FORM 10-QSB
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 000-22083
GLOBAL MED TECHNOLOGIES, INC.
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(Exact name of small business issuer as specified in its charter)
COLORADO 84-1116894
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
12600 West Colfax, Suite C-420, Lakewood, Colorado 80215
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(Address of principal executive offices)
(303) 238-2000
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(Issuer's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. [X] Yes [ ] No
As of August 15, 2000, 13,661,786 shares of the issuer's Common Stock were
outstanding.
Transitional Small Business Disclosure Format [ ] Yes [X] No
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PART I - FINANCIAL INFORMATION
The interim financial statements included in this Form 10-Q have not been
reviewed by the Company's independent auditors, nor any other independent
accountants, using professional standards and procedures for conducting such
reviews, as established by generally accepted auditing standards. Accordingly,
the Company's independent auditors have not expressed any opinion or any other
form of assurance on such financial statements, and assume no responsibility
for, and disclaim any association with, such financial statements.
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, December 31,
2000 1999
------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .................................................. $ 421 330
Accounts receivable-trade, net of allowance for uncollectible accounts
of $50 at June 30, 2000 and December 31, 1999, respectively ............ 707 445
Accrued revenues, net of allowance for uncollectible accounts
of $15 at June 30, 2000 and December 31, 1999 .......................... 894 324
Prepaid expenses and other assets .......................................... 315 66
------- -------
Total current assets .......................................................... 2,337 1,165
EQUIPMENT, FURNITURE AND FIXTURES, AT COST:
Furniture and fixtures ..................................................... 167 167
Machinery and equipment .................................................... 306 306
Computer hardware and software ............................................. 1,596 1,583
------- -------
2,069 2,056
Less accumulated depreciation and amortization ............................. (1,624) (1,564)
------- -------
Net equipment, furniture and fixtures ......................................... 445 492
DEFERRED FINANCING COSTS,
net of accumulated amortization of $457 and $158 at
June 30, 2000 and December 31, 1999, respectively .......................... 301 300
CAPITALIZED SOFTWARE DEVELOPMENT COSTS,
net of accumulated amortization of $1,460 and $1,126 at
June 30, 2000 and December 31, 1999, respectively .......................... 1,579 1,566
OTHER ASSETS .................................................................. 410 65
------- -------
Total assets .................................................................. $ 5,072 3,588
======= =======
See accompanying notes to unaudited consolidated financial statements.
2
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<CAPTION>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In thousands)
June 30, December 31,
2000 1999
------- -----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable ............................................................. $ 430 303
Accrued expenses ............................................................. 876 808
Accrued payroll .............................................................. 120 87
Accrued compensated absences ................................................. 389 412
Noncompete accrual ........................................................... 35 35
Deferred revenue ............................................................. 1,777 1,502
Financing agreements, related party .......................................... 5,400 --
Current portion of capital lease obligations ................................. 149 145
-------- --------
Total current liabilities ....................................................... 9,176 3,292
CAPITAL LEASE OBLIGATIONS, less current portion ................................. 118 179
FINANCING AGREEMENTS, RELATED PARTY, less current portion ....................... -- 4,400
-------- --------
Total liabilities ............................................................... 9,294 7,871
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT:
Preferred stock, $.01 par value: Authorized shares - 10,000;
none issued or outstanding ................................................ -- --
Common stock, $.01 par value: Authorized shares - 40,000;
issued and outstanding shares - 13,662, and 11,638 at June 30, 2000
and December 31, 1999, respectively ....................................... 137 116
Additional paid-in capital ................................................... 28,956 27,158
Accumulated deficit .......................................................... (33,315) (31,557)
-------- --------
Total stockholders' deficit ..................................................... (4,222) (4,283)
-------- --------
Total liabilities and stockholders' deficit ..................................... $ 5,072 3,588
======== ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
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<TABLE>
<CAPTION>
GLOBAL MED TECHNOLOGIES, INC.
UNAUDITED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER COMMON SHARE INFORMATION)
Three months ended
June 30,
2000 1999
---- ----
<S> <C> <C>
REVENUES:
Software sales and consulting ...................................... $ 1,059 1,848
Hardware and software sales, obtained from vendors ................. -- 159
-------- --------
1,059 2,007
-------- --------
COST OF REVENUES:
Software sales and consulting ...................................... 450 660
Hardware and software sales, obtained from vendors ................. -- 158
-------- --------
450 818
-------- --------
Gross profit .......................................................... 609 1,189
OPERATING EXPENSES:
General and administrative ......................................... 855 513
Sales and marketing ................................................ 388 432
Research and development ........................................... 141 162
Depreciation and amortization ...................................... (75) 122
-------- --------
Loss from operations .................................................. (700) (40)
OTHER INCOME (EXPENSE):
Interest income .................................................... 4 99
Interest expense ................................................... (172) (91)
Amortization of deferred financing costs ........................... (195) (702)
Other .............................................................. -- 23
-------- --------
Net loss .............................................................. $ (1,063) (711)
======== ========
Basic and diluted loss per share of common share ...................... $ (0.09) (0.07)
======== ========
Weighted average number of common shares outstanding -
basic and diluted .................................................. 12,415 10,695
======== ========
</TABLE>
See accompanying notes to unaudited financial statements.
4
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<TABLE>
<CAPTION>
GLOBAL MED TECHNOLOGIES, INC.
UNAUDITED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER COMMON SHARE INFORMATION)
Six months ended
June 30,
2000 1999
---- ----
<S> <C> <C>
REVENUES:
Software sales and consulting ......................................... $ 1,998 3,084
Hardware and software sales, obtained from vendors .................... -- 159
------- --------
1,998 3,243
------- --------
COST OF REVENUES:
Software sales and consulting ......................................... 970 1,204
Hardware and software sales, obtained from vendors .................... -- 158
------- --------
970 1,362
------- --------
Gross profit ............................................................. 1,028 1,881
OPERATING EXPENSES:
General and administrative ............................................ 1,345 1,005
Sales and marketing ................................................... 614 684
Research and development .............................................. 141 178
Depreciation and amortization ......................................... 60 250
------- --------
Loss from operations ..................................................... (1,132) (236)
OTHER INCOME (EXPENSE):
Interest income ....................................................... 5 102
Interest expense ...................................................... (318) (218)
Amortization of deferred financing costs .............................. (313) (4,687)
Other ................................................................. -- 23
------- --------
Net loss ................................................................. $(1,758) (5,016)
======= ========
Basic and diluted loss per share of common share ......................... $ (.14) (0.51)
======= ========
Weighted average number of common shares outstanding -
basic and diluted ..................................................... 12,137 9,786
======= ========
</TABLE>
See accompanying notes to unaudited financial statements.
5
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<TABLE>
<CAPTION>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
(In thousands)
Common Stock Additional
--------------------- paid-in Accumulated
Shares Amount capital Deficit Total
------ ------ ---------- ----------- -----
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1999 .......................... 11,638 $ 116 27,158 (31,557) (4,283)
Exercise of stock options ......................... 44 1 40 -- 41
Issuance of common stock for cash ................. 1,320 14 646 660
Issuance of common stock for financing costs ...... 160 1 298 -- 299
Common stock issued for services .................. 500 5 745 -- 750
Contributed capital ............................... -- -- 69 -- 69
Net loss .......................................... -- -- -- (1,758) (1,758)
------- ------- ------- ------- -------
Balances, June 30, 2000 .............................. 13,662 $ 137 28,956 (33,315) (4,222)
======= ======= ======= ======= =======
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
6
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<TABLE>
<CAPTION>
GLOBAL MED TECHNOLOGIES, INC.
UNAUDITED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Six months ended
June 30,
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ....................................................................... $(1,758) (5,016)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization ............................................. 60 346
Amortization of software development costs ................................ 334 --
Amortization of financing costs ........................................... 299 4,687
Changes in allowances for uncollectible amounts ........................... -- 50
Loss on disposal of assets ................................................ -- 37
Expense related to issuance of common stock, options and
warrants ............................................................. 750 241
Increase in other long term assets ........................................ (30) --
Changes in operating assets and liabilities:
Accounts receivable-trade, net ......................................... (262) (119)
Accrued revenues, net .................................................. (570) (241)
Prepaid expenses and other assets ...................................... 205 47
Accounts payable ....................................................... 127 41
Accrued expenses ....................................................... 68 (43)
Accrued payroll ........................................................ 33 155
Accrued compensated absences ........................................... (23) 13
Noncompete accrual ..................................................... -- --
Deferred revenue ....................................................... 275 (151)
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Net cash provided by (used in) operating activities .............. (492) 47
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalized software development costs ......................................... (347) (572)
Purchases of equipment, furniture and fixtures ................................. (13) (72)
Proceeds from sales of property and equipment .................................. -- 6
------- -------
Net cash used in investing activities ............................ (360) (638)
------- -------
(Continued)
See accompanying notes to unaudited financial statements.
7
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<CAPTION>
GLOBAL MED TECHNOLOGIES, INC.
UNAUDITED STATEMENTS OF CASH FLOWS (CONTINUED)
(IN THOUSANDS)
Six months ended
June 30,
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on financing agreements, related party .............................. $ 1,000 450
Borrowing on bridge loan ....................................................... -- 200
Repayments on bridge loan ...................................................... -- (200)
Principal payments under capital lease obligations ............................. (57) (91)
------- -------
Net cash provided by financing activities ........................ 943 359
------- -------
Net increase (decrease) in cash and cash equivalents ........................... 91 (232)
Cash and cash equivalents, at beginning of period .............................. 330 821
------- -------
Cash and cash equivalents, at end of period .................................... $ 421 589
======= =======
SUPPLEMENTAL DISCLOSURES OF OTHER INVESTING AND FINANCING ACTIVITIES:
Forgiveness of debt in exchange for exercise of warrants .................... $ -- 500
======= =======
Cancellation of common stock issued for services ............................ $ -- (23)
======= =======
Common stock issued for financing fees ...................................... $ 299 168
======= =======
Common stock issued for services ............................................ $ 750 23
======= =======
Equipment financed under capital lease ...................................... $ -- 273
======= =======
</TABLE>
See accompanying notes to unaudited financial statements.
8
<PAGE>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Global Med
Technologies, Inc. and Subsidiary (the Company or Global Med) have been prepared
by management in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments consisting
of only normal recurring adjustments considered necessary for a fair
presentation of their financial position at June 30, 2000 and the results of
their operations for the three months ended June 30, 2000 and 1999 have been
included.
While management believes the disclosures presented are adequate to prevent
misleading information, it is suggested that the accompanying unaudited
consolidated financial statements be read in conjunction with the audited
consolidated financial statements and the notes thereto contained in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1999, as
filed with the Securities and Exchange Commission. The interim results of
operations for the three and six months ended June 30, 2000 are not necessarily
indicative of the results that may be expected for any other interim period of
2000 or for the year ending December 31, 2000.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Company's management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
2. RELATED PARTIES
Global Med is effectively controlled by Online Credit International Limited
(Online International), formerly Heng Fung Holdings Company Limited, and its
subsidiary Online Credit Limited, formerly Heng Fung Finance Company Limited
(Online Credit) per the terms of the 1998 Financing Agreements. In addition,
Online International is a significant shareholder of Global Med. Online
International also is a majority shareholder of eVision USA.Com, Inc. (eVision)
and of a subsidiary of eVision, eBanker USA.com, Inc. (eBanker). eVision holds
warrants to purchase 1,000,000 shares of common stock of Global Med at $0.25 per
share. Global Med has outstanding balances on various financing agreements with
eBanker. (See Note 3). eBanker owns a significant number of shares of common
stock of Global Med and holds warrants to purchase 9,000,000 shares of common
stock of Global Med at $0.25 per share. eVision has a wholly owned subsidiary,
American Fronteer Financial Corporation (American Fronteer or AFFC) which is a
broker dealer. Online International, Online Credit, eVision, eBanker and AFFC
are related parties to Global Med.
9
<PAGE>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. FINANCING AGREEMENTS, RELATED PARTY
In April 2000, the loan agreements with eBanker for $2,650,000 and $2,000,000
that were due in April 2000 were extended to January 9 and January 7, 2001,
respectively. Payment of interest was also extended to the respective dates in
January 2001. The conversion rate of the $2,650,000 loan agreement was increased
to $1.6875 per share. Other terms of the loans remain the same. In consideration
of the extension, Global Med agreed to pay a fee of 137,778 shares of its common
stock. Based on the market price of the stock on the date of the agreements, the
shares have a value of $262,130, which will be recorded as deferred financing
costs and amortized over the extension period. If the loan's accrued interest or
principal is not repaid in 270 days the loan's interest and principal due date
will be automatically extended to April 15, 2001. The loan will become a
straight loan, without conversion features. Interest will continue to accrue on
the balance at 12% interest per annum.
If the loan's accrued interest or principal is not repaid in 270 days, 10-year
warrants convertible into common shares of Global Med at an exercise price of
$0.50 will be issued to eBanker. The number of shares will be equal to the
entire principal and interest amount divided by the new exercise price.
The bridge loan with eBanker of $750,000, as extended was due to mature on
September 30, 2000. In April 2000, eBanker agreed to extend the due date to
January 1, 2001. Payment of interest was also extended to January 1, 2001.
Global Med agreed to pay a fee of 22,222 shares of its common stock. Based on
the market price of the stock on the date of the agreements, the shares have a
value of $37,500, which will be recorded as deferred financing costs and
amortized over the extension period.
4. PEOPLEMED.COM, INC.
During 1999, Global Med Technologies, Inc. formed a subsidiary, PeopleMed.com,
Inc., (PeopleMed) a Colorado corporation, which is approximately 85% owned by
the Company, to develop a software application designed to give HMO providers
and other third party payers access to clinical information for chronic disease
patients. This application will allow doctors and other medical employees access
to a patient's history. The remaining 15% of PeopleMed is owned by certain
officers and directors of Global Med Technologies, Inc. PeopleMed received
$12,750 during the six months ended June 30, 2000 in payment of subscriptions
for common stock. There is no minority interest reflected in the June 30, 2000
or December 31, 1999 balance sheets because PeopleMed had a stockholders'
deficit at those dates. PeopleMed's operations were not material for the three
and six months ended June 30, 2000.
In February 2000, PeopleMed commenced a private placement of 2,000,000 shares of
its $.001 par value common stock at $1.00 per share for a total of $2,000,000.
As of June 30, 2000, the Company had received proceeds of $50,000 for 50,000
shares. The cash payments received during the six months ended June 30, 2000 are
reflected as contributed capital in the accompanying financial statements.
10
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GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. STOCKHOLDERS' EQUITY
Stock Option Exercises
During the six months ended June 30, 2000, options to purchase 44,000 shares of
common stock were exercised for a total of $41,000.
Sales of Common Stock
In June 2000, eVision purchased 1,000,000 shares of common stock of the Company
for $500,000. A director purchased 150,000 shares of common stock for $75,000
and 170,000 shares were sold to a shareholder for $85,000.
Consultancy Agreement
The Company entered into a consultancy agreement, effective as of February 24,
2000, for a period of twenty-four (24) months, with National Financial
Communications Corporation, dba OTC Financial Network (OTC Financial). OTC
Financial will provide consulting services, with the expressed intent and goal
of getting the Company, or its successor or assigns, listed on the Nasdaq Stock
Market which include providing financial community and investor relations for
the Company; and advising the Company, as requested, regarding the financial
community and investor relations.
Upon execution of this agreement, the Company agreed to: (a) issue to OTC
Financial 250,000 shares of restricted common stock; and (b) deposit into
escrow, in the name of OTC Financial, an additional 250,000 shares of restricted
common stock. Upon the Company's listing on the Nasdaq Stock Market, the stock
held in escrow will be released to the consultant. The shares of common stock
held in escrow may be returned to Company in the event of: (a) the term of the
consultancy agreement should expire before the Company is listed on the Nasdaq
Stock Market; or (b) the agreement is terminated before the Company is listed on
the Nasdaq Stock Market; or (c) the Company gives notice to OTC Financial of OTC
Financial's breach of the agreement.
On the effective date of the agreement, the 500,000 shares of common stock had a
fair value of $750,000 based on quoted market prices of the Company's common
stock. The amount has been recorded as a prepaid expense and other noncurrent
asset and is being amortized over the term of the agreement.
6. RECLASSIFICATIONS
Certain prior period amounts have been reclassified to conform with the current
period presentation.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
Global Med Technologies, Inc. and subsidiary (the Company or Global Med),
designs, develops, markets and supports information management software products
for blood banks, hospitals, centralized transfusion centers and other healthcare
related facilities. Revenues are derived from the licensing of software, the
provision of consulting and other value-added support services and the resale of
hardware and software obtained from vendors.
In April 2000, the loan agreements with eBanker for $2,650,000 and $2,000,000
that were due in April 2000 were extended to January 9 and January 7, 2001,
respectively. Payment of interest was also extended to the respective dates in
January 2001. The conversion rate of the $2,650,000 loan agreement was increased
to $1.6875 per share. Other terms of the loans remain the same. In consideration
of the extension, Global Med agreed to pay a fee of 137,778 shares of its common
stock. Based on the market price of the stock on the date of the agreements, the
shares have a value of $262,130, which will be recorded as deferred financing
costs and amortized over the extension period. If the loan's accrued interest or
principal is not repaid in 270 days the loan's interest and principal due date
will be automatically extended to April 15, 2001. The loan will become a
straight loan, without conversion features. Interest will continue to accrue on
the balance at 12% interest per annum.
If the loans and accrued interest are not repaid in 270 days, ten-year warrants,
exercisable to purchase common stock of Global Med at an exercise price of $0.50
per share, will be issued to eBanker. The number of common shares to be included
in the warrant to be issued will be equal to the entire principal and interest
amount divided by the exercise price of $0.50.
The bridge loan with eBanker of $750,000 was to mature on September 30, 2000. In
April 2000, eBanker agreed to extend the due date to January 1, 2001. Payment of
interest was also extended to January 1, 2001. Global Med agreed to pay a fee of
22,222 shares of its common stock. Based on the market price of the stock on the
date of the agreements, the shares have a value of $37,500, which will be
recorded as deferred financing costs and amortized over the extension period.
Global Med is in the process of negotiating possible alternative financing
arrangements.
The following discussion of the Company's results of operations and of its
liquidity and capital resources is derived from and should be read in
conjunction with the unaudited financial statements and the related notes
herein.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999
Revenues. Revenues are comprised of software sales and consulting.
Revenues from software sales and consulting decreased by $790 thousand, or 43%,
for the three months ended June 30, 2000 compared to the same three months in
1999. This decrease in revenues is primarily the result of a contract settlement
received in 1999 for $919 thousand offset by increased sales of the SAFETRACE
and SAFETRACE Tx(TM) products in 2000.
12
<PAGE>
Cost of revenue. Cost of revenue as a percentage of total revenues was 42% and
41% for the three months ended June 30, 2000 and 1999, respectively. This cost
increase was primarily a result of the contract settlement received in 1999 for
which there were no associated costs of revenue, offset by lower costs of
revenues of SAFETRACE TX (TM). SAFETRACE TX (TM) software product licenses are
typically priced at higher profit margins than SAFETRACE.
Gross profit. Gross profit as a percentage of total revenue was 58% and 59% for
the three months ended June 30, 2000 and 1999, respectively. This decrease in
gross profit was primarily due to the factors described above.
General and administrative. General and administrative increased $342 thousand,
or 67%, for the three months ended June 30, 2000 compared to the same three
months in 1999. This increase was attributable primarily to the Consultancy
Agreement with OTC Financial of $94 thousand, legal fees associated with the
preparation of a registration statement of $50 thousand, an increase in rent
expense of $45 thousand, and overhead costs associated with the PeopleMed
subsidiary of $240 thousand, offset by reductions in general and administrative
expenses resulting from the reduction in force of October 1999.
Sales and marketing. Sales and marketing expenses decreased $44 thousand or 10%,
for the three months ended June 30, 2000 compared to the same three months in
1999. This decrease in sales and marketing expenses was primarily due to the
increased sales and marketing efforts related to SAFETRACE TX(TM) during the
three months ended June 30, 1999, which were offset by the reduction in force of
October 1999.
Research and development. Research and development expenses decreased $21
thousand for the three months ended June 30, 2000 compared to the same three
months in 1999. The decrease in research and development expenses was primarily
due to the capitalization of software development costs of $347 thousand for the
three months ended June 30, 2000; offset by research and development costs
incurred for PeopleMed.
Interest expense. Interest expense increased $81 thousand or 89% for the three
months ended June 30, 2000 compared to the same three months in 1999. This
increase was primarily due to the borrowings on the Financing Agreements.
Loss from operations before other income (expense). The Company's loss from
operations during the three months ended June 30, 2000 of $700 thousand is $660
thousand more than the loss for the same three months in 1999 of $40 thousand.
The increased loss experienced during the three months ended June 30, 2000 was
primarily attributable to the contract settlement of $919 thousand received in
1999 offset by increases in sales.
SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999
Revenues. Revenues are comprised of software sales and consulting revenues.
Revenues from software sales and consulting decreased by $1.086 million, or 35%,
for the six months ended June 30, 2000 compared to the same six months in 1999.
This decrease in software sales and consulting revenues is primarily the result
of the contract settlement of $919 thousand received in 1999 as well as
decreased sales of the SAFETRACE and SAFETRACE Tx(TM) products due to lingering
Year 2000 effects on potential purchasers of software. Although the Company
experienced no adverse results when the Year 2000 occurred, software purchasers
were delaying decisions until more time had passed to ensure no Year 2000 issues
surfaced during the first six months of 2000. These purchasing delays were
experienced by the software industry overall and are not particular to Global
Med.
13
<PAGE>
Cost of revenue. Cost of revenue as a percentage of total revenues was 49% and
42% for the six months ended June 30, 2000 and 1999, respectively. This cost
increase was primarily a result of the contract settlement received in 1999 for
which there were no associated costs of revenue, offset by lower costs of
revenues of SAFETRACE TX (TM). SAFETRACE TX (TM) software product licenses are
typically priced at higher profit margins than SAFETRACE.
Gross profit. Gross profit as a percentage of total revenue was 51% and 58% for
the six months ended June 30, 2000 and 1999, respectively. This decrease in
gross profit was primarily a result of the factors described above.
General and administrative. General and administrative expenses increased $340
thousand, or 34%, for the six months ended June 30, 2000 compared to the same
six months in 1999. This increase was attributable primarily to the Consultancy
Agreement with OTC Financial of $188 thousand, legal fees associated with the
preparation of a registration statement, an increase in rent expense, and
overhead costs associated with the PeopleMed subsidiary, offset by reductions in
general and administrative expenses resulting from the reduction in force of
October 1999
Sales and marketing. Sales and marketing expenses decreased $70 thousand or 10%,
for the six months ended June 30, 2000 compared to the same six months in 1999.
This decrease in sales and marketing expenses was primarily due to the leveling
off of the increased sales and marketing efforts related to SAFETRACE TX(TM) of
1999.
Research and development. Research and development expenses decreased $37
thousand to $141 thousand, for the six months ended June 30, 2000 compared to
the same six months in 1999. The decrease in research and development expenses
was primarily due to the capitalization of software development costs resulting
from SAFETRACE TX(TM) achieving technological feasibility in 1999, offset by
increases in research and development for PeopleMed.
Interest expense. Interest expense increased $101 thousand or 46% for the six
months ended June 30, 2000 compared to the same six months in 1999. This
increase was primarily due to the borrowings on the Financing Agreements.
Loss from operations before other income (expense). The Company's loss from
operations during the six months ended June 30, 2000 of $1.132 million is $896
thousand more than the loss for the same six months in 1999. The increased loss
experienced during the six months ended June 30, 2000 was primarily attributable
to the contract settlement received in 1999 of $919 thousand offset by increased
sales of SAFETRACE TX(TM).
Net loss. The Company's net loss for the six months ended June 30, 2000 and 1999
was $1.758 million and $5.016 million, respectively. The difference of $3.258
million relates primarily to the noncash financing costs incurred in 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and cash equivalents of $421 thousand of June 30, 2000
compared to $330 thousand at December 31, 1999, none of which was restricted.
The Company had a net working capital deficit of $6.839 million as of June 30,
2000 and $2.127 million at December 31, 1999. The primary reason for the
decrease in working capital is the classification of the Financing Agreements as
current liabilities as of June 30, 2000.
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The Company used $492 thousand in net cash for operating activities during the
six months ended June 30, 2000. Net cash used by investing activities was $360
thousand during the six months ended June 30, 2000 compared to $638 thousand
during the same period of 1999. The Company invested $347 thousand and $572
thousand in software development during the six months ended June 30, 2000 and
1999, respectively.
Net cash provided by financing activities was $943 thousand during the six
months ended June 30, 2000, compared to net cash provided by financing
activities of $359 thousand during the six months ended June 30, 1999. These
amounts primarily include proceeds from the Financing Agreements.
In view of the Company's current cash position, financing activities, and
projected cash flow, management believes the Company has the financial
resources, or can obtain the financial resources, to maintain its planned level
of operations for the next twelve months, although the Company anticipates that
it may continue to incur operating losses, negative cash flows and capital
expenditures during that period.
It is expected that the net proceeds generated by the Financing Agreements as
discussed above, are sufficient to fund the Company's liquidity and capital
requirements in the short term excluding acquisitions or major new product
development initiatives. Management anticipates that the net proceeds from the
Financing Agreements, proceeds from the exercise of warrants, and any future
financing activities will be used to fund the Company's anticipated research and
software development costs, sales and marketing efforts, and negative cash flows
during the remainder of 2000 and for general working capital purposes.
As stated above, Global Med is in the process of negotiating possible
alternative financing arrangements. If these efforts are unsuccessful, the
Company will adjust its operations accordingly.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements," which provides guidance with respect to revenue recognition issues
and disclosures. As amended by SAB No. 101B, the Company is required to
implement the provisions of SAB No. 101 no later than the fourth quarter of the
fiscal year ending December 30, 2000. The Company does not believe SAB No. 101
will have a material impact on its financial statements.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
(C) Recent Sales of Unregistered Securities
During the quarter ended June 30, 2000, Global Med issued 160,000 shares of
common stock in payment of financing fees. The issuance of shares for payment of
financing fees were made in reliance upon the exemption from registration
provided by Section 4(2) of the Securities Act of 1933, as amended (1933 Act).
The purchaser had access to full information concerning the Company. The
certificates for the shares contain a restrictive legend advising that the
shares may not be offered for sale, sold or otherwise transferred without having
first been registered under the 1933 Act or pursuant to an exemption from
registration under the 1933 Act. No underwriters were involved in the
transaction.
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In June 2000, Global Med sold a total of 1,320,000 shares of its common stock to
various parties. The issuances of shares were made in reliance upon the
exemption from registration provided by Section 4(2) of the 1933 Act. The
purchasers had access to full information concerning the Company. The
certificates for the shares contain a restrictive legend advising that the
shares may not be offered for sale, sold or otherwise transferred without having
first been registered under the 1933 Act or pursuant to an exemption from
registration under the 1933 Act. No underwriters were involved in the
transaction.
In April 2000, Global Med issued a total of 500,000 shares of its common stock
to a consultant in exchange for services. The issuances of shares in exchange
for services were made in reliance upon the exemption from registration provided
by Section 4(2) of the 1933 Act. The purchaser had access to full information
concerning the Company. The certificates for the shares contain a restrictive
legend advising that the shares may not be offered for sale, sold or otherwise
transferred without having first been registered under the 1933 Act or pursuant
to an exemption from registration under the 1933 Act. No underwriters were
involved in the transaction.
ITEM 5. OTHER INFORMATION
In July 2000, Alan K. Geddes, Vice President, Finance, Treasurer, and Chief
Financial Officer, resigned from his position with the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit No. Description
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27 Financial Data Schedule for June 30, 2000
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the three
months ended June 30, 2000.
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.
GLOBAL MED TECHNOLOGIES, INC.,
A Colorado Corporation
Date: August 24, 2000 By /s/ Michael I. Ruxin
----------------------------------------------
Michael I. Ruxin, Chairman of the Board
and Chief Executive Officer, and Principal
Accounting Officer
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