U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the quarterly period ended March 31,
2004
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the transition period from _______ to
_______
COMMISSION FILE NUMBER 1-12711
DIGITAL POWER CORPORATION
(Exact name of small business issuer as specified in its charter)
California 94-1721931
---------- ----------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
41920 Christy Street, Fremont CA 94538-3158
-------------------------------------------
(Address of principal executive offices)
(510) 657-2635
--------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Number of shares of common stock outstanding as of May 1, 2004: 5,700,703.
ITEM 1. FINANCIAL STATEMENTS
DIGITAL POWER CORPORATION
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2004
IN U.S. DOLLARS
UNAUDITED
INDEX
Page
----------------
Review Report of Unaudited Interim Consolidated
Financial Statements 3
Consolidated Balance Sheets 4 - 5
Consolidated Statements of Operations 6
Statements of Changes in Shareholders' Equity 7
Consolidated Statements of Cash Flows 8
Notes to Consolidated Financial Statements 9 - 12
- - - - - - - -
- 2 -
[GRAPHIC OMITTED]
The Board of Directors
Digital Power Corporation
-------------------------
Re: Review report of unaudited interim consolidated financial
statements
as of and for the three-month period ended March 31, 2004
----------------------------------------------------------
We have reviewed the accompanying consolidated balance sheet of Digital
Power Corporation ("the Company") and its subsidiary as of March 31, 2004, and
the related consolidated statements of operations, and cash flows for the
three-month period ended March 31, 2004 and 2003 and changes in shareholders'
equity for the three month period ended March 31, 2004 in accordance with
Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants. All information included in
these financial statements is the representation of the Company's management.
A review consists principally of inquiries of company personnel and
analytical procedures applied to financial data. It is substantially less in
scope than an audit in accordance with auditing standards generally accepted in
the United States, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements at March 31, 2004, and
the three-month period then ended in order for them to be in conformity with
accounting principles generally accepted in the United States.
s/KOST FORER GABBAY & KASIERER
Tel-Aviv, Israel KOST FORER GABBAY & KASIERER
May 11, 2004 A Member of Ernst & Young Global
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DIGITAL POWER CORPORATION
-------------------------
CONSOLIDATED BALANCE SHEETS
-----------------------------------------------------------------------------------------------------------------------------
U.S. dollars in thousands
March 31,
2004
----------------
Unaudited
----------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,164
Restricted cash 296
Trade receivables, net of allowance for doubtful accounts of $ 44 at March 31, 2004 1,515
Prepaid expenses and other current assets 247
Inventories 1,671
----------------
Total current assets 4,893
-----
----------------
LEASE DEPOSITS 18
----------------
PROPERTY AND EQUIPMENT, NET 303
----------------
Total assets $ 5,214
-----
================
The accompanying notes are an integral part of the consolidated financial
statements.
The financial statements included in this report include additional information
not otherwise required by regulations of the Securities and Exchange Commission.
The Company is providing this additional information in connection with Telkoor
Telecom Ltd. filings with the securities agencies in Israel.
- 4 -
CONSOLIDATED BALANCE SHEETS
----------------------------------------------------------------------------------------------------------------------------
U.S. dollars in thousands, except share data
March 31,
2004
----------------
Unaudited
----------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 891
Other current liabilities 1,275
----------------
Total current liabilities 2,166
-----
----------------
SHAREHOLDERS' EQUITY:
Series A redeemable, convertible preferred shares no par value: 500,000 shares authorized, 0 shares
issued and outstanding at March 31, 2004 -
Preferred shares, no par value: 1,500,000 shares authorized, 0 shares issued and outstanding at
March 31, 2004 -
Common shares, no par value: 10,000,000 shares authorized; 5,700,703 shares issued and outstanding
at March 31, 2004 11,036
Additional paid-in capital 1,708
Deferred stock compensation (19)
Accumulated deficit (9,697)
Accumulated other comprehensive income 20
----------------
Total shareholders' equity 3,048
-----
----------------
Total liabilities and shareholders' equity $ 5,214
-----
================
The accompanying notes are an integral part of the consolidated financial
statements.
- 5 -
CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA
Three months ended
March 31,
------------------------------------------
2004 2003
------------------ --------------------
Unaudited
------------------------------------------
Revenues $ 1,829 $ 2,133
Cost of revenues 1,393 1,538
------------------ ------------------
Gross profit 436 595
------------------ ------------------
Operating expenses:
Engineering and product development 137 145
Selling and marketing 303 259
General and administrative 280 310
------------------ ------------------
Total operating expenses 720 714
-----
------------------ ------------------
Operating loss (284) (119)
Financial income (expenses), net 32 (4)
------------------ ------------------
Loss before tax benefit (252) (123)
Tax benefit - 8
------------------ ------------------
Net loss $ (252) $ (115)
================== ==================
Basic and diluted loss per share $ (0.04) $ (0.03)
================== ==================
Weighted average number of shares used in computing basic and diluted loss
per share 5,663,281 4,510,680
================== ==================
The accompanying notes are an integral part of the consolidated financial
statements.
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DIGITAL POWER CORPORATION
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
------------------------------------------------------------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE DATA
Accumulated
Common shares Additional Deferred other Total other Total
----------------- paid-in stock Accumulated comprehensive comprehensive shareholders'
Number Amount capital compensation deficit Loss income (loss) equity
--------- ------- ---------- ------------ ----------- ------------- ------------- -----------
Balance as of January 1, 2004 5,410,680 $11,036 $ 1,437 $ - $ (9,445) $ (6) $ 3,022
Issuance of Common shares, net 290,023 - 246 - - - 246
Deferred stock compensation
related to options granted
to an employee - - 25 (25) - - -
Amortization of deferred stock
compensation related to
options granted to an
employee - - - 6 - - 6
Comprehensive loss:
Net loss
Foreign currency translation
adjustments - - - - (252) - (252) (252)
- - - - - 26 $ 26 26
--------- ------- ---------- ------------- ----------- ------------- ------------ ----------
Total other comprehensive loss $ 226
============
Balance as of March 31, 2004 (Unaudited) 5,700,703 $11,036 $ 1,708 $ (19) $ (9,697) $ 20 $ 3,048
========= ======= ========== ============= =========== ============= =========
The accompanying notes are an integral part of the consolidated financial
statements.
- 7 -
DIGITAL POWER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
----------------------------------------------------------------------------------------------------------------------------
U.S. dollars in thousands
Three months ended
March 31,
---------------------------------------
2004 2003
------------------ -----------------
Unaudited
---------------------------------------
Cash flows from operating activities:
Net loss $ (252) $ (115)
Adjustments required to reconcile net loss to net cash provided by (used
in) operating activities:
Depreciation 25 37
Compensation related to options granted to an employee 6 -
Decrease in deferred income taxes - 342
Decrease in trade receivables 121 204
Increase in prepaid expenses and other current assets (105) (14)
Decrease in inventories 28 3
Decrease in accounts payables (190) (178)
Increase (decrease) in other current liabilities 233 (213)
------------------ ------------------
Net cash provided by (used in) operating activities (134) 66
------------------ ------------------
Cash flows from investing activities:
Purchase of property and equipment (4) (19)
Proceeds from long-term loan - 6
------------------ ------------------
Net cash used in investing activities (4) (13)
------------------ ------------------
Cash flows from financing activities:
Proceeds from short-term bank credit - 40
Principal payments on capital lease obligations - (10)
Issuance of shares pursuant to an investment by Telkoor Telecom Ltd. 246 -
------------------ ------------------
Net cash provided by financing activities 246 30
------------------ ------------------
Effect of exchange rate changes on cash and cash equivalents 6 (15)
------------------ ------------------
Increase in cash and cash equivalents 114 68
Cash and cash equivalents at the beginning of the period 1,050 616
------------------ ------------------
Cash and cash equivalents at the end of the period $ 1,164 $ 684
================== ==================
Supplemental disclosure of cash flows activities:
Cash paid during the period for interest $ - $ 5
================== ==================
The accompanying notes are an integral part of the consolidated financial
statements.
- 8 -
--------------------------------------------------------------------------------
NOTE 1:- GENERAL
Digital Power Corporation ("the Company" or "DPC") was incorporated in
1969, under the General Corporation Law of the state of California.
The Company has a wholly-owned subsidiary, Digital Power Limited
("DPL"), located in the United Kingdom. The Company and its subsidiary
are currently engaged in the design, manufacture and sale of switching
power supplies and converters. The Company has two reportable
geographic segments - North America (sales through DPC) and Europe
(sales through DPL).
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
a. The significant accounting policies applied in the annual financial
statements of the Company as of December 31, 2003, are applied
consistently in these financial statements. In addition the
following accounting policy is applied:
The accompanying unaudited consolidated financial statements as
of March 31, 2004 and for the three months ended March 31, 2004 and
2003 are unaudiated and reflect all adjustments (consisting only of
normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the financial
position and operating results for the interim periods. The
condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes
thereto, together with management's discussion and analysis of the
financial condition and results of operations, contained in the
Company Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2003. The results of operations for the three
months ended March 31, 2004 are not necessarily indicative of
the results for the entire fiscal year ending December 31, 2004.
b. Accounting for stock-based compensation:
The Company and its subsidiary have elected to follow Accounting
Principles Board Opinion No. 25 "Accounting for Stock Issued
to Employees" ("APB No. 25") in accounting for its employee stock
option plans. Under APB No. 25, when the exercise price of the
Company's share options is less than the market price of the
underlying shares on the date of grant, compensation expense is
recognized.
The Company and its subsidiary apply SFAS No. 123, and Emerging
Issues Task Force No. 96-18 "Accounting for Equity Instruments
that are Issued to Other than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services" ("EITF 96-18"), with
respect to options issued to non-employees SFAS No. 123 requires
use of an option valuation model to measure the fair value of the
options at the grant date.
- 9 -
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Under Statement of Financial Accounting Standard No. 123
"Accounting for Stock Based compensation ("SFAS No. 123") SFAS No.
123, proforma information regarding net earnings (loss) and net
earnings (loss) per share is required and has been determined
as if the Company had accounted for its employee options under the
fair value method of that statement. The fair value for these
options was estimated at the date of grant using a Black-Scholes
Option Valuation Model, with the following weighted-average
assumptions for March 31, 2004 and 2003. Expected volatility of
113% and 46% respectively, risk-free interest rates of 4.7% and
1.5%, respectively, dividend yield of 0% for each period, and a
weighted-average expected life of the option of 4 years for each
period. Stock compensation, for pro-forma purposes, is
amortized over the vesting period.
The following table illustrates the effect on net loss and loss
per share as if the fair value method had been applied to all
outstanding and unvested awards in each period:
Three months ended
March 31,
--------------------------------
2004 2003
-------------- --------------
Unaudited
--------------------------------
Net loss available to Ordinary shares - as reported $ (252) $ (115)
Deduct - stock-based employee compensation - intrinsic value 6 -
Add - stock-based employee compensation -fair value (81) (620)
-------------- --------------
Pro forma net loss $ (327) $ (735)
============== ==============
Earning per share:
Basic and diluted net loss, as reported $ (0.04) $ (0.03)
============== ==============
Pro forma basic and diluted net loss $ (0.06) $ (0.16)
============== ==============
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NOTE 3:- SHARE CAPITAL
On January 12, 2004, the Company entered into an agreement to sell
290,023 shares of Common Stock to Telkoor Telecom Ltd. in
consideration of $246, net of issuance expenses. Additionally under
the abovementioned agreement, Telkoor may purchase additional shares
of Common Stock for an aggregate consideration of $250 prior to or on
June 30, 2004, as determined in the agreement.
NOTE 4:- PENDING LITIGATION
On April 2, 2003, a claim was filed against the Company by Tek-Tron
Enterprises Inc. in state court of Pennsylvania, specifically, the
Court of Common Pleas of Bucks County, at Case No. 0302116-24-1.
Tek-Tron Enterprises Inc. is seeking damages of approximately
$300,000. This case is a complaint for breaking of contract and
conversion of parts and infrastructure owned by Tek-Tron Enterprises
Inc. located in the Company's former subsidiary, Poder Digital S.A.'s,
Mexico manufacturing plant. The Company accrued $ 102,000 including
expenses related to the lawsuit.
NOTE 5:- SEGMENTS, MAJOR CUSTOMERS AND GEOGRAPHICAL INFORMATION
The Company has two reportable geographic segments, see Note 1 for a
brief description of the Company's business. The data is presented in
accordance with Statement of Financial Accounting Standard No.131,
"Disclosure About Segments of an Enterprise and Related Information"
("SFAS No. 131").
The following data presents the revenues, expenditures and other
operating data of the Company's geographic operating segments:
Three months ended March 31, 2004 (Unaudited)
------------------------------------------------------------------------
DPC DPL Eliminations Total
---------------- --------------- --------------- ---------------
Revenues $ 784 $ 1,045 $ - $ 1,829
Intersegment revenues 138 - (138) -
---------------- --------------- --------------- ---------------
Total revenues $ 922 $ 1,045 $ (138) $ 1,829
================ =============== =============== ===============
Depreciation expense $ 7 $ 18 $ - $ 25
================ =============== =============== ===============
Operating loss $ (233) $ (51) $ - $ (284)
================ =============== =============== ===============
Financial income, net $ 32
===============
Net loss $ (237) $ (15) $ - $ (252)
================ =============== =============== ===============
Expenditures for segment assets as
of March 31, 2004 $ - $ 4 $ - $ 4
================ =============== =============== ===============
Identifiable assets as of
March 31, 2004 $ 2,242 $ 2,972 $ - $ 5,214
================ =============== =============== ===============
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NOTE 5:- SEGMENTS CUSTOMERS AND GEOGRAPHICAL INFORMATION (Cont.)
Three months ended March 31, 2003 (unauditd)
------------------------------------------------------------------------
DPC DPL Eliminations Total
--------------- --------------- --------------- ---------------
Revenues $ 994 $ 1,139 $ - $ 2,133
Intersegment revenues 203 - (203) -
--------------- --------------- --------------- ---------------
Total revenues $ 1,197 $ 1,139 $ (203) 2,133
=============== =============== =============== ===============
Depreciation expenses $ 8 $ 29 $ - $ 37
=============== =============== =============== ===============
Operating loss $ (109) $ (10) $ - $ (119)
=============== =============== =============== ===============
Financial expenses, net $ (4)
===============
Loss before tax benefit $ (123)
===============
Tax benefit $ - $ 8 $ - $ 8
=============== =============== =============== ===============
Net income (loss) $ (117) $ 2 $ - $ (115)
=============== =============== =============== ===============
Expenditures for segment assets as
of March 31, 2003 $ - $ 19 $ - $ 19
=============== =============== =============== ===============
Identifiable assets as of
March 31, 2003 $ 2,145 $ 2,853 $ - $ 4,998
=============== =============== =============== ===============
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
With the exception of historical facts stated herein, the matters discussed in
this report are "forward looking" statements that involve risks and
uncertainties that could cause actual results to differ materially from
projected results. Such "forward looking" statements include, but are not
necessarily limited to, statements regarding anticipated levels of future
revenues and earnings from operations of the Company. Factors that could cause
actual results to differ materially include, in addition to other factors
identified in this report, dependence on the electronic equipment industry,
competition in the power supply industry, dependence on manufacturers in Mexico,
China and other risks factors detailed in the Company's Form 10-KSB for the year
ended December 31, 2003. Readers of this report are cautioned not to put undue
reliance on "forward looking" statements which are, by their nature, uncertain
as reliable indicators of future performance. The Company disclaims any intent
or obligation to publicly update these "forward looking" statements, whether as
a result of new information, future events, or otherwise.
GENERAL
We are engaged in the business of designing, developing, manufacturing,
marketing and selling switching power supplies to telecommunications, data
communication , test and measurement equipment, office and factory automation
and instrumentation equipment manufacturers. Revenues are generated from sales
to distributors, OEMs in the telecommunication, data communication, test and
measurements equipment, office and factory automation and instrumentation
manufacturers' equipment in North America, Europe, and the United Kingdom.
We have continued our efforts to increase sales to existing and new
customers, and continue our strategy to manufacture our product in the Far East.
Until revenues increase to a sufficient amount to offset our expenses, we
anticipate that we will continue to experience net losses for the near future.
We believe that our cash will be sufficient to fund those losses.
The Company entered into a securities purchase agreement on January 12,
2004 to sell 290,023 shares of Common stock to Telkoor Telecom Ltd. for the
aggregate consideration of $250,000. Telkoor may purchase additional shares of
Common stock for an aggregate consideration of $250,000 prior to or on June 30,
2004, as determined in the agreement.
On January 19, 2004, the Company hired Jonathan Wax as president and CEO.
- 13 -
THREE MONTHS ENDED MARCH 31, 2004, COMPARED TO MARCH 31, 2003
REVENUES
Total revenues decreased by 14.3% to $1,829,000 for the first quarter ended
March 31, 2004, from $2,133,000 for the first quarter ended March 31, 2003.
Revenues from the domestic operation of DPC decreased 21.1% to $784,000 for the
first quarter ended March 31, 2004, from $994,000 for the first quarter ended
March 31, 2003. Revenues from the Company's European operations of DPL decreased
8.3% to $1,045,000 for the first quarter ended March 31, 2004, from $1,139,000
for the first quarter ended March 31, 2003. The revenue decrease in the first
quarter of 2004 is mainly due to a reduction in sales of our mature products and
slower than anticipated ramp up in sales of our new products.
GROSS MARGINS
Gross margins were 23.8% for the three months ended March 31, 2004, compared to
27.9% for the three months ended March 31, 2003. The decrease in gross margins
can be primarily attributed to the shift in product mix, fixed cost and decrease
in revenues.
ENGINEERING AND PRODUCT DEVELOPMENT
Engineering and product development expenses were 7.5% of revenues for the three
months ended March 31, 2004 and 6.8 % for the three months ended March 31, 2003.
Actual dollar expenditures remained at approximately the same level.
SELLING AND MARKETING
Selling and marketing expenses were 16.6 % of revenues for the three months
ended March 31, 2004, compared to 12.1% for the three months ended March 31,
2003. The increase in sales and marketing expenses were primarily due to new
hires as part of our efforts to increase sales in the future.
GENERAL AND ADMINISTRATIVE
General and administrative expenses were 15.3% of revenues for the three months
ended March 31, 2004, compared to 14.5% for the three months ended March 31,
2003. In actual dollars, general and administrative expenditures decreased by
$30,000, which was mainly due to recovery of bad debt allowance.
FINANCIAL INCOME AND OTHER EXPENSES
Financial income net was $32,000 for the three months ended March 31, 2004,
compared to financial expenses net of $4,000 for the three months ended March
31, 2003. The financial income resulted mainly from a favorable exchange rate.
LOSS BEFORE INCOME TAXES
For the three months ended March 31, 2004, the Company had a loss before income
taxes of $252,000 compared to a loss before income taxes of $123,000 for the
three months ended March 31, 2003. The loss increase is mainly due to the
decrease in revenues and gross margin.
- 14 -
TAX BENEFIT
The tax benefit of $8,000 for the first quarter of 2003 was from DPL. No tax
benefit was recorded for the first quarter of 2004.
NET LOSS
Net loss for the three months ended March 31, 2004, was $252,000 compared to net
loss of $115,000 for the three months ended March 31, 2003. The net loss
increase is mainly due to the decrease in revenues and gross margin. The Company
intends to reduce costs by transitioning the manufacture of our newer commercial
product lines to the Far East.
LIQUIDITY AND CAPITAL RESOURCES
On March 31, 2004, the Company had cash, cash equivalent and a short-term bank
deposit of $1,164,000 and working capital of $2,727,000. This compares with cash
and cash equivalent of $684,000 and working capital of $2,701,000 at March 31,
2003. The increase in working capital is mainly from the Telkoor Telecom
investment of $246,000, offset partially by the operating loss.
Cash used in operating activities for the Company totaled $134,000 for the three
months ended March 31, 2004, compared to cash provided of $66,000 for the three
months ended March 31, 2003. Cash used in investing activities was $4,000 for
the three months ended March 31, 2004, compared to $13,000 for the three months
ended March 31, 2003. Net cash provided by financing activities was $246,000 for
the three months ended March 31, 2004, compared to the net cash provided of
$30,000 for the three months ended March 31, 2003.
The Company has available a line of credit with Silicon Valley Bank ("SVB"). The
Company can borrow up to $1,200,000 against eligible accounts receivable and
other financial covenants. The rate for this line of credit would be at Silicon
Valley Bank's prime rate plus 1.75%. In order to utilize the line of credit, the
Company is required to maintain certain ratios and be in compliance with other
covenants. As of March 31, 2004, the Company has not utilized its line of
credit.
The Company's subsidiary has a $548,000 line of credit with Lloyds TSB Bank.
Borrowing under this line of credit bears interest of 1.75% per annum over the
bank's base rate. As of March 31, 2004, there is no outstanding balance on this
line of credit.
The Company believes it has adequate resources at this time to continue its
promotional efforts to increase sales in the electronic industry market.
However, if the Company does not meet those goals, it may have to raise money
through debts or equity, which may dilute shareholder's equity.
ITEM 3. CONTROLS AND PROCEDURES
The Company's management with the participation of the Company's principal
executive and financial officers evaluated the effectiveness of the Company's
disclosure controls and procedures (as defined Rule 13a-15(e) of the Exchange
Act) as of the end of the period covered by this report. The Company's
- 15 -
disclosure controls and procedures are designed to ensure that information
required to be disclosed by the Company in the reports it files or submits under
the Exchange Act are recorded, processed, summarized and reported on a timely
basis. Based upon their evaluation, the Company's principal executive and
financial officers concluded that the Company's disclosure controls and
procedures are effective to accumulate and communicate to the Company's
management as appropriate to allow timely decisions regarding disclosure.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time the Company is subject to exposure to legal proceedings
and claims which arise in the ordinary course of business. In the opinion of
management, the amount of ultimate liability with respect to any such current
actions will not materially affect the financial position or results of
operations of the Company.
ITEM 2. CHANGES IN SECURITIES
On January 12, 2004, the Company sold 290,023 shares of common stock for
$0.862 per share to Telkoor Telecom Ltd. Under the terms of the stock purchase
agreement, Telkoor may invest an additional $250,000 on or before June 30, 2004.
The purchase price per share for the additional investment is the average
closing price of the Company's common stock twenty (20) trading days prior to
notice of intent to invest. There was no broker or placement agent in this
transaction.
The sales and issuance of common stock was made by us in reliance upon the
exemptions from registration provided under Section 4(2) and 4(6) of the
Securities Act of 1933, as amended, and Rule 506 of Regulation D, promulgated by
the SEC under federal securities laws and comparable exemptions for sales to
"accredited" investors under state securities laws. The offers and sales were
made to accredited investors as defined in Rule 501(a) under the Securities Act,
no general solicitation was made by us or any person acting on our behalf; the
securities sold were subject to transfer restrictions, and the certificates for
those shares contained an appropriate legend stating that they had not been
registered under the Securities Act and may not be offered or sold absent
registration or pursuant to an exemption there from.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
- 16 -
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
--------
3(ii) Bylaws as Amended
31.1 Certification of the CEO under the Sarbanes-Oxley Act
31.2 Certification of the CFO under the Sarbanes-Oxley Act
32 Certification of the CEO & CFO under the Sarbanes-Oxley Act
(b) Reports on Form 8-K
The Company filed the following reports:
Date of Report Date of Event Item reported
-------------- ------------- -------------
March 17, 2004 March 11, 2004 Press release announcing fourth
quarter results, Mark Thum's
resignation from the Board and
elimination of Executive CEO
position
January 14, 2004 January 11, 2004 Press release announcing securities
purchase agreement with Telkoor
Telecom Ltd.
- 17 -
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DIGITAL POWER CORPORATION
(Registrant)
Date: May 12, 2004 /s/ JONATHAN WAX
------------------------------
Jonathan Wax
Chief Executive Officer
(Principal Executive Officer)
Date: May 12, 2004 /s/ HAIM YATIM
------------------------------
Haim Yatim
Chief Financial Officer
(Principal Financial and
Accounting Officer)