FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1997
Commission File Number 1-8635
AMERICAN MEDICAL ALERT CORP.
(Exact Name of Small Business Issuer as Specified in its Charter)
New York 11-2571221
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3265 Lawson Boulevard, Oceanside, New York 11572
(Address of principal executive offices)
(Zip Code)
(516) 536-5850
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [_]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 5,896,720 shares of $.01 par
value common stock as of August 1, 1997.
<PAGE>
AMERICAN MEDICAL ALERT CORP.
INDEX
PART I FINANCIAL INFORMATION
PAGE
Item 1. Financial Statements.
Condensed Balance Sheets for June 30, 1997
and December 31, 1996 1
Condensed Statements of Income for the
Six Months Ended June 30, 1997 and 1996 2
Condensed Statements of Income for the
Three Months Ended June 30, 1997 and 1996 3
Condensed Statements of Cash Flows for
the Six Months Ended June 30, 1997 and 1996 4
Notes to Condensed Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 6
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders. 7
Item 6. Exhibits and Reports on Form 8-K. 9
<PAGE>
Item 1. Financial Statements.
AMERICAN MEDICAL ALERT CORP.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
June 30, 1997 Dec.,31,1996*
(UNAUDITED
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 231,320 $ 301,013
Accounts and notes receivable (net of allowance
for doubtful accounts of $30,000 in each of '97 & '96) 1,532,267 1,327,799
Inventory 1,170,278 1,171,021
Prepaid expenses and other current assets 308,754 137,247
Deferred income tax benefit 54,000 54,000
----------- -----------
Total Current Assets 3,296,619 2,991,080
----------- -----------
Inventory of medical devices held for lease at cost 547,000 637,000
----------- -----------
Note receivable -0- 15,956
----------- -----------
FIXED ASSETS:
(Net of accumulated depreciation and amortization) 3,226,877 3,115,110
OTHER ASSETS 25,692 24,868
----------- -----------
TOTAL ASSETS $ 7,096,188 $ 6,784,014
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Note Payable Bank $ 450,000 $ -0-
Accounts payable 186,505 192,707
Accrued expenses 171,182 311,954
Taxes payable -0- 16,464
Current portion of long-term debt 9,332 9,182
----------- -----------
Total Current Liabilities 817,019 530,307
DEFERRED INCOME TAX LIABILITY 258,000 258,000
NOTE PAYABLE BANK -0- 450,000
LONG-TERM DEBT-LESS CURRENT MATURITIES 7,244 11,849
----------- -----------
Total Liabilities 1,082,263 1,250,156
----------- -----------
COMMITMENTS AND CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY
Preferred stock - $.01 par value; -0- -0-
authorized - 1,000,000 shares -
none issued and outstanding
Common stock - $.01 par value; 58,878 58,432
authorized - 10,000,000 shares; issued
and outstanding - 5,887,752 shares in
1997 and 5,843,276 shares in 1996
Additional paid-in capital 4,483,484 4,391,990
Retained Earnings 1,577,595 1,189,468
----------- -----------
6,119,957 5,639,890
Less 43,910 shares in 1997 & 1,995 in 1996 of (106,032) (106,032)
treasury stock, at cost ----------- -----------
Total Shareholders Equity 6,013,925 5,533,858
----------- -----------
TOTAL LIABILITIES & SHAREHOLDERS EQUITY $ 7,096,188 $ 6,784,014
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
* Derived from audited financial statements
1
<PAGE>
AMERICAN MEDICAL ALERT CORP.
CONDENSED STATEMENTS OF INCOME
(Unaudited)
Six Months Ended June 30,
1997 1996
----------- -----------
Revenues:
Services $ 3,284,793 $ 3,014,028
Product Sales 291,893 508,988
----------- -----------
3,576,686 3,523,016
----------- -----------
Cost and Expenses (Income):
Costs related to services (Note 4) 1,233,608 1,012,304
Costs of products sold (Note 4) 270,419 347,046
Selling, general and
administrative expenses 1,355,578 1,251,171
Interest expense 23,934 25,236
Other income (680) (1,000)
----------- -----------
2,882,859 2,634,757
----------- -----------
Income before provision for income taxes 693,827 888,259
Provision for income taxes 305,700 391,000
----------- -----------
NET INCOME $ 388,127 $ 497,259
----------- -----------
Net income per share $ .07 $ .09
=========== ===========
Weighted average number of
common shares outstanding (Note 3) 5,918,128 5,765,456
=========== ===========
See accompanying notes to condensed financial statements
2
<PAGE>
<PAGE>
AMERICAN MEDICAL ALERT CORP.
CONDENSED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended June 30,
---------------------------
1997 1996
----------- -----------
Revenues:
Services $ 1,669,028 $ 1,534,772
Product Sales 177,318 337,098
----------- -----------
1,846,346 1,871,870
Cost and Expenses (Income):
Cost related to services (Note 4) 642,316 537,591
Costs of products sold (Note 4) 163,020 236,595
Selling, general and
administrative expenses 650,759 605,375
Interest expense 11,104 10,125
Other Income (334) (1,000)
----------- -----------
1,466,865 1,388,686
----------- -----------
Income before provisions for income
taxes 379,481 483,184
Provision for income taxes 166,700 213,000
----------- -----------
NET INCOME $ 212,781 $ 270,184
=========== ===========
Net income per share $ .04 $ .05
=========== ===========
Weighted average number of
common shares outstanding (Note 3) 5,936,156 $ 5,788,124
=========== ===========
See accompanying notes to condensed financial statements
3
<PAGE>
AMERICAN MEDICAL ALERT CORP.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
-------------------------
1997 1996
--------- ---------
Cash Flows From Operating Activities:
Net Income $ 388,127 $ 497,259
Adjustments to reconcile net income to
net cash provided by operating activities
Provision for deferred income taxes 24,000
Depreciation and amortization 357,580 308,102
Change in Assets and Liabilities:
(Increase) Decrease in receivables (204,468) (106,294)
(Increase) Decrease in inventory 90,743 (188,767)
(Increase) in prepaid expenses
and other assets (156,375) (42,543)
Increase (Decrease) in accounts payable,
accrued expenses and taxes payable (163,438) 71,444
--------- ---------
Net Cash Provided by Operating Activities 312,169 563,201
--------- ---------
Cash Flows from Investing Activities:
Expenditures for fixed assets (469,347) (500,349)
--------- ---------
Net Cash Used In Investing Activities (469,347) (500,349)
--------- ---------
Cash Flows from Financing Activities:
Repayment of bank borrowing - 0 - (150,000)
Net (Repayment of) loans payable (4,455) 10,654
Net Proceeds upon exercise of stock options 91,940 7,536
--------- ---------
Net Cash Provided (Used) in Financing Activities 87,485 (131,810)
--------- ---------
Net (Decrease) increase in Cash (69,693) (68,958)
Cash, Beginning of Period 301,013 319,989
--------- ---------
Cash, End of Period $ 231,320 $ 251,031
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD
FOR INTEREST $ 23,934 $ 25,236
========= =========
CASH PAID DURING THE PERIOD
FOR INCOME TAXES $ 390,177 $ 207,129
========= =========
See accompanying notes to condensed financial statements
4
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AMERICAN MEDICAL ALERT CORP.
Notes to Condensed Financial Statements
(Unaudited)
1. General:
These financial statements should be read in conjunction with the
notes to the financial statements contained in the latest annual
report on Form 10-KSB for the year ended December 31, 1996.
2. Results of Operations:
In the opinion of management, the accompanying unaudited condensed
financial statements contain all adjustments (consisting only of
normal recurring accruals) necessary to present fairly the financial
position as of June 30, 1997, the condensed statements of income for
the three and six month periods ended June 30, 1997 and 1996, and the
statements of cash flows for the six months ended June 30, 1997 and
1996. These financial statements should be read in conjunction with
the financial statements and notes thereto for the year ended
December 31, 1996 included in the Company's Annual Report on Form
10-KSB. The accounting policies used in preparing these financial
statements are consistent with those applied in the December 31, 1996
financial statements.
3. Income Per Share:
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings per Share" which changes the methodology of calculating
earnings per share. SFAS No. 128 requires the disclosure of diluted
earnings per share regardless of its difference from basic earnings
per share. The company plans to adopt SFAS No. 128 in December 1997.
Early adoption is not permitted. Had the company adopted SFAS No. 128
as of June 30, 1997, the related per share disclosure for both basic
and diluted earnings per share would have been:
Three Months Ended June 30 Six Months Ended June 30
-------------------------- ------------------------
Basic Diluted Basic Diluted
----- ------- ----- -------
1997 .04 .04 .07 .07
======= ======= ======= =======
1996 .05 .05 .10 .09
======= ======= ======= =======
5
<PAGE>
AMERICAN MEDICAL ALERT CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(for the Six Months Ended June 30, 1997)
The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of the Company's results
of operations and financial condition. The discussion should be read in
conjunction with the consolidated financial statements contained in the latest
Annual Report on Form 10-KSB dated December 31, 1996.
Liquidity and Capital Resources
- -------------------------------
On March 27, 1997, the Company renegotiated its $ 1,500,000 credit note (based
upon 75% of eligible accounts receivable and 25% of inventory, as defined) and
extended it until April 30, 1998. As of July 28, 1997, $ 350,000 was outstanding
under this note. The Company's working capital on June 30, 1997 was $ 2,451,315.
During 1997 the Company anticipates that it will make capital investments of
approximately $ 1,000,000 of which approximately $ 470,000 has been expended
through June 30, 1997 for the purchase and production of additional systems
which the Company intends to rent. The Company believes that its present cash
and working capital position, its borrowing availability and future anticipated
income will be sufficient to meet its cash and working capital needs for the
foreseeable future.
Results of Operations
- ---------------------
Revenue from services increased $ 270,765 for the six months ended June 30, 1997
as compared to the same period in 1996, an increase of 9%. This increase
resulted from the expansion of the Company's customer base for monthly
monitoring and leasing services. Costs related to services for the six months
ended June 30, 1997 and 1996 were 38% and 34% respectively.
Revenue from services increased $ 134,256 for the three months ended June 30,
1997 as compared to the same period in 1996, an increase of 9%. This increase
resulted from the expansion of the Company's customer base for monthly
monitoring and leasing services. Costs related to services for the three months
ended June 30, 1997 and 1996 were 38% and 35% respectively.
Revenue from product sales decreased $ 217,095 for the six months ended June 30,
1997 as compared to the same period in 1996, a decrease of 43%. This decrease
was primarily due to the rescheduling of sales to retirement communities and
assisted living facilities. The gross profit on product sales for the six months
ended June 30, 1997 and 1996 was 7% and 32% respectively.
Revenue from product sales decreased $ 159,780 for the three months ended June
30, 1997 as compared to the same period in 1996, a decrease of 47%. This
decrease was primarily due to the rescheduling in sales to retirement
communities and assisted living facilities. The gross profit on product sales
for the three months ended June 30, 1997 and 1996 was 8% and 30% respectively.
This decline was attributable to increased fixed production costs and sales
concessions made to a major new customer.
6
<PAGE>
As a result of these concessions, a contract to purchase significant quantities
of new product was achieved.
Interest expense for the six months ended June 30, 1997 and 1996 was $ 23,934
and $ 25,236 respectively. Selling, general and administrative expenses as
compared as a percentage of total revenues for the six months ended June 30,
1997 and 1996 were 38% and 36% respectively.
Interest expense for the three months ended June 30, 1997 and 1996 was $ 11,104
and $10,125 respectively. Selling, general and administrative expenses as
compared as a percentage of total revenues for the three months ended June 30,
1997 and 1996 were 35% and 32% respectively.
PART II. - OTHER INFORMATION
Item 4. Submission of matters to a Vote of Security Holders.
On June 11, 1997, the Company held its 1997 Annual Meeting of Shareholders (the
"1997 Meeting").
At the 1997 Meeting, the Company's shareholders elected five directors to serve
until the 1998 Annual Meeting of Shareholders and until their respective
successors shall be elected and qualified. The vote for such directors was as
follows:
FOR WITHHELD
--- --------
Howard M. Siegel 4,981,207 57,087
Myron Segal 4,981,107 57,187
Leonard Herz 4,981,207 57,087
Peter Breitstone 4,981,207 57,087
Eli S. Feldman 4,981,207 57,087
The proposal to amend the Corporation's Certificate of Incorporation to increase
the total number of shares of capital stock which the Corporation has authority
to issue from 10,000,000 to 11,000,000 and to create a class of stock designated
as preferred stock with a par value of $ .01 per share which would consist of
1,000,000 shares, received the affirmative vote of a majority of the shares
issued, outstanding and entitled to vote thereon.
The proposal authorizing that 750,000 shares of the Corporation's Common Stock
be reserved for the issuance upon the exercise of options being granted under
the American Medical Alert 1997 Stock Option Plan was approved.
The Company's shareholders voted with respect to the ratification and approval
of Margolin, Winer & Evens, LLP as the Company's independent auditors for the
year ending December 31, 1997. Approximately 98% of the votes cast with respect
to the ratification and approval voted in favor of the proposal and accordingly,
the proposal was approved.
7
<PAGE>
Item 6. Exhibit and Reports on Form 8-K.
(a) Exhibits:
27. Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
AMERICAN MEDICAL ALERT CORP.
By: /s/ Howard M. Siegel Dated: August 7, 1997
-----------------------------------
Howard M. Siegel
President & Chief Operating Officer
By: /s/ Corey M. Aronin
-----------------------------------
Corey M. Aronin
Chief Financial Officer
9
<TABLE> <S> <C>
<ARTICLE> 5
<NAME> AMERICAN MEDICAL ALERT CORP.
<CIK> 0000700721
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 231,320
<SECURITIES> 0
<RECEIVABLES> 1,562,267
<ALLOWANCES> 30,000
<INVENTORY> 1,717,278
<CURRENT-ASSETS> 3,296,619
<PP&E> 3,226,877
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,096,188
<CURRENT-LIABILITIES> 817,019
<BONDS> 466,576
0
0
<COMMON> 58,878
<OTHER-SE> 5,955,047
<TOTAL-LIABILITY-AND-EQUITY> 7,096,188
<SALES> 291,893
<TOTAL-REVENUES> 3,576,686
<CGS> 270,419
<TOTAL-COSTS> 2,882,859
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,934
<INCOME-PRETAX> 693,827
<INCOME-TAX> 305,700
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 388,127
<EPS-PRIMARY> .07
<EPS-DILUTED> 0
</TABLE>
