SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                              REPORT ON FORM 10-KSB

            [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
or any amendment to this Form 10-KSB. [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.


                                        2
<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.


                                       3
<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.


                                       5
<PAGE>

        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.

         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.


                                       7
<PAGE>

         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.

         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.


                                       8
<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.


                                       9
<PAGE>

         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).

         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.


                                       10
<PAGE>

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.

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.


                                       11
<PAGE>

         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. .

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)

<TABLE>
<CAPTION>
                                                                                        Year Ended
                                                                                       December 31,
                                                                                   --------------------
Amplifier Markets                                                                  2004            2003
-----------------                                                                  ----            ----
<S>                                                                                <C>           <C>
 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
                                                                                   ====          ======
</TABLE>

                    *  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.


                                       12
<PAGE>

                    * 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.

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.


                                       15
<PAGE>

         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.

         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.


                                       16
<PAGE>

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.

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 $980,496  and  $834,663 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.


                                       22
<PAGE>

         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:

         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.


                                       23
<PAGE>

         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;

         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.

Item 3.  LEGAL PROCEEDINGS


                                       28
<PAGE>

         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.

                                     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).


                                       31
<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 $618,531 in 2003,
a decrease  of  $618,531  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).

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 was $779,266 or 105% of sales  (including an inventory  write-down
of $101,039)  during the year ended  December 31, 2004,  compared to 104% during
the same period for 2003. 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 was  $678,227 or 91% 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 decreased in 2004 by $266,372 to
$586,505  from  $852,877,  in 2003.  Expressed  as a  percentage  of sales,  the
selling,   general   and   administrative   expenses   (excluding   stock  based
compensation)  were  79%  in  2004  and  63%  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.

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.


                                       32
<PAGE>

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 of $834,663 or
$0.08 per share for the year ended December 31, 2004 compared with net losses of
$980,496 or $0.10 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).

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 was $1,411,679 or 104% 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 for
the year ended December 31, 2003 was $1,247,007 or 92% 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.  Gross  margin  decreased  from the year ended
December 31, 2001  because of lower  amplifier  sales  resulting in higher fixed
direct costs and lower margins for the high-speed  wireless  Internet  products.
The Company is  continuing  to assess cost  reduction  of its products and sales
volume increases to improve gross margins in 2003.


                                       33
<PAGE>

Selling,  general and administrative expenses decreased in 2003 by $1,235,556 to
$852,877  from  $2,088,433,  in 2002.  Expressed as a percentage  of sales,  the
selling,   general   and   administrative   expenses   (excluding   stock  based
compensation)  were  63% 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:

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.


                                       34
<PAGE>

As a result of the  foregoing,  the Company  incurred  net losses of $980,496 or
$0.10 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 of $23,764,836. 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  exceeded  our  cash  and
receivables by $1,572,164.  Our current ratio was 0.26 to 1.00, but our ratio of
accounts receivable to current liabilities was only 0.08 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  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 $268,000  (95% of accounts
receivable  of  $283,597)  in 2004.  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.  Provision for
doubtful accounts decreased from $108,000 in 2003 to $21,260 in 2004.

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.


                                       35
<PAGE>

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.


                                       36
<PAGE>

Item 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

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

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

         None.

Item 8a: CONTROLS AND PROCEDURES

         (a) Evaluation of Disclosure Controls and Procedures.

         Within the 90 days prior to the date of this  report,  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 are
         effective in timely alerting him to material information required to be
         included in the Company's periodic SEC filings relating to the Company.

         (b) Changes in Internal Controls.

         There were no significant changes in the Company's internal controls or
         in  other  factors  that  could  significantly  affect  these  internal
         controls subsequent to the date of my most recent evaluation.


                                       37
<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:

<TABLE>
<CAPTION>
Name                       Age          Position(s) with the Company
----                       ---          ----------------------------
<S>                        <C>          <C>
Tarlochan Bains*           55           Chief Executive Officer, Treasurer and Director.

John Lee                   76           Director

Jessica Lee                42           Secretary/Director

Mikio Tajima               72           Director
</TABLE>

  *  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.


                                       38
<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 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).


                                       39
<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
                                                       -------------------      Other Annual     Stock    Options/    LTIP    Other
Name and Principal Position        Year         Salary ($)        Bonus ($)     Compensation     Awards    SARS(#)   Payouts  Comp
---------------------------        ----         ----------        ---------     ------------     ------    -------   -------  ----
<S>                                <C>          <C>                 <C>        <C>               <C>       <C>        <C>     <C>
Devendar S. Bains,                 2004         $140,250(7)         --
Chief technology officer           2003         $162,000(4)         --         $20,000 (1)
                                   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.


                                       40
<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.

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").


                                       41
<PAGE>

         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.

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.


                                       42
<PAGE>

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."

(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.


                                       43
<PAGE>

(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.

         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.


                                       44
<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:

Index to Financial Statements                              F1

Report of Independent Certified Public Accountants         F2

Balance Sheets                                             F3 - F4

Statement of Operations                                    F5

Statement of Stockholders' Equity                          F6

Statement of Cash Flows                                    F7

Notes to Financial Statements                              F-8 - F-21

(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
 10.4*   Employment Agreement between the Company and Nirmal Bains
 10.5    Intentionally Omitted
 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


                                       45
<PAGE>

*        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.


                                       46
<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 -

         Notes to Financial Statements                                F-8 - F-21


                                      -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.

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

New York, New York
April 12, 2005


                                      -F2-
<PAGE>

                                 Amplidyne, Inc.
                                 BALANCE SHEETS
                                  December 31,

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

CURRENT ASSETS
         Cash and cash equivalents                                           $ 122,234       $      --
         Accounts receivable, net of allowance for doubtful accounts of
           $268,000 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
                                  December 31,

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

CURRENT LIABILITIES
         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                                                506,000                 --
         Accounts payable                                                                  456,910            411,171
         Other convertible notes payable - payment default effective
                  March 31, 2005                                                            22,173                 --
         Accrued expenses and other current liabilities (including
                  delinquent federal payroll taxes, penalties and interest
                           aggregating $81,353)                                            199,198             81,486
         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                            1,709,995            997,509

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

                           TOTAL LIABILITIES                                             1,709,995          1,018,482
                                                                                      ------------       ------------

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,
                  respectively                                                               1,038              1,038
         Additional paid-in capital                                                     22,503,014         22,494,854
         Accumulated deficit                                                           (23,764,836)       (22,930,175)
                                                                                      ------------       ------------
                                                                                        (1,260,784)          (434,283)
                                                                                      ------------       ------------

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

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS


                                      -F4-
<PAGE>

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

<TABLE>
<CAPTION>
                                                              2004               2003
                                                          ------------       ------------
<S>                                                       <C>                <C>
Net sales                                                 $    743,790       $  1,351,225
Cost of goods sold  (net of inventory write-down
         of $101,039 in 2004 and $164,672 in 2003)             779,266          1,411,679
                                                          ------------       ------------

                  Gross loss                                   (35,476)           (60,454)

Operating expenses
         Selling, general and administrative                   586,505            852,877
         Research, engineering and development                 256,175            287,629
                                                          ------------       ------------

                  Operating loss                              (878,156)        (1,200,960)

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                    (814,428)          (979,798)

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

                  NET LOSS                                $   (834,663)      $   (980,496)
                                                          ============       ============

Net loss per share - basic and diluted                    $      (0.08)      $      (0.10)
                                                          ============       ============

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
                     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
Issuance of common stock in connection with
litigation settled in the year ended December 31, 2002                                               700,000                70
                                                          ------------       ------------       ------------      ------------

BALANCE AT DECEMBER 31, 2003                                        --                 --         10,376,500             1,038
Net loss for the year ended December 31, 2004

Litigation  settlement to be paid through the issuance
of common stock
                                                          ------------       ------------       ------------      ------------

BALANCE AT DECEMBER 31, 2004                                        --       $         --         10,376,500      $      1,038

<CAPTION>
                                                          Additional
                                                            Paid-In          Accumulated      Subscriptions
                                                            Capital             Deficit         Receivable             Total
                                                          ------------       ------------       ------------      ------------
<S>                                                       <C>                <C>                <C>               <C>
BALANCE AT DECEMBER 31, 2002                              $ 22,494,924       $(21,949,679)      $         --      $    546,213
Net loss for the year ended December 31, 2003                                    (980,496)                            (980,496)
Issuance of common stock in connection with
litigation settled in the year ended December 31, 2002             (70)                                                     --
                                                          ------------       ------------       ------------      ------------

BALANCE AT DECEMBER 31, 2003                                22,494,854        (22,930,175)                --          (434,283)
Net loss for the year ended December 31, 2004                 (834,661)          (834,661)
Litigation settlement to be paid through the issuance
of common stock                                                  8,160                                                   8,160
                                                          ------------       ------------       ------------      ------------

BALANCE AT DECEMBER 31, 2004                              $ 22,503,014       $(23,764,836)      $         --      $ (1,260,784)
                                                          ============       ============       ============      ============
</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
                                                                                                   ---------       ---------
<S>                                                                                                <C>             <C>
Cash flows from operating activities:
Net Loss                                                                                           $(834,663)      $(980,496)
                                                                                                   ---------       ---------
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                                      163,152         (72,814)
                           Advances from customer                                                    (37,992)         60,000
                                    Total adjustments                                                484,260         864,420
                                                                                                   ---------       ---------
                   Net cash (used for) operating activities                                         (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        343,000              --
         Proceeds of temporary additional advance from Lee                                             6,000              --
         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       $      --
                                                                                                   =========       =========

Supplemental disclosures of cash flow information:
         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


                                      -F7-
<PAGE>

                                 Amplidyne, Inc.
                          Notes to 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  $834,663  and  $980,496  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;

      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;


                                      -F8-
<PAGE>

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

      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.

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


                                      -F9-
<PAGE>

                                 Amplidyne, Inc.
                          Notes to 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.


                                     -F10-
<PAGE>

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

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 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.

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.

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.


                                     -F11-
<PAGE>

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

11. RECLASSIFICATIONS

Certain  reclassifications  were  made to the 2003  amounts  to  conform  to the
current presentation.

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.

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      $1,128,453
         Internet business                    88,111         222,772
                                          ----------      ----------
                                          $  743,790      $1,351,225
                                          ==========      ==========
Sales - external, by geographic area
         United States                    $       --      $  201,087
         Europe                              743,790         732,694
         Canada                                   --         417,444
         All other foreign countries              --              --
                                          ----------      ----------
                                          $  743,790      $1,351,225
                                          ==========      ==========
Inventory
         Amplifier                        $  249,372      $  248,575
         Internet business                    60,261         159,134
                                          ----------      ----------
                                          $  309,633      $  407,709
                                          ==========      ==========


                                     -F12-
<PAGE>

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

NOTE C - PUBLIC OFFERING AND PRIVATE PLACEMENTS

1.       Common Sock 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

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,
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.


                                     -F13-
<PAGE>

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

In a separate  transaction,  John 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
convertible  promissory  notes  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. 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  two  convertible  promissory  notes  which  will be
convertible in the aggregate into Series C shares representing approximately 32%
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 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.

In October  2004,  an  additional  $156,000 was received from John Lee, of which
$6,000  represented  a  temporary  additional  advance  outside  of the Series C
Convertible financing.

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.

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.


                                     -F14-
<PAGE>

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

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                            $ (983,008)      $  (1,197,411)
Loss per share                      $    (0.09)      $       (0.12)

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

<TABLE>
<CAPTION>
                                                Shares of common     Weighted average
                                               stock attributable    exercise price of
                                                   to options            options
                                               ------------------    -----------------
<S>                                                 <C>                 <C>
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
                                                   ==========
</TABLE>


                                     -F15-
<PAGE>

                                 Amplidyne, Inc.
                          Notes to 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          Weighted
                    outstanding at      remaining      Weighted average   exercisable at       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.


                                     -F16-
<PAGE>

                                 Amplidyne, Inc.
                          Notes to 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 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).


                                     -F17-
<PAGE>

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

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.


                                     -F18-
<PAGE>

                                 Amplidyne, Inc.
                          Notes to 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 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.


                                     -F19-
<PAGE>

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

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.


                                     -F20-
<PAGE>

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

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.


                                     -F21-
<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.


                                       47
<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.

<TABLE>
<CAPTION>
Signature                                   Title                                     Date
---------                                   -----                                     ----
<S>                                 <C>                                         <C>
/s/ Tarlochan S. Bains              Chief Executive Officer and Director        April 15, 2005
----------------------------
Tarlochan S. Bains

/s/ John Lee                        Secretary                                   April 15, 2005
-------------------------
John Lee

/s/Jessica Lee                      Director                                    April 15, 2005
-------------------------
Jessica Lee

/s/ Mikio Tajima                    Director                                    April 15, 2005
----------------
Mikio Tajima
</TABLE>


                                       48