remaining cash and no near term prospects of private placements, options
or warrant exercises and reduced revenues, management believes that the Company
will have great difficulty meeting its working capital and litigation settlement
obligations over the next 12 months. The Company is presently dependent on cash
flows generated from sales and loans from officers to meet our obligations. Our
inability to substantially improve our deteriorated revenues will have serious
adverse consequences and, accordingly, there is substantial doubt in our ability
to remain in business over the next 12 months. There can be no assurance that
sufficient financing will be available to the Company on acceptable terms, or at
all. If adequate funds are not available, the Company may be required to delay,
scale back or eliminate its research, engineering and development or
manufacturing programs or obtain funds through arrangements with partners or
others that may require the Company to relinquish rights to certain of its
technologies or potential products or other assets. Accordingly, the inability
to obtain such financing could have a material adverse effect on the Company's
business, financial condition and results of operations.

The Company 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.

Management's plans for dealing with the foregoing matters include:

      o Increasing sales of its high speed internet connectivity products
      through both individual customers, strategic alliances and mergers.

      o Decreasing the dependency on certain major customers by aggressively
      seeking other customers in the amplifier markets;

      o Partnering with significant companies to jointly develop innovative
      products, which has yielded orders with multinational companies to date,
      and which are expected to further expand such relationships;

      o Maintaining a reduced cost structure through a more streamlined
      operation by using automated machinery to produce components for our
      products;


                                      -F9-
<PAGE>

                                 Amplidyne, Inc.
                     Notes to Restated Financial Statements
                           December 31, 2004 and 2003

      o Deferral of payments of officers' salaries, as needed;

      o 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;

      o Reducing overhead costs and general expenditures.

      o Merging with another company to provide adequate working capital and
      jointly develop innovative products.

NOTE B - SUMMARY OF ACCOUNTING POLICIES

A summary of the significant accounting policies consistently applied in the
preparation of the accompanying financial statements follows.

1. REVENUE RECOGNITION

Revenue is recognized upon shipment of products to customers because our
shipping terms are F.O.B. shipping point. There are generally no rights of
return, customer acceptance protocols, installation or any other post-shipment
obligations. All of our products are custom built to customer specifications. We
provide an industry standard one-year limited warranty under which the customer
may return the defective product for repair or replacement.

Returns received under warranty are not material relative to sales, nor are the
costs to repair. All sales are final, except for warranty repair/replacement and
there is no price protection. In addition, the only company post?shipment
obligation is for warranty repair and replacement. Finally, we do not install
product or provide services for a fee.

2. INVENTORIES

Inventories are stated at the lower of cost or market; cost is determined using
the first-in, first-out method. At December 31, 2004 and 2003, inventories
consisted of the following:

                                 2004           2003
                         ------------   ------------
      Component parts    $    230,812   $    290,178
      Work-in-progress         76,568         36,052
      Finished Goods            2,253         81,479
                         ------------   ------------
                         $    309,633   $    407,709
                         ============   ============


                                     -F10-
<PAGE>

                                 Amplidyne, Inc.
                     Notes to Restated Financial Statements
                           December 31, 2004 and 2003

3. PROPERTY, PLANT AND EQUIPMENT

Depreciation and amortization are provided for in amounts sufficient to relate
the cost of depreciable assets to operations over their estimated service lives,
which range from three to seven years. Leasehold improvements are amortized over
the lives of the respective leases, or the service lives of the improvements,
whichever is shorter. The straight-line method of depreciation is followed for
substantially all assets for financial reporting purposes, but accelerated
methods are used for tax purposes.

4. VALUATION OF LONG-LIVED ASSETS

The Company reviews long-lived assets held and used for possible impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. The Company has not recorded any provision for
the impairment of long-lived assets at December 31, 2004.

5. INCOME TAXES

The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes. This
statement requires, among other things, an asset and liability approach for
financial accounting and reporting of deferred income taxes. In addition, the
deferred tax liabilities and assets are required to be adjusted for the effect
of any future changes in the tax law or rates. Deferred income taxes arise from
temporary differences resulting in the basis of assets and liabilities for
financial reporting and income tax purposes. A valuation allowance is provided
if the Company is uncertain as to the realization of deferred tax assets.

6. RISKS, UNCERTAINTIES AND CERTAIN CONCENTRATIONS OF CREDIT RISK AND ECONOMIC
DEPENDENCY

The Company's future results of operations involve a number of significant risks
and uncertainties. Factors that could affect the Company's future operating
results and cause actual results to vary materially from expectations include,
but are not limited to, dependence on key personnel, dependence on a limited
number of customers, ability to design new products and product obsolescence,
ability to generate consistent sales, ability to finance research and
development, government regulation, technological innovations and acceptance,
competition, reliance on certain vendors, credit and other risks.

Financial instruments, which potentially subject the Company to concentrations
of credit risk, consist principally of cash and accounts receivable.

The Company maintains cash and cash equivalents in bank deposit and money market
accounts in one bank, which, at times, may exceed federally insured limits or
not be insured. The Company has not experienced any losses in such accounts and
does not believe it is exposed to any significant credit risk on cash and cash
equivalents.

During 2004, one customer accounted for approximately 95% of net sales and 100%
of net accounts receivable at December 31, 2004. Export sales in 2004 accounted
for substantially all net sales and were primarily to Europe.

During 2003, two customers accounted for 80% of net sales (49% and 31%) and 45%
of net accounts receivable at December 31, 2003. Export sales in 2003 accounted
for approximately 85% of net sales and


                                     -F11-
<PAGE>

                                 Amplidyne, Inc.
                     Notes to Restated Financial Statements
                           December 31, 2004 and 2003

were primarily to Europe (54%), Canada (31%).

In addition, the Company is dependent on a limited number of suppliers for key
components used in the Company's products (primarily power transistors) and
subcontracted manufacturing processes. Management believes that other suppliers
could provide similar components and processes on comparable terms. A change in
suppliers, however, could disrupt manufacturing.

The carrying values of financial instruments potentially subject to valuation
risk, consisting of cash and cash equivalents, accounts receivable, and
officer's loan receivable, approximate fair value, principally because of the
short maturity of these items.

7. USE OF ESTIMATES

In preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and revenues and expenses during the reporting
period. Actual results could differ from those estimates.

8. STOCK-BASED EMPLOYEE COMPENSATION

Stock-based employee compensation is accounted for under the intrinsic value
based method as prescribed by Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations as
clarified by Financial Interpretation No. 44 (FIN 44), Accounting for Certain
Transactions Involving Stock Compensation. Included in these notes to the
financial statements are the pro forma disclosures required by Statement of
Financial Accounting Standards No. 123 (SFAS No. 123), Accounting for
Stock-Based Compensation.

Under the fair value method, the Company's net loss and loss per share would
have been as follows:

                               2004            2003
                       ------------    ------------
      Net loss         $   (917,223)   $ (1,127,349)
      Loss per share   $      (0.09)   $      (0.11)

9. CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents.


                                     -F12-
<PAGE>

                                 Amplidyne, Inc.
                     Notes to Restated Financial Statements
                           December 31, 2004 and 2003

10. ADVERTISING EXPENSES

The Company expenses advertising costs as incurred. Advertising expenses were
$6,649 and $5,792 for the years ended December 31, 2004 and 2003, respectively.

11. RECLASSIFICATIONS AND RESTATEMENTS

Certain reclassifications were made to the 2003 amounts to conform to the
current presentation. We corrected accounting errors in overstated accounts
payable by reducing cost of sales and selling, general and administrative
expenses, resulting in a reduction of our losses by $65,785 in 2004 and $70,062
in 2003. The following table represents the components of the changes:

<TABLE>
<CAPTION>
                                                                             Year Ended December 31

                                                                              2004            2003
                                                                          ------------    ------------
<S>                                                                       <C>             <C>
      Cost of goods sold as previously stated                             $    779,266    $  1,411,679
      Reduction from correction of accounting error                              9,109          40,635
                                                                          ------------    ------------
      Cost of goods sold as restated                                      $    770,157    $  1,371,044
                                                                          ============    ============

      Selling, general and administrative expenses as previously stated   $    586,505    $    852,878
      Reduction from correction of accounting error                             56,676          29,427
                                                                          ------------    ------------
      Selling, general and administrative expenses  as restated           $    529,829    $    823,451
                                                                          ============    ============

      Net loss as previously stated                                       $   (834,663)   $   (980,496)
      Reduction from correction of accounting error                             65,785          70,062
                                                                          ------------    ------------
      Net loss as restated                                                $   (768,878)   $   (910,434)
                                                                          ============    ============

      Loss per share as previously stated                                 $      (0.08)   $      (0.10)
      Reduction from correction of accounting error                               0.01            0.01
                                                                          ------------    ------------
      Loss per share as restated                                          $      (0.07)   $      (0.09)
                                                                          ============    ============
</TABLE>

12. LOSS PER SHARE

Statement of Financial Accounting Standards No.128 (SFAS No. 128), Earnings per
Share, specifies the computation, 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 shares of common stock outstanding. Net
loss per common share - diluted does not include potential common shares derived
from stock options and warrants because they are antidilutive. The number of
antidilutive securities excluded from the dilutable loss per share calculation
for the years ended December 31, 2004 and 2003 were 395,000 and 945,000 shares,
respectively.


                                     -F13-
<PAGE>

                                 Amplidyne, Inc.
                     Notes to Restated Financial Statements
                           December 31, 2004 and 2003

13. SEGMENT INFORMATION

The Company commenced its wireless Internet connectivity business in the summer
of 2000. The Company does not measure its operating results, assets or
liabilities by segment. However, the following limited segment information is
available:

                                              Year Ended     Year Ended
                                             December 31,   December 31,
                                                 2004           2003
                                             ------------   ------------
      Sales - external

               Amplifier                          655,679   $  1,128,454
               Internet business                   88,111        222,772
                                             ------------   ------------
                                             $    743,790   $  1,351,226
                                             ============   ============
      Sales - external, by geographic area
               United States                 $         --   $    201,088
               Europe                             743,790        732,694
               Canada                                  --        417,444
               All other foreign countries             --             --
                                             ------------   ------------
                                             $    743,790   $  1,351,226
                                             ============   ============
      Inventory

               Amplifier                     $    249,372   $    248,575
               Internet business                   60,261        159,134
                                             ------------   ------------
                                             $    309,633   $    407,709
                                             ============   ============

NOTE C - PUBLIC OFFERING AND PRIVATE PLACEMENTS

1.    Common Stock Warrants and Options

At December 31, 2004, the following 395,000 warrants, remained outstanding:

      (1)   20,000 exercisable at $1.00 through May 2010

      (2)   300,000 exercisable at $2.00 through December 31, 2005

      (3)   75,000 exercisable at $.96 through March 2007

At December 31, 2004, the Company had employee stock options outstanding to
acquire 370,000 shares of common stock at exercise prices of $0.20 to $1.50 per
share.

2.    Stock Purchase and Financing Agreements

a.    Phoenix Opportunity Fund II, L.P.

On January 28, 2004, the Company entered into a Subscription Agreement (the
"Agreement") with Phoenix Opportunity Fund II, L.P. ("Phoenix"), a limited
partnership organized under the laws of the State of Delaware, pursuant to which
Phoenix agreed to make an aggregate investment of $100,000 in exchange for
282,700 shares of a newly created class of Series C Convertible Preferred Stock,


                                     -F14-
<PAGE>

                                 Amplidyne, Inc.
                     Notes to Restated Financial Statements
                           December 31, 2004 and 2003


representing approximately 80% of the Company's outstanding stock on a fully
diluted basis. As the Company was required to amend its certificate of
incorporation or effect a reverse stock split in order to have sufficient
authorized shares to complete the equity financing, Phoenix made an initial
investment of $20,000 in exchange for 54,325 shares of Series C Convertible
Preferred Stock, and loaned approximately $80,000 to the Company with the
remaining portion of the equity investment to be completed after
recapitalization. Phoenix also entered into a stock restriction agreement with
Devendar S. Bains, our former Chairman of the Board, Chief Executive Officer,
and Treasurer, pursuant to which Mr. Bains issued an irrevocable proxy to
Phoenix until the recapitalization is completed, which, together with the shares
received in connection with the initial investment, would have given Phoenix
effective control over 53% of the Company's voting stock.

The preferred shares were never issued to Phoenix. Due to a dispute among the
Parties with respect to the terms of the loan transaction. The Company and
Phoenix agreed to rescind their agreement, and the Company agreed to pay
Phoenix: (i) $20,000 in cash for the funds Phoenix invested, (ii) $80,000 in
cash for the funds which Phoenix lent to the Company, and (iii) $40,000 for
expenses incurred by Phoenix on behalf of the Company. The $40,000 was paid by
delivery of a secured promissory note due March 31, 2005, and bearing interest
at the rate of eight percent per annum secured by substantially all the assets
of the Company.

The Company did not make the required payment due on March 31, 2005 under the
Phoenix rescission agreement, and the Company remains currently delinquent. As
yet, no action has been taken by Phoenix concerning this default.

b.    John Chase Lee and Associates

In a separate transaction, John Chase Lee of Piscataway, NJ ("Lee") entered into
a Note Purchase Agreement with the Company by which Lee agreed to lend the
Company an initial $200,000 and up to an additional $200,000 in one or more
installments on or before October 30, 2004. The Company agreed to deliver to
John Lee unsecured convertible promissory notes which are convertible into
Series C shares representing approximately 80% of the Company's outstanding
stock on a fully diluted basis. However, as discussed later in this note,
$100,000 was received from two business associates of Lee as a substitution for
Lee's investment in the same amount and those borrowings were not subject to the
same conversion provisions. Accordingly, the aggregate debt is convertible into
Series C shares representing approximately 64% of the Company's outstanding
stock on a fully diluted basis.

Such conversion will take place at such time as the Company is able to do so.
Messrs. Devendar Bains and Tarlochan Bains are required to devote their full
business time and attention to the business of the Company for eight (8) years
from May 25, 2004. In the event that either Devendar Bains or Tarlochan Bains
must leave the employ of the Company for any reason, each agrees that, if
requested by the Board of Directors of the Company, he will use his best efforts
to find a qualified replacement for himself acceptable to the Board of
Directors, and that he will not engage in a business competitive with the
Company for a period of eight (8) years. On May 25, 2004, Lee loaned the Company
$250,000, and was issued three convertible promissory notes which will be
convertible in the aggregate into Series C shares representing approximately 40%
of the Company's outstanding stock on a fully diluted basis, if and when
converted. If not converted, the notes are payable on demand, provided that
demand cannot be made


                                     -F15-
<PAGE>

                                 Amplidyne, Inc.
                     Notes to Restated Financial Statements
                           December 31, 2004 and 2003


before December 31, 2004, unless the Company is in default of the Note Purchase
Agreement. Of the $250,000 loaned to the Company, $100,000 was used to pay
Phoenix in connection with the rescission described above, $45,000 was used to
make a final payment in resolution of litigation with High Gain Antenna Co. Ltd.
of Korea, and to pay associated bank fees, $12,000 was used to pay legal fees
and $43,000 was used for working capital purposes.

In August 2004, an additional $50,000 was received from each of Hye Joung Lee
and Joong Bin Lee (an aggregate of $100,000) in connection with the same
agreement. These parties are business associates of John Lee, but otherwise
unrelated. The unsecured notes issued in connection with these borrowings are
substantially the same as the Lee notes, except that they contain no conversion
privileges.

In October 2004, an additional $156,000 was received from John Lee, of which
$6,000 represented a temporary additional advance outside of the the Series C
Convertible financing. The note issued for the $150,000 of proceeds received
contained the same provisions as the May 25, 2004 note and provided for
conversion into Series C shares representing approximately 24% of the Company's
outstanding stock on a fully diluted basis, if and when converted.

No conversions to the Series C shares, pursuant to the Lee financing, have been
made as of December 31, 2004 and to the date of the issuance of the current
year's financial statements. In addition, no demand for payment has been made by
Lee as of December 31, 2004 and to the date of the issuance of the current
year's financial statements. As discussed in Note F 7, the Company's corporate
status in the State of Delaware was not in good standing, the Series C Preferred
shares referred to above have not been approved by shareholders and the
appropriate designations thereof have not been filed with the Delaware Secretary
of State. Consequently, the notes were not been converted until July 2005
because we were unable to issue the Series C Preferred shares.

All of the notes in connection with this financing bear no interest.

The following table summarizes the terms of each promissory note:

<TABLE>
<CAPTION>
                                                                                   Percentage of Issued and Outstanding Common
                                                                                        Stock represented by the Series C
                                                Principal Amount                    Convertible Preferred Stock that the Debt
      Date                    Holder                                 Due Date                  is Convertible Into
                                                                                               -------------------
<S>                       <C>                   <C>                  <C>                    <C>
    05/25/04              John Chase Lee                $150,000     12/31/04                          24%
    05/25/04              John Chase Lee                  50,000     12/31/04                           8%
    06/08/04              John Chase Lee                  50,000     12/31/04                           8%
    08/25/04               Hye Joung Lee                  50,000     12/31/04               No conversion privileges
    08/25/04               Joong Bin Lee                  50,000     12/31/04               No conversion privileges
    10/28/04              John Chase Lee                 150,000     12/31/04                          24%
                                                ----------------                                       ---
                                                        $500,000                                       64%
                                                ================                                       ===
</TABLE>


                                     -F16-
<PAGE>

                                 Amplidyne, Inc.
                     Notes to Restated Financial Statements
                           December 31, 2004 and 2003

NOTE D - STOCK OPTION PLANS

An option and stock appreciation rights (SARs) plan was authorized prior to the
public offering whereby options could be granted to purchase no more than
1,500,000 shares of common stock at exercise prices no less than fair market
value as of date of grant. At the 2001 Annual Shareholders' Meeting, the maximum
number of shares set aside for this plan was increased to 2,225,000. Under the
plan, employees and directors may be granted options to purchase shares of
common stock at the fair market value at the time of grant. Options generally
vest in three years and expire in four years from the date of grant. 1,656,000
options remained outstanding at December 31, 2004. The extension of the exercise
date of the warrants mentioned above did not result in a charge to operations
because the extension occurred prior to the effective date of FIN 44 and because
the exercise price exceeded the market value of the underlying common stock at
the date of the extension.

The Company has elected to follow Accounting Principles Board Opinion (APB) No.
25, Accounting for Stock Issued to Employees, and related Interpretations in
accounting for its stock options. Under APB No. 25, if the exercise price of the
Company's employee stock options equals the market price of the underlying stock
on the date of grant, no compensation expense is recognized. SFAS No. 123,
Accounting for Stock-Based Compensation, requires presentation of pro forma net
loss and loss per share as if the Company had accounted for its employee stock
options granted under the fair value method of that statement. For purposes of
pro forma disclosure, the estimated fair value of the options is amortized to
expense over the vesting period.

Under the fair value method, the Company's net loss and loss per share would
have been as follows:

                               2004            2003
                       ------------    ------------
      Net loss         $   (917,223)   $ (1,127,349)
      Loss per share   $      (0.09)   $      (0.11)

Stock option activity during 2004 and 2003, is summarized below:

                                         Shares of common     Weighted average
                                        stock attributable   exercise price of
                                            to options             options
                                            ----------             -------

Unexercised at December 31, 2002                 2,051,000            3.233
         Expired at December 31, 2003             (30,000)            3.250
         Issued during 2003                        200,000            0.150
                                        -------------------
Unexercised at  December 31, 2003                2,221,000            0.669

         Expired at December 31, 2004          (1,851,000)            0.541
                                        -------------------
Unexercised at December 31, 2004                   370,000            1.302
                                        ===================


                                     -F17-
<PAGE>

                                 Amplidyne, Inc.
                     Notes to Restated Financial Statements
                           December 31, 2004 and 2003

The following table summarizes information concerning outstanding and
exercisable options, including warrants issued to officers, at December 31,
2004:

<TABLE>
<CAPTION>
                                   Options Outstanding                          Options Exercisable
                   ---------------------------------------------------   ---------------------------------
                       Number       Weighted average                         Number
                   outstanding at       remaining     Weighted average   exercisable at   Weighted average
 Exercise Prices     period end      contractual life   exercise price     period end      exercise price
 ---------------     ----------      ----------------   --------------     ----------      --------------
<S>                   <C>               <C>                <C>              <C>               <C>
     1.040             10,000             1 year           1.040             10,000            1.040
     1.120             10,000             1 year           1.120             10,000            1.120
     1.500            300,000             1 year           1.500            300,000            1.500
     0.200             50,000           1.25 years         0.200             50,000            0.200
                      -------                                               -------
                      370,000                                               370,000
                     --------                                              --------
</TABLE>

NOTE E - INCOME TAXES

Temporary differences and carryforwards give rise to deferred tax assets and
liabilities. The principal components of the deferred tax assets relate to net
operating loss carryforwards. At December 31, 2004, the Federal net operating
loss carryforwards are approximately $16,200,000. The net operating loss
carryforwards expire at various dates through 2024, and because of the
uncertainty in the Company's ability to utilize the net operating loss
carryforwards, a full valuation allowance of approximately $5,600,000 and
$5,400,000 has been provided on the deferred tax asset at December 31, 2004 and
2003, respectively.

The Company participated in the New Jersey Technology Tax Certificate Transfer
Program, whereby net operating loss carryforwards generated in New Jersey can be
sold to other qualified companies. During 2004 and 2003, the Company received
$129,317 and $180,316, respectively, from the sale of such net operating losses.
The Company expects to sell additional New Jersey net operating losses in 2004,
although there can be no assurance a suitable transaction will be consummated.
The New Jersey net operating loss carryforwards are approximately $4,240,000 at
December 31, 2004.

Internal Revenue Code Section 382 places a limitation on the utilization of
Federal net operating loss and other credit carryforwards when an ownership
change, as defined by the tax law, occurs. Generally, this occurs when a greater
than 50 percentage point change in ownership occurs. Accordingly, the actual
utilization of the net operating loss carryforwards and other deferred tax
assets for tax purposes may be limited annually under Code Section 382 to a
percentage (about 5%) of the fair market value of the Company at the time of any
such ownership change.

The Company's tax provision for 2004 and 2003 is principally due to the impact
of state income and minimum taxes.


                                     -F18-
<PAGE>

                                 Amplidyne, Inc.
                     Notes to Restated Financial Statements
                           December 31, 2004 and 2003

NOTE F - COMMITMENTS AND OTHER COMMENTS

1. OPERATING LEASES

During July 2000, the Company entered into a lease agreement for approximately
11,000 square feet of office and manufacturing space, for a five-year period
ending July 13, 2004. The annual rental was $71,000 plus the Company's share of
real estate taxes, utilities and other occupancy costs. The landlord held a
security deposit of $35,625 representing approximately 6 months rent.

In July 2004, John Lee entered into a contract with the existing landlord of the
operating premises to purchase the building. In connection therewith, Lee
negotiated a return of the security deposit and accumulated interest thereon to
the Company in the aggregate amount of $40,160. The Company is currently leasing
the premises on a month to month basis and is paying rent on a semi-monthly
basis. Although there is no lease or contract presently in effect with Lee, it
is anticipated that the Company will be able to continue occupying the premises
under a lease with Lee at an as yet to be determined rent, once impediments to
Mr. Lee's closing on the property purchase are resolved.

Rent expense, including the Company's share of real estate taxes, utilities and
other occupancy costs, was $71,672 and $81,940 for the years ended December 31,
2004 and 2003, respectively.

2. EMPLOYMENT AGREEMENTS

Commencing May 1, 1996, the Company entered into three five-year employment
agreements with its Chairman, its Vice President of Sales and Marketing and its
Secretary (the Officers). These agreements were extended to expire April 30,
2005. The agreements call for aggregate annual base salaries of $312,000, plus
certain employee benefits.

The Officers deferred a portion of their compensation from 1997 through 1999. In
1999 the Officers converted an aggregate of $181,131 of such deferrals,
principally arising in 1999, into 66,378 shares of common stock of the Company,
representing the estimated fair value of the common stock of the Company at that
time. No shares have been issued in lieu of officers' deferred compensation
since 1999. During 2004, the now former Chief Executive Officer deferred
salaries of $58,000 and the Chief Executive Officer and the Secretary each also
deferred salaries of $9,331 and $2,885 in 2004, respectively. During 2003, the
now former Chief Executive Officer deferred salaries of $139,707 and the Vice
President of Operations and the Secretary each also deferred salaries of $44,281
and $9,000, respectively.

3. 401(K) PLAN

During 1996, the Company established a defined contribution plan, the Amplidyne,
Inc. 401(k) Plan. The Company makes no contributions. All employees with greater
than six months' service with the Company were eligible to participate in the
plan. The plan was administered by a third party and was discontinued for
periods ending after December 31, 2003.

4. LETTER OF INTENT - ABORTED MERGER

In February, 2003, the Company entered into a letter of intent with V-Link,
Inc., a provider of wireless networks for hotels whereby was to acquire all of
that Company's common stock. V-Link, as a customer


                                     -F19-
<PAGE>

                                 Amplidyne, Inc.
                     Notes to Restated Financial Statements
                           December 31, 2004 and 2003

of the Company, advanced $100,000 in March 2003 for future orders which had been
fulfilled by December 31, 2003. The merger negotiations have ceased and V-Link
has sued the Company and its Chief Executive Officer (see Note H - Litigation -
item 6).

5. NOTES PAYABLE CONVERTIBLE INTO COMMON STOCK AT HOLDERS' OPTION

In March 2003, two investors, each of which already own approximately 4% of the
Company's outstanding common stock, loaned the Company $20,000. The terms of
each loan provide for 6% interest and were due in March 2005 with accrued
interest. By their terms, the loans provide for accelerated payment under
certain conditions, and conversion prior to maturity into the Company's common
stock at the holders option at the rate of $.10 per share. As of December 31,
2004, there were no conditions present that trigger an acceleration, nor has
either holder exercised their option to convert them into common stock.

The Company did not make the required payments due March 31, 2005 under the
notes, for principal and interest, and the Company remains currently delinquent.
As yet, no actions have been taken by the holders concerning this default.

6. NOTICE OF OPPOSITION ON TRADEMARKS

The Company's registration of the Ampwave trademark was opposed at the U.S.
Patent Office. The Company settled with the opposing party by agreeing to stop
using the Ampwave name after a period of one (1) year from the date of signing.
Sales under the Ampwave label were $88,111 for the year ended December 31, 2004.
Management believes that the settlement will have no material financial effect.

7. DELAWARE CORPORATE STATUS

The Company is delinquent in its filing and payment of the Delaware Franchise
Tax report and, accordingly, is not in good standing.

NOTE G - RELATED PARTY TRANSACTIONS

1. OFFICER / STOCKHOLDER LOANS

The now former Chief Executive Officer agreed to defer $74,000 (2003) and
$58,000 (2004) of salaries to help the Company with its cash flow. The current
Chief executive Officer (formerly the Vice President of Operations) and the
Secretary each also agreed to defer $9,331 and $2,885 of salaries, respectively.
In 2004, the now former Chief Executive Officer and principal shareholder loaned
the Company an additional $37,991 and was repaid $4,500. As of December 31,
2004, the Company owed $295,207 to the now former Chief Executive Officer for
loans ($97,501) and accrued salaries ($197,706) and owed other officers an
aggregate of $73,499 for accrued salaries. The total due to all officers
combined at December 31, 2004 was $368,706.

2. PURCHASES FROM RELATED PARTY

A former member of the Company's Board of Directors is President and CEO of one
of the Company's vendors. During 2004 and 2003, the Company made purchases of
approximately $14,000 and $38,000, respectively, from this vendor.


                                     -F20-
<PAGE>

                                 Amplidyne, Inc.
                     Notes to Restated Financial Statements
                           December 31, 2004 and 2003

NOTE H - 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.

1. A customer 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 that customer at a cost of
$175,000; $25,000 is to be paid quarterly over two years. $95,000 remained
unpaid at December 31, 2004.

2. 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
South Korean sales rep. 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 a total of
$85,000 in twelve equal monthly installments, none of which has been paid to
date. The Company has not received any required documents and releases from the
plaintiff and management believes that the possibility of any further assertion
in this matter is remote. Accordingly, the provision for litigation settlement
costs for the year ended December 31, 2002, reflected a reduction for the
estimated liability in this matter as of December 31, 2001. As of December 31,
2004, the status of this matter remains unchanged.

3. The Company was subject to a SEC formal order of investigation relating to
the subject matter of the Class Action Lawsuit that was commenced in 1999 and
settled in 2001. On May 22, 2003, the Commission filed a settled action in the
United States District Court for the District of New Jersey against Amplidyne,
Inc. ("Amplidyne") and its President, Chairman and Chief Executive Officer,
Devendar S. Bains ("Bains"). The Commission's Complaint alleges that Amplidyne
and Bains violated the anti-fraud provision of the federal securities laws by
making false statements concerning Amplidyne's purported entry into the high
speed Internet wireless access market. Simultaneously with the filing of the
Complaint, Amplidyne and Bains, without admitting or denying the allegations in
the Complaint, consented to the entry of a final judgment permanently enjoining
both from violating Section 10(b) of the Securities Exchange Act of 1934 and
Rule 10(b)-5 thereunder. In addition, Bains agreed to pay a civil penalty of
$50,000.

4. The Company (as well as an officer and director of the Company) was 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 sought 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. 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 had filed a motion in the Law Division for a new trial, which was denied
and gave notice of appeal to file an appeal of the verdict


                                     -F21-
<PAGE>

                                 Amplidyne, Inc.
                     Notes to Restated Financial Statements
                           December 31, 2004 and 2003

and judgment to the Superior Court of New Jersey, Appellate Division. Management
latter determined that pursuing the appeal would not be in the best interest of
the Company and its shareholders.

In January 2003, the Company entered into a Stipulation of Settlement and
Release before the Superior Court of New Jersey, Somerset County. The settlement
stipulates that the Company pay a total of $200,000 plus 700,000 shares of
restricted common stock of the Company valued by the agreement at $105,000
(management has determined that the discounted value of the 700,000 restricted
shares was $29,400 as of February 4, 2003 based on quoted market price of $0.07
per share discounted for lack of marketability). Accordingly, a provision for
litigation settlement costs of $229,400 for the year ended December 31, 2002,
was made to reflect an estimated liability for it at that date. The stipulation
called for an initial payment of $75,000 (paid in March 2003) with the remaining
balance payable in $25,000 increments on the following dates: June 2, 2003,
August 31, 2003, November 29, 2003, February 27, 2004 and May 28, 2004. The
record judgement of $400,000 shall remain until the payment obligations are made
in full. In the event of default, the plaintiff shall have the right to execute
the judgement after crediting $105,000 for the agreed value of the shares issued
plus any payments made pursuant to the settlement. As of December 31, 2003, the
balance due in connection with this matter was $75,000. the amount was paid in
its entirety in 2004. The Company has fulfilled its obligations and has received
a warrant of satisfaction of judgment from opposing counsel dated June 6, 2004.

5. On May 30, 2002, the Company filed a two-count lawsuit in the Superior Court
of New Jersey, Law Division, Somerset County, seeking, among other things,
declaratory relief that the Company is not obligated to pay a finders fee (in
connection with the Company's purchase of the Darwin Assets), and that the
Company is entitled to monetary damages as a result of defendant's false
misrepresentations. On July 10, 2002, the matter was removed to the United
States District Court of New Jersey but later transferred back to the United
States Bankruptcy Court and then transferred to the United States District Court
of New Jersey. On July 29, 2002, defendants filed a counterclaim seeking
$200,000 in damages as a result of a finders fee agreement. In January 2003, the
matter was transferred to the United States District Court for the Middle
District of Florida. The defendants sought a further transfer to the United
States Bankruptcy Court for the Middle District of Florida, but such motion was
denied. In June 2004, the Company entered into a Settlement Agreement with the
plaintiff before the United states District court in Tampa, Florida. The
settlement provides for the following obligations by the Company to Mr. Fogel:
(1) payment of $12,000 by July 14, 2004; (2) issuance of 250,000 shares of
restricted common stock by July 14, 2004 and; (3) the shipment of specified
items of inventory valued at approximately $22,000. The agreement further calls
for the issuance of common stock of one share for each $1 of inventory not
delivered in lieu of the inventory in the event the company cannot deliver.
Since non-delivery of the specified items is definite, the financial statements
provide for the issuance of 22,000 additional shares. All shares in connection
with this transaction are valued at the publicly traded market value of $.05 on
the date of the transaction, less a discount of 40% for the restriction on sale.

6. The Company (as well as an officer and director of the Company) is a
defendant in a complaint brought in November 2003 in the Circuit Court of the
State of Florida (17th Judicial District, Broward County) alleging fraud and
seeking relief for unspecified damages and costs associated with an aborted plan
of merger. Management has been in settlement discussions with the plaintiff, but
to date has not reached an accord. On June 29, 2004, the Company filed a Motion
to Dismiss the lawsuit against the


                                     -F22-
<PAGE>

                                 Amplidyne, Inc.
                     Notes to Restated Financial Statements
                           December 31, 2004 and 2003

Company.

NOTE I - SUBSEQUENT EVENTS

1. LOANS FROM AND REPAYMENTS TO OFFICER / STOCKHOLDER

From January through March 2005, the former Chief Executive Officer loaned the
Company approximately $2,000. As of April 12, 2005 the Company owed
approximately $297,000 to this officer for loans and accrued salaries. (See note
F-1).

2. ADDITIONAL ADVANCES FROM JOHN LEE

From January through March 2005, John Lee loaned the Company approximately
$100,700 as temporary advances.

In early April 2005, Lee informally advised the Company of his intention to
convert $100,700 of his loans into Series C Preferred Stock in accordance with
the terms of the Note Purchase Agreement. If and when this conversion is
effectuated, Lee will have 21.4% voting control of the capital stock of the
Company.

3. NOTICE OF FEDERAL TAX LIEN

On January 18, 2005, the Internal Revenue Service filed a federal tax lien with
the County Clerk of Somerset County, New Jersey, in the amount of $35,663. This
lien attaches to all property currently owned by the Company as well as all
property it may acquire in the future, until the lien is satisfied. The Company
is negotiating payment terms with the government, the agreement of which is
expected to forestall any enforcement action. Although enforcement action (such
as seizure of assets) is not presently anticipated, the government retains the
right to take such action. Furthermore, even if satisfactory payment terms are
agreed to, the lien will remain until the related liability of $35,663 is fully
satisfied.


                                     -F23-
<PAGE>

Item 14:

Audit fees

Aggregate fees bills by the Company's principal accountant were $34,678 in 2004
and $18,000. Audit-Related Fees

There were no audit related fees in 2004.

Audit Committee Policies and Procedures for Pre-Approval of Services

The audit committee is in the process of formulating procedures for pre-approval
of all audit, review and attest services and non-audit services.


                                       52
<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) 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.

                                   AMPLIDYNE, INC.

                                   By: /s/ Tarlochan S. Bains
                                       -----------------------
                                       Name Tarlochan S. Bains
                                       Title: Chief Executive Officer, Principal
                                       Accounting Officer and Director

      Pursuant to the requirements of Section 13 or 15(d) 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.

Signature                             Title                         Date
---------                             -----                         ----

/s/ Tarlochan S. Bains        Former Chief Executive Officer  December 12, 2005
-------------------------
Tarlochan S. Bains

/s/ John Lee                  Chief Executive Officer
-------------------------     and Director                    December 12, 2005
John Lee

/s/Jessica Lee                Director                        December 12, 2005
-------------------------
Jessica Lee

/s/ Mikio Tajima              Director                        December 12, 2005
-------------------------
Mikio Tajima


                                       53