U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(mark one)
__X___Quarterly report under Section 13 or 15 of the Securities
Exchange Act of 1934.
For the quarterly period ended September 30, 1999.
______Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the transition period from ______ to ______
Commission file number 0-16341
Advanced Medical Products, Inc.
(Exact name of small business issuer as specified in its charter)
6 Woodcross Drive, Columbia, South Carolina 29212
(Address of principal executive offices) (Zip code)
(803) 407-3044
(Issuer's telephone number, including area code)
(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.
YES __X___ NO ______
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
5,962,495 at November 8, 1999.
PART 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements
Advanced Medical Products Inc.
Balance Sheet
Sept. 30, 1999 June 30, 1999
(unaudited)
CURRENT ASSETS:
Cash $ 2,289 $ 64,073
Total Current Assets 2,289 64,073
Total Assets 2,289 64,073
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities: - -
Total Current Liabilities - -
Liabilities Subject to Compromise 25,163 86,948
Total Liabilities 25,163 86,948
Stockholders' Equity:
Common Stock, $0.01 par value; authorized 7,000,000
shares, 5,962,495 shares issued and outstanding at
September 30, 1999 and at June 30, 1999. 59,625 59,625
Additional Paid-In Capital 4,813,468 4,813,468
Accumulated Deficit (4,895,968) (4,895,968)
Total Stockholders' Equity (Deficit) (22,875) (22,875)
Total Liabilities and Stockholders Equity $ 2,289 $ 64,073
The accompanying notes are an integral part of these financial statements.
Advanced Medical Products Inc.
Statement of Operations and Accumulated Deficit
Three Months Ended
Sept. 30, 1999 Sept. 30, 1998
(unaudited) (unaudited)
Net Sales $ -0- $ 675,282
Cost of Sales -0- 359,370
Gross Profit -0- 315,912
Selling, General and Administrative -0- 330,321
Research and Development -0- 40,289
Interest Expenses -0- 20,864
Income Before Income Taxes -0- (75,562)
Provision For Income Taxes -0- -0-
Net Income -0- (75,562)
Accumulated Deficit -
Beginning of Period (4,813,468) (5,218,251)
Accumulated Deficit - End of Period $(4,813,468) $(5,293,813)
Net Income (Loss) Applicable to
Common Shares $ -0- $( 75,562)
Earnings Per Share Data: (Note 8)
Net Income (Loss) $ -0- $( 0.01)
Weighted Average Number of Common
Shares Outstanding 5,962,495 5,962,495
The accompanying notes are an integral part of these financial statements.
Advanced Medical Products Inc.
Statement of Cash Flows
Three Months Ended
Sept. 30, 1999 Sept. 30, 1998
(unaudited) (unaudited)
Cash flows from operating activities:
Net Income -0- $ (75,562)
Cash provided (used) by operating activities:
Depreciation and amortization -0- 39,219
Provision for doubtful accounts -0- 6,000
Change in assets and liabilities:
Accounts receivable -0- (155,678)
Inventory -0- (32,246)
Other assets -0- 13,348
Accounts payable -0- 146,730
Other current liabilities -0- (8,047)
Total adjustments -0- 9,326
Net cash provided (used) by operating
activities -0- (66,236)
Liabilities subject to compromise
Cash used to satisfy professional fees
and administrative expenses 43,784 -0-
Cash used to pay priority tax claims 18,000 -0-
Cash flows used by investing activities:
Capital expenditures -0- -0-
Capitalization of software costs -0- ( 6,040)
Net cash used by investing activities -0- ( 6,040)
Cash flows provided (used) by financing
activities:
Net increase in short term notes -0- 39,400
Payments on long-term debt -0- (13,398)
Net cash provided (used) by financing
activities -0- 26,002
Net increase (decrease) in cash (61,784) (46,274)
Cash, beginning of period 64,073 82,087
Cash, end of period $ 2,289 $ 35,813
Supplemental disclosures
of cash flow information:
Cash paid during the period for:
Interest -0- $ 20,200
Income taxes -0- -0-
The accompanying notes are an integral part of these financial statements.
Advanced Medical Products Inc.
Notes to Financial Statements
1. Basis of Presentation
The accompanying unaudited condensed financial statements
have been prepared in accordance with generally accepted
accounting principals for interim financial information and
with the instructions to Form 10-QSB and Article 10-01 of
Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally
accepted accounting principals 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.
2. Bankruptcy
On March 23, 1999, after reporting that, for the quarter
ended December 31, 1998 the Company had net losses of
$373,173 of which $130,000 was as a result of the
distributor in Europe, Kontron Instruments Ltd. filing for
Administrative Receivership, Advanced Medical Products,
Inc. filed a motion with the Federal Bankruptcy Court,
District of South Carolina, for an order authorizing the
sale of all assets, including equipment, inventory, and
accounts receivable, outside the ordinary course of
business, free and clear of all liens and encumbrances,
pursuant to 11 U.S.C. Section 363 of the bankruptcy code.
Advanced Medical Products, Inc. continued to operate as
debtor in possession, pending sale of the assets. Emergent
Asset Based Lending, L.L.C., Advanced Medical's principle
secured lender whose loan agreement had been in default
since December 1998, agreed to continue to lend against
receivables and inventory only based on Biosensor
Corporation would guarantee the debt. As of March 22,
1999, $ 253,446 was borrowed by Advanced Medical under this
agreement. As of September 30, 1999 Advanced Medial had no
obligation to Emergent under this agreement as the loan
was assumed by Biosensor on May 11, 1999.
On May 3, 1999, the United State Bankruptcy Court for the
District of South Carolina entered an order approving the
Disclosure Statement filed on March 23, 1999, fixing June
11, 1999 as the last day for filing ballots accepting or
rejecting the Plan of Reorganization, and setting June 21,
1999 as the date of the hearing on the confirmation of the
Plan. On May 11, 1999, pursuant to a court order entered
on May 10, 1999 in the Federal Bankruptcy Court for the
District of South Carolina, Advanced Medical Products, Inc.
sold all assets, including equipment, inventory, and
accounts receivable, outside the ordinary course of
business, free and clear of all liens and encumbrances and
other interests, pursuant to 11 U.S.C. Section 363 of the
bankruptcy code. Biosensor Corporation, the Company's
majority shareholder, purchased the assets and assumed all
of the secured debt, employee and commission liabilities,
and all customer warranty and service liabilities of
Advanced Medical Products, Inc. In addition, Biosensor
made a payment of $68,000 for certain priority claims and
administrative expenses, and for distribution to outside
unsecured creditors. Biosensor and its subsidiaries agreed
not to participate in distribution of payments toward
unsecured claims, although their claims exceeded unsecured
claims by all non-affiliated creditors combined. The assets
and liabilities of Advanced Medical purchased by Biosensor
were consolidated with the operating assets and liabilities
of Biosensor, and the assets and liabilities of Diagnostic
Monitoring, purchased by Biosensor from Cardiac Science
Inc. on December 31, 1998, into Advanced Biosensor, Inc., a
new wholly owned subsidiary of Biosensor, which also agreed
to assume Advanced Medical's lease obligations and to
continue to operate the business at the present Columbia, SC location.
At a hearing held on June 21, 1999 the Plan of Reorganization, as
amended, was confirmed. The Plan had previously been approved by all
classes of creditors. On June 29, 1999 the United State Bankruptcy
Court for the District of South Carolina entered an order confirming the
Plan of Reorganization.
The Chapter 11 bankruptcy estate of Advanced Medical Products, Inc.
has been fully administered. The Company filed the Final Report
in Chapter 11 Proceeding with the Court on October 5, 1999, and the
Final Decree closing the bankruptcy case was issued by the Court on
November 10, 1999.
3. Related Party Transactions
Biosensor Corporation, the Company's majority shareholder,
purchased all of the Company's assets, free and clear of
all liens and encumbrances, and assumed all of the secured
debt, employee and commission liabilities, and all customer
warranty and service liabilities of Advanced Medical
Products, Inc. In addition, Biosensor made a payment of
$68,000 for certain priority claims and administrative
expenses, and for distribution to outside unsecured
creditors. Biosensor and its subsidiaries agreed not to
participate in distribution of payments toward unsecured
claims, although their claims exceeded unsecured claims by
all non-affiliated creditors combined. The assets and
liabilities of the Company, effective May 12, 1999, were
consolidated with the operating assets and liabilities of
Biosensor, and the assets and liabilities of Diagnostic
Monitoring purchased by Biosensor from Cardiac Science Inc.
on December 31, 1998, into Advanced Biosensor, Inc., a new
wholly owned subsidiary of Biosensor, which also agreed to
assume Advanced Medical's lease obligations and to continue
to operate the business at the present Columbia, SC location.
4. Capital Stock Transactions
On January 12, 1996 Carolina Medical, Inc., a privately held
medical device manufacturing company located in King, North
Carolina, purchased 750,000 shares of Advanced Medical
Products, Inc.'s authorized but un-issued common stock for
$150,000. Biotel International, Inc., a holding company
(which was subsequently acquired by Carolina Medical)
purchased an additional 1,400,000 shares of Advanced
Medical's common stock on March 29, 1996 for $280,000. On
October 20, 1997 the Company entered into a Stock Purchase
Agreement with Carolina Medical, Inc., selling an additional
850,000 shares of common stock of Advanced Medical Products,
Inc. to Carolina Medical, Inc. for $263,500. Of this amount,
$183,500 was paid to the Company in November and the balance
was structured as a note, which was paid by April 30, 1998.
This stock purchase increased Carolina Medical's ownership in
the Company to 3,000,000 shares or 50.3 percent of the
5,962,495 issued and outstanding common stock shares.
Registrant has 4,000 shares of authorized Class A Preferred
Stock, no par value, of which no shares are currently issued
and outstanding. A total of 2,377 Class A Preferred Stock
shares had been issued by the Company between 1992 and 1996.
The terms of the Class A Preferred Stock entitled the holder
thereof to cash dividends at the rate of $50.00 per annum per
share. Dividends on such shares are cumulative. Such
dividends are payable annually in arrears. Since December 31,
1997 the Company had been in violation of its preferred stock
agreements with Nishimoto-Sangyo Company, Ltd. and SCANA
Corporation, the Company's two preferred stockholders. These
two preferred stock agreements required that an annual
dividend of $50 per $1,000 of the face value of the preferred
stock be declared and paid at the end of each calendar year.
However, the Company had deficits in both retained earnings
and stockholders equity at December 31, 1997 and therefore
under Delaware law could not legally declare a dividend.
Nishimoto-Sangyo was unwilling to convert unpaid dividends
into additional common or preferred shares of Advanced
Medical, as they had done in prior years, but in May 1998
Nishimoto sold their common and preferred stock in the
Company in exchange for shares of Carolina Medical, Inc.
This transaction brought Carolina Medical's ownership in the
Company to 55.3% of the common stock and 93.3% of the
preferred stock of the Company issued and outstanding. In
June 1998 Carolina Medical purchased from SCANA the remaining
160 shares of preferred stock in the Company. As of June 30,
1998, dividends on the preferred stock of $162,981 were owed
to Carolina Medical by the Company. Carolina Medical Inc.,
a North Carolina corporation, was merged with and into CMI
of Minnesota, ("CMI"), a Minnesota corporation. CMI also
owned Braemar, Inc., a North Carolina corporation operating
in Minneapolis, MN that develops, manufactures and markets
tape recording devices for ambulatory ECG monitoring
devices, digital Holter monitors and event recorders. On
July 23, 1998, Biosensor Corporation, a Minneapolis
corporation, acquired all of the outstanding shares of CMI
of Minnesota, pursuant to a Plan of Reorganization and
Agreement by and between CMI and Biosensor. On May 23,
1999 stockholders of Biosensor Corporation voted to change
the name of Biosensor Corporation to BIOTEL Inc., the
company that now owns 55.3% of the common stock of the Company.
In July 1998, the Company's board approved a plan to sell the Company's
MICROS QV product line to Carolina Medical in exchange for all of
the 2,377 shares of Preferred Stock in the Company (having a face value,
at original cost, of $2,377,000), and the unpaid dividends of $162,981.
In October 1998 the exchange of the product line for all of the shares of
the Company's Preferred Stock issued and outstanding was completed and the
shares were retired.
5. Per Share Earnings
Earnings per common share were computed by dividing net
income by the weighted average number of common shares
outstanding during the period. Earnings per share did not
include the impact of outstanding options since it was not significant.
6. Subsequent Events
In October 1999, BIOTEL, Inc. entered into discussions with Loomco
International and others regarding the possibility of BIOTEL
selling its 3,300,000 common stock shares of the Registrant. All
of the current Directors of the Registrant have agreed to resign if
the sale by BIOTEL of the majority stock position of the Registrant's
common stock is completed.
ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS
Forward Looking Statements
This and other sections of this report contain "forward-
looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995, which represent
the Company's expectations concerning future events
including future cash flows, results of operations,
expected continuing availability of the credit line, the
Company's continuing ability to sell its Holter and
ambulatory blood pressure products to office practices, and
the Company's belief regarding future recovery from
declining revenues in the medical device industry. By
their very nature, forward-looking statements are subject
to known and unknown risks and uncertainties relating to
the Company's future performance that may cause actual
results to differ materially from those expressed or
implied in such forward-looking statements. The Company
does not undertake and assumes no obligation to update any
forward-looking statement that may be made herein or from
time to time by or on behalf of the Company.
The following discussion should be read in conjunction with
the accompanying Financial Statements, including the notes
thereto, appearing elsewhere herein.
Results of Operations
The Company had no operations and no sales for the three
months ended September 30, 1999. There were no selling,
general and administrative expenses and no research and
development costs, and there was no profit or loss.
The Company's gross profit margin for the three months
ended September 30, 1998 was 47% of net sales. Selling,
general and administrative expenses of $330,329 for the
three months ended September 30, 1998 were 49% of net sales.
Research and development costs during the quarter ended
September 30, 1998 were 6% of sales
Net loss applicable to common shares for the quarter ended
September 30, 1998 was $75,562.
During the first three months ended September 30, 1999,
cash decreased by $61,784 and liabilities decreased by
$61,784 as administrative expenses and priority claims were
paid by the debtor in possession. During the three months
ended September 30, 1998, accounts receivable increased by
$149,678 due to the higher level of sales, inventory
increased from $322,706 to $354,493, and current notes and
accounts payable increased by $39,400 and $146,730 respectively.
Liquidity and Capital Resources
The Company ceased operations on May 11, 1999. The cash
available on September 30, 1999 of $2,289 was insufficient
to meet remaining priority claims totaling $25,163. No capital
resources are available to the Company, and there is no liquidity.
PART II - OTHER INFORMATION
ITEM 6: Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) Reports on Form 8-K - No reports on Form 8-K have been filed
during the quarter for which this report is filed. However, a report
was filed on Form 8-K on October 18, 1999 regarding the US 11 363
sale of the Company's assets through the U.S. Bankruptcy Court,
District of South Carolina.
SIGNATURES
In accordance with the requirements of the Exchange Act,
the Registrant caused this Report to be signed on its behalf by
the undersigned hereunto duly authorized.
Advanced Medical Products, Inc.
(Registrant)
By: GEORGE L. DOWN
George L. Down, President
Dated: November 12, 1999
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