SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended Commission File Number
JANUARY 31, 1999 0-9922
---------------- ------
AMERICAN ELECTROMEDICS CORP.
----------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
DELAWARE 04-2608713
-------- ----------
(State or Other Jurisdiction (IRS Employer ID No.)
of Incorporation
or Organization)
13 COLUMBIA DRIVE, SUITE 5, AMHERST, NEW HAMPSHIRE 03031
---------------------------------------------------------
(Address and Zip Code of Principal Executive Offices)
Issuer's telephone number, including area code: 603-880-6300
------------
Securities registered pursuant to Section 12(b) of the
Exchange Act: NONE
----
Securities registered pursuant to Section 12(g) of the
Exchange Act:
COMMON STOCK, PAR VALUE $.10 PER SHARE
--------------------------------------
(Title of Class)
Indicate by check mark whether the Issuer (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Exchange Act during the past 12 months, and (2) has been subject
to such filing requirements for the past 90 days.
YES X NO
--- ---
As of March 11, 1999, there were outstanding 7,668,464 shares of
the Issuer's Common Stock, $.10 par value.
<PAGE>
AMERICAN ELECTROMEDICS CORP.
Index
-----
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets, January 31, 1999 and
July 31, 1998 . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations for the Three and
Six Months Ended January 31, 1999 and January 31, 1998 . 4
Consolidated Statements of Cash Flows for the Six
Months Ended January 31, 1999 and January 31, 1998 . . . 5
Notes to Consolidated Financial Statements . . . . . . . 6
Item 2. Management's Discussion and Analysis or Plan
of Operation . . . . . . . . . . . . . . . . . . . . 7
PART II - OTHER INFORMATION
Item 2. Changes in Securities . . . . . . . . . . . . . . . . 9
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 9
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . .10
-2-
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
AMERICAN ELECTROMEDICS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JANUARY 31, JULY 31,
1999 1998
----------- -----------
(Unaudited)
ASSETS (Thousands)
Current Assets:
Cash and cash equivalents . . . . . . . $ 107 $ 396
Accounts receivable . . . . . . . . . . 1,443 1,169
Inventories . . . . . . . . . . . . . . 2,432 1,951
Prepaid and other current assets . . . 356 223
------- -------
Total current assets . . . . . . . . 4,338 3,739
Property and equipment . . . . . . . . 900 794
Accumulated depreciation . . . . . . . (467) (436)
------- -------
433 358
Goodwill . . . . . . . . . . . . . . . 4,174 4,298
Patents . . . . . . . . . . . . . . . 2,932 3,027
Other . . . . . . . . . . . . . . . . 29 36
------- -------
$11,906 $11,458
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Bank debt . . . . . . . . . . . . . . . $1,223 $1,033
Loans from related parties. . . . . . . 425 -
Other short-term debt . . . . . . . . . 650 -
Accounts payable . . . . . . . . . . . 2,263 1,118
Accrued liabilities . . . . . . . . . . 568 723
Dividends payable . . . . . . . . . . . 327 72
------- -------
Total current liabilities . . . . . . 5,456 2,946
Stockholders' equity:
Series A Convertible Preferred
stock,$.01 par value; Authorized -
1,000,000 shares; Outstanding -3,000 shares 2,387 2,387
Common stock, $.10 par value;
Authorized - 20,000,000 shares;
Outstanding - 7,668,464
shares at January 31, 1999 and
7,058,136 at January 31, 1998. . . . . 767 705
Additional paid-in capital . . . . . . 12,270 12,643
Retained deficit . . . . . . . . . . . (8,322) (5,680)
Accumulated other comprehensive loss. . (190) (249)
------- -------
6,912 9,806
Deferred compensation . . . . . . . . . (462) (1,294)
------- -------
Total stockholders' equity . . . . 6,450 8,512
------- -------
$11,906 $11,458
======= =======
See accompanying notes.
-3-
<PAGE>
AMERICAN ELECTROMEDICS CORP.AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ -----------------
JANUARY JANUARY JANUARY JANUARY
31, 1999 31, 1998 31, 1999 31,1998
-------- -------- -------- ---------
(Thousands, except per share amounts)
Net sales . . . . . . . . . $2,290 $1,805 $4,396 $3,635
Cost of goods sold. . . . . 1,454 821 2,673 1,879
------ ------ ------ ------
Gross profit. . . . . . . . 836 984 1,723 1,756
Selling, general and
administrative . . . . . . 1,966 903 3,888 1,590
Research and development. . 77 - 205 -
------ ------ ------ ------
Total operating expenses . 2,043 903 4,093 1,590
------ ------ ------ ------
Operating income (loss). . (1,207) 81 (2,370) 166
Other income (expenses):
Undistributed earnings
of affiliate. . . . . . - 77 - 77
Interest, net . . . . . (58) (40) (75) (118)
Minority interest in
affiliate . . . . . . . - - - (85)
Other . . . . . . . . . (91) (52) (197) 6
------ ------ ------ ------
(149) (15) (272) (120)
Income (loss) before
provision for income taxes (1,356) 66 (2,642) 46
Provision for income taxes - (2) - (2)
------ ------- ------ ------
Net income (loss). . . . $(1,356) $ 64 $(2,642) $ 44
====== ======= ====== ======
Net income (loss)
attributable to common
stockholders* . . . . $(1,494) $ 64 $(2,897) $ 44
====== ======= ====== ======
Weighted average number
of common and
common equivalent shares
outstanding 7,369,800 4,096,830 7,217,218 3,282,142
========= ========= ========= =========
Earnings (loss) per
common and common
equivalent share:
Basic $ (.20) $ .02 $ (.40) $ .01
====== ======= ====== =======
Diluted $ (.20) $ .02 $ (.40) $ .01
====== ======= ====== =======
See accompanying notes.
* The three and six months ended January 31,1999 includes the impact of
$138,000 and $255,000, respectively, of dividends on Preferred Stock.
-4-
<PAGE>
AMERICAN ELECTROMEDICS CORP.AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
SIX MONTHS ENDED
----------------
JANUARY 31, JANUARY 31,
1999 1998
----------- ----------
(Thousands)
OPERATING ACTIVITIES:
Net income (loss) $ (2,642) $ 44
Adjustments to reconcile net income
(loss) to net cash used in operating
activities:
Depreciation and amortization 284 132
Deferred compensation 832 -
Undistributed earnings of affiliate - (77)
Minority interest in affiliate - 85
Changes in operating assets and
liabilities:
Accounts receivable (252) 341
Inventories, prepaid and other
current assets (528) (1,339)
Accounts payable and accrued
liabilities 969 (264)
------- -------
Net cash used in operating
activities (1,337) (1,078)
INVESTING ACTIVITIES:
Purchase of property and equipment,
net (125) (94)
------- -------
Net cash used in investing
activities (125) (94)
FINANCING ACTIVITIES:
Principal payments on long-term debt - (72)
Proceeds from long-term debt and bank
line of credit - (28)
Proceeds from issuance of common
stock, net - 994
Net proceeds from bank debt 153 -
Net proceeds from related party debt 425 -
Net proceeds from other short-term debt 650 -
Issuance of common stock, net (79) -
Proceeds from exercise of stock
options 22 -
------- -------
Net cash provided by
financing activities 1,171 894
------- -------
Effect of exchange rate changes on
cash and cash equivalents 2 1
Decrease in cash and cash equivalents (289) (277)
Cash and cash equivalents, beginning
of period 396 533
------- -------
Cash and cash equivalents, end of
period $ 107 $ 256
======= =======
NON-CASH ACTIVITIES:
Conversion of convertible subordinated
debt into common stock $ - $ 720
======= =======
Common Stock issued in connection
with acquisitions $ - $ 210
======= =======
Common stock issued under
conversion provision of warrants $ 59 $ -
======= =======
See accompanying notes.
-5-
<PAGE>
AMERICAN ELECTROMEDICS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1999
(Unaudited)
1. BASIS OF PRESENTATION
---------------------
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included.
Operating results for the three and six month periods ended January
31, 1999 are not necessarily indicative of the results that may be
expected for the year ending July 31, 1999. For further information,
refer to the financial statements and footnotes thereto included in
the Company's annual report on Form 10-KSB for the year ended July 31,
1998.
Foreign Currency Translation
The financial statements of the Company's foreign subsidiary have been
translated into U.S. dollars in accordance with Statement of Financial
Accounting Standards No. 52, Foreign Currency Translation. All balance
sheet amounts have been translated using the exchange rates in effect
at the balance sheet date. Statement of Operations amounts have been
translated using average exchange rates. The gains and losses
resulting from changes in exchange rates from the date of acquisition
of Rosch GmbH to January 31, 1999 have been reported separately as a
component of stockholders' equity. The aggregate transaction gains and
losses are insignificant.
Comprehensive Income (Loss)
Effective August 1, 1998, the Company adopted Statement of Financial
Accounting Standard No. 130, Reporting Comprehensive Income (SFAS
130). SFAS 130 establishes new rules for the reporting and display of
comprehensive income or loss and its components, however, the adoption
of this statement had no impact on the Company's net income or
shareholders' equity. For the three and six months ended January 31,
1999, the Company's only item of other comprehensive income was the
foreign currency translation adjustment recognized in consolidation of
its wholly-owned German subsidiary, Rosch GmbH. SFAS 130 requires such
adjustments, which prior to adoption were reported separately in
shareholders' equity, to be included in other comprehensive income.
Prior year financial statements have been reclassified to conform to
the requirements of SFAS 130.
The foreign currency translation adjustment and comprehensive loss for
the three months ended January 31, 1999 was $(29,000) and
($1,385,000), respectively. For the six months ended January 31, 1999,
the foreign currency translation adjustment and comprehensive loss was
$59,000 and ($2,583,000), respectively. As of January 31, 1999, the
cumulative translation adjustment and accumulated other comprehensive
loss was ($190,000).
-6-
<PAGE>
2. DEBT
----
In September 1998, the Company entered into a $505,000 line-of-credit
with Guardian Financial Services, Inc. (owned by an officer of the
Company). This line-of-credit is due on demand and bears an interest
rate of 10% per annum. As of January 31, 1999, $425,000 was
outstanding under this line-of-credit, which expired on February 28,
1999, and remains outstanding as a demand loan, which is to be secured
by substantially all assets of the Company.
On January 29, 1999, the Company entered into a $50,000 Promissory
Note bearing interest at 11.5%, and maturing on February 15, 1999. The
Company's $600,000 term loan, originally due to expire on November 25,
1998, has reverted to a demand loan and was still outstanding at
January 31, 1999. The $650,000 total balance was paid in full on
February 3, 1999. See "Subsequent Event", below.
3. AQUISITIONS
-----------
On April 30, 1998, the Company acquired all of the issued and
outstanding capital stock of Dynamic Dental Systems, Inc. ("DDS"),
pursuant to an Agreement and Plan of Merger, whereby DDS became a
wholly-owned subsidiary of the Company. DDS was founded in 1997 and is
a distributor of digital operator hardware, cosmetic-imaging software,
intraoral dental camera systems and digital x-ray equipment. The total
cost of acquisition was approximately $3.2 million consisting
primarily of 750,000 shares of the Company's Common Stock, valued at
an aggregate price of $3,000,000 and $225,000 in cash. The purchase
price exceeded the fair value of net assets acquired by approximately
$3.4 million, which is being amortized on a straight-line basis over
15 years. The acquisition has been accounted for as a purchase and,
accordingly, the operating results of DDS have been included in the
Company's consolidated financial statements since the date of
acquisition.
On May 12, 1998, the Company acquired Equidine Systems, Inc. ("ESI).
ESI was founded in 1990 and is engaged in the development of the
INJEX(TM) needle-free drug injection delivery system, which is
designed to eliminate the risks of contaminated needle stick accidents
and the resulting cross contamination of hepatitis, HIV, and other
diseases. The total cost of acquisition was approximately $2.6 million
consisting of 600,000 shares of the Company's Common Stock. The
acquisition has been accounted for as a purchase and, accordingly, the
operating results of ESI have been included in the Company's
consolidated financial statements since the date of acquisition. The
excess of the aggregate purchase price over the fair market value of
net assets acquired of approximately $3.0 million, which has been
allocated to patents, is being amortized over 15 years, the remaining
life of the patent.
The following unaudited proforma consolidated financial results of
operations for the three and six months ended January 31, 1998 assume
the acquisitions of DDS and ESI occurred as of August 1, 1997.
Three months ended Six months ended
January 31, 1998 January 31, 1998
------------------ ----------------
Net sales. . . . . . . . . . . . $2,488,000 $4,716,000
Net loss . . . . . . . . . . . . (55,000) (233,000)
Loss per share; basic and diluted (.01) (.05)
4. EQUITY
------
Effective December 15, 1998, certain holders of oustanding warrants to
purchase an aggregate of 1 million shares of the Company's Common
Stock at $1 per share, exercised their rights under the related
warrant agreements to execute a cashless exercise. Upon exercise of
these warrants, the Company issued 589,828 shares of its Common Stock,
par $.10.
5. SUBSEQUENT EVENT
----------------
On February 3, 1999, the Company sold 1,600 shares of Series B
Preferred Stock to three purchasers for $1,000 per share or an
aggregate purchase price of $1.6 million, together with Warrants to
purchase up to 25,000 shares of the Company's Common Stock at an
exercise price of $3.00 per share and exercisable until January 31,
2002.
The Series B Preferred Stock is convertible at any time after April
30, 1999 into shares of common stock at a conversion rate equal to
$1,000 divided by the lower of (i) $2.00 or (ii) 75% of the average
closing bid price for the common stock for the five trading days
immediately preceding the conversion date. The Company may force
conversion of all ( and not less than all) of the outstanding shares
of Series B Preferred Stock at any time after the first anniversary of
the effective date of a registration statement covering the underlying
shares of Common Stock. There is no minimum conversion price. Should
the bid price of the Common Stock fall substantially prior to
conversion, the holders of the Series B Preferred Stock could obtain a
significant portion of the Common Stock upon conversion, to the
detriment of the then holders of the Common Stock.
The Series B Preferred Stock has a liquidation preference of $1,000
per share, plus any accrued and unpaid dividends, and provides for an
annual dividend equal to 5% of the liquidation preference, which may
be paid at the election of the Company in cash or shares of its common
stock.
The conversion terms of the Series B Preferred Stock could result in a
discount to the holders, depending on the market price of the
Company's Common Stock during the five trading days immediately
preceding a future conversion date. Any such discount would be
considered an additional preferred stock dividend resulting from the
beneficial conversion feature of the securities, and would be recorded
as a charge to income available to common stockholders at the time of
conversion. As the Series B Preferred Stock is not convertible until
after April 30, 1999, the amount of the dividend which would be
recognized, if any, cannot be determined at this time.
The net proceeds of $1,500,000 (after offering expenses)from the sale
of the Series B Preferred Stock were used in part to repay the
Company's $600,000 term loan and $50,000 Promissory Note described in
Note 2, above.
6. YEAR 2000
---------
The Year 2000 Issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any
of the Company's computer programs or hardware that have
date-sensitive software embedded chips may recognize a date using "00"
as the year 1900 rather than the year 2000. This could result in a
system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process
transactions, send invoices, or engage in similar normal business
activities.
Based on recent assessments, the Company determined that it will be
required to modify or replace significant portions of its software and
certain hardware so that those systems will properly utilize dates
beyond December 31, 1999. The Company presently believes that with
modifications or replacements of existing software and certain
hardware, the Year 2000 Issue can be mitigated. However, if such
modifications and replacements are not made, or are not completed
timely, the Year 2000 Issue could have a material impact on the
operations of the Company.
The Company's plan to resolve the Year 2000 Issue involves the
following four phases: assessment, remediation, testing and
implementation. To date, the Company has substantially completed its
assessment of all systems that could be significantly affected by the
Year 2000. The assessment indicated that most of the Company's
significant information technology systems will be affected, including
its financial information system which includes its general ledger,
accounts payable, billing and inventory systems. The assessment was
also undertaken on the Company's products, which are also at risk, as
they utilize software and hardware (embedded chips) as well. However,
based on its review of its product line, the Company has determined
that most of the products it has sold and will continue to sell do not
require remediation to be Year 2000 compliant. Accordingly, the
Company does not believe that the Year 2000 presents a material
exposure as it relates to the Company's products. The Company's
manufacturing processes consist principally of unautomated assembly of
components manufactured by outside third-parties. The Company has
begun to gather information about the Year 2000 compliance status of
its significant suppliers, and will take appropriate steps to monitor
their compliance on an ongoing basis.
Regarding its information technology exposures, the Company utilizes
an unmodified off-the-shelf software package, which is not year 2000
compliant. The Company has confirmed with its software vendor that a
year 2000-compliant upgrade is readily available, and anticipates
purchasing this upgrade during its third fiscal quarter, which ends on
April 30, 1999. The upgrade would provide full year 2000 compliance
with respect to its financial information systems, and as the new
software will also be an unmodified off-the-shelf package, testing to
ensure Year 2000 compliance will not be necessary. Implementation will
take place as early as possible following the purchase of the system,
and is expected to be completed no later than June 30, 1999.
The Company does not presently maintain direct interfaces with any
third-party vendors. The Company has made various queries of its
significant suppliers that do not share information systems with the
Company (external agents). To date, the Company is not aware of any
external agent with a Year 2000 issue that would materially impact the
Company's results of operations, liquidity, or capital resources.
However, the Company has no means of assuring that external agents
will be Year 2000 ready. The inability of external agents to complete
their Year 2000 resolution process in a timely fashion could
materially impact the Company. The effect of non-compliance by
external agents is not determinable.
The total cost of the Company's Year 2000 project is estimated at
$25,000, which will be funded through operating cash flows. To date,
the Company has not incurred any direct costs related to its Year 2000
project. The project costs will consist principally of the cost of new
software, which will be capitalized.
Management of the Company believes it has an effective plan in place
to resolve the Year 2000 Issue in a timely manner. As noted above, the
Company has not yet completed all necessary phases of its Year 2000
project. In the event that the Company does not complete any
additional phases, the Company could be unable to take customer
orders, manufacture and ship products, invoice customers or collect
payments. In addition, disruptions in the economy generally resulting
from Year 2000 issues could also materially adversely affect the
Company.
The Company currently has no contingency plans in place in the event
it does not complete all phases of its Year 2000 project. The Company
plans to evaluate the status of completion in June 1999 and determine
whether such a plan is necessary.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
This Report contains or refers to forward-looking information made
pursuant to the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. That information covers future
revenues, products and income and is based upon current expectations
that involve a number of business risks and uncertainties. Among the
factors that could cause actual results to differ materially from
those expressed or implied in any forward-looking statement include,
but not limited to, technological innovations of competitors, delays
in product introductions, changes in health care regulations and
reimbursements, changes in foreign economic conditions or currency
translation, product acceptance or changes in government regulation of
the Company's products, as well as other factors discussed in other
Securities and Exchange Commission filings for the Company.
RESULTS OF OPERATIONS
---------------------
Net sales for the three and six month periods ended January 31, 1999
were $2,290,000 and $4,396,000, respectively, compared to $1,805,000
and $3,635,000 for the three and six month periods ended January 31,
1998. The increase in sales in fiscal 1999 was attributable to the
acquisitions of DDS and ESI in April and May 1998, respectively.
-7-
<PAGE>
Cost of sales for the three and six month periods ended January 31,
1999 were 63.5% and 60.8%, compared to 45.5% and 51.7% of net sales
during the same periods in the prior year. The increase in cost as a
percentage of sales can be attributed to the product mix which
included sales of DDS in fiscal 1999. The intraoral dental camera and
related product lines in the U.S. generally produce lower gross
margins than the Company's other product lines.
Total operating expenses for the three and six month periods ended
January 31, 1999 were $2,043,000 and $4,093,000, respectively,
compared to $903,000 and $1,590,000 for the comparable prior year
periods. The 1999 amounts reflect increased marketing, promotional,
and development activity. The fiscal 1999 amounts also include the
selling, general and administrative expenses of DDS and ESI, acquired
in April and May 1998, respectively. The increase also includes
$399,000 and $832,000 for the three and six month periods ended
January 31, 1999, respectively, for amortization of deferred
compensation for consultants and for options granted in connection
with the acquisitions of DDS and ESI. This amortization relates
primarily to the deferred compensation recognized in connection with
the Company's consulting agreement with Liviakis Financial
Communications, and will be fully amortized as of March 15, 1999.
Net loss for the three and six month periods ended January 31, 1999
were $1,356,000, or $.20 per common share, and $2,642,000, or $.40 per
common share, compared to net profit of $64,000, or $.02 per share,
and $44,000, or $.01 per share for the same periods in the prior
fiscal year. The decrease in net results is primarily attributable to
increased selling, general and administrative costs and decreased
gross margins.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Working capital (deficit) of the Company at January 31, 1999 was
$(1,118,000), compared to $793,000 at fiscal year ended July 31, 1998.
The $1,911,000 decrease in working capital primarily reflects the
effect of operating losses. In February 1999, the Company received
gross proceeds of $1,600,000 upon a private placement of 1,600 shares
of Series B Convertible Preferred Stock. As mentioned in Note 5 to the
consolidated financial statements, the Company used $650,000 of the
proceeds to repay portions of its short-term indebtedness, and the
remaining proceeds of $850,000 (net of offering costs of $100,000) is
being used for general working capital purposes.
The Company has incurred net losses of $1,356,000 and $2,642,000,
respectively, for the three and six month periods ended January 31,
1999, as well as a net loss of $3,674,000 for the year ended July 31,
1998. This and other factors, such as working capital needed for the
Company's operations, requires additional funding beyond that which
the Company currently has available. The Company therefore will need
to immediately raise additional capital.
The Company announced on January 5, 1999, that it intends to change
the Company's business strategy and direction in order to focus all of
its resources on ESI, and the continued development of the INJEX(TM)
System. The Company plans to affect this change through the sale of
its audiometrics and U.S. dental (DDS) business units. The proceeds
from such sales would likely provide additional working capital, and
reduce the Company's expected short-term working capital needs by
eliminating the operating losses those business units have been
incurring. In addition, the Company continues to seek other sources of
additional working capital through equity and/or debt placements or
secured financing. No assurance can be given that the Company's plans
to sell its audiometrics and U.S. dental business units will be
successfully achieved, or that such other financing arrangements will
be obtained. Further, no assurance can be given that such sales or
financing arrangements would be successfully completed within the
necessary time frame and, if so, on terms not dilutive to existing
stockholders.
As a result of the foregoing, substantial doubt exists about the
ability of the Company to continue as a going concern. The
accompanying financial statements do not include any adjustments
relating to the recoverability and classification of asset carrying
amounts or the amount and classification of liabilities that might
result should the Company be unable to continue as a going concern.
-8-
<PAGE>
PART II. - OTHER INFORMATION
Item 2. CHANGES IN SECURITIES
Effective December 15, 1998, certain holders of oustanding warrants to
purchase an aggregate of 1 million shares of the Company's Common
Stock at $1 per share, exercised their rights under the related
warrant agreements to execute a cashless exercise. Upon exercise of
these warrants, the Company issued 589,828 shares of its Common Stock,
par $.10.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
There were no reports on Form 8-K filed during the quarterly period
ended January 31, 1999.
Exhibits -
27. Financial Data Schedule
-9-
<PAGE>
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.
AMERICAN ELECTROMEDICS CORP.
----------------------------
Dated: March 16, 1999 /s/ Thomas A. Slamecka
----------------------
Thomas A. Slamecka
Chairman
Dated: March 16, 1999 /s/ Michael T. Pieniazek
------------------------
Michael T. Pieniazek
President and
Chief Financial Officer
-10-
<PAGE>
EXHIBIT INDEX
Exhibit Description
- ------ -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from American
Electromedics Corp. Form 10-QSB for the period ended January 31, 1999 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-END> JAN-31-1999
<CASH> 107
<SECURITIES> 0
<RECEIVABLES> 1,443
<ALLOWANCES> 0
<INVENTORY> 2,432
<CURRENT-ASSETS> 356
<PP&E> 900
<DEPRECIATION> (467)
<TOTAL-ASSETS> 11,906
<CURRENT-LIABILITIES> 5,456
<BONDS> 0
0
2,387
<COMMON> 767
<OTHER-SE> 3,296
<TOTAL-LIABILITY-AND-EQUITY> 11,906
<SALES> 2,290
<TOTAL-REVENUES> 2,290
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,356)
<EPS-PRIMARY> (.20)
<EPS-DILUTED> (.20)
</TABLE>
