SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[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 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from _______________________ to ____________________
0-16594
Commission file number ________________________________________________________
MEDICAL TECHNOLOGY SYSTEMS, INC.
________________________________________________________________________________
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 59-2740462
-------------------------------- ---------------------
(State or other jurisdiction of (I.R.S.) Employer
Incorporation or Organization) Identification No.)
12920 Automobile Boulevard, Clearwater, Florida 33762
________________________________________________________________________________
(Address of Principal Executive Offices)
727-576-6311
________________________________________________________________________________
(Registrant's Telephone Number, Including Area Code)
________________________________________________________________________________
(Former Name, Former Address and Former Fiscal Year,
if changed since last report)
Indicate by check mark whether the registrant: (1) has 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 _____
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No ______
10Q-1
i
MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
Index
Page
Part I - Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
June 30, 2000 and March 31, 2000........................... 1
Condensed Consolidated Statements of Operations -
Three Months Ended June 30, 2000 and 1999.................. 2
Condensed Consolidated Statements of Changes in Stockholders'
Equity (Deficit) - Three Months Ended June 30, 2000........ 3
Condensed Consolidated Statements of Cash Flow -
Three Months Ended June 30, 2000 and 1999.................. 4
Notes to Condensed Consolidated Financial Statements............ 5 - 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................ 9 - 11
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K................................ 12
Signature....................................................... 12
1
<PAGE>
MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2000
Item 1. Financial Statements
PART 1 - FINANCIAL INFORMATION
MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
ASSETS
<TABLE>
<CAPTION>
June 30, March 31,
2000 2000
----------------- -----------------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash $ 163 $ 172
Accounts Receivable, Net 2,895 2,601
Inventories 1,719 2,030
Prepaids and Other 103 86
-------------- --------------
Total Current Assets 4,880 4,889
Property and Equipment, Net 1,723 1,904
Other Assets, Net 1,315 1,073
----------------- -----------------
Total Assets $ 7,918 $ 7,866
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Current Maturities of Long-Term Debt $ 1,006 $ 1,052
Accounts Payable and Accrued Liabilities 1,989 2,135
----------------- -----------------
Total Current Liabilities 2,995 3,187
Net Liabilities of Discontinued Operations 631 605
Long-Term Debt, Less Current Maturities 12,926 13,111
----------------- -----------------
Total Liabilities 16,552 16,903
----------------- -----------------
Stockholders' Equity (Deficit):
Voting Preferred Stock 1 1
Common Stock 65 65
Capital In Excess of Par Value 8,646 8,646
Accumulated Deficit (17,018) (17,421)
Less: Treasury Stock (328) (328)
----------------- -----------------
Total Stockholders' Equity (Deficit) (8,634) (9,037)
----------------- -----------------
Total Liabilities and Stockholders' Equity (Deficit) $ 7,918 $ 7,866
================= =================
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands; Except Earnings Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
------------------------------------------
2000 1999
--------------- ----------------
<S> <C> <C>
Revenue:
Net Sales $ 4,679 $ 3,836
Costs and Expenses:
Cost of Sales 2,693 2,076
Selling, General and Administrative 1,124 1,077
Research and Development 27 83
Depreciation and Amortization 193 255
Interest, Net 268 294
--------------- ----------------
Total Costs and Expenses 4,305 3,785
--------------- ----------------
Income from Continuing Operations Before
Discontinued Operations and Extraordinary Gain 374 51
Income (Loss) from Operations of Discontinued Operations,
Net of Income Tax 8 (524)
Gain on Forgiveness of Debt of Discontinued Operations 21 0
Gain on Disposal of Discontinued Operations,
Net of Income Tax 0 1,822
--------------- ----------------
Net Income $ 403 $ 1,349
=============== ================
Earnings per Basic and Diluted Common Share:
Income from Continuing Operations $ 0.06 $ 0.01
Income from Discontinued Operations 0.00 0.20
--------------- ----------------
Net Income per Basic and Diluted Common Share $ 0.06 $ 0.21
=============== ================
Weighted average Common Shares Outstanding - Basic and Diluted 6,543 6,406
=============== ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
THREE MONTHS ENDED JUNE 30, 2000
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
COMMON STOCK
--------------------------------------------------------------------------------------
Number .01 Capital in Retained Treasury
of Par Excess of Earnings Stock Total
Shares Value Par Value (Deficit)
----------- ----------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, March 31, 2000 6,542,621 $ 65 $ 8,646 $ (17,421) $ (328) $ (9,038)
Net Income for Three Months
Ended June 30, 2000 403 403
--------------------------------------------------------------------------------------
Balance, June 30, 2000 6,542,621 $ 65 $ 8,646 $ (17,018) $ (328) $ (8,635)
=========== =========== ============ ============ ============ ===========
VOTING PREFERRED STOCK
--------------------------------------------------------------------------------------
Number $.0001
of Par
Shares Value
----------- -----------
Balance, March 31, 2000 6,500,000 $ 1 $ 1
----------- ----------- -----------
Balance June 30, 2000 6,500,000 $ 1 $ 1
----------- ----------- -----------
Total Stockholders' Equity -----------
(Deficit), June 31, 2000 $ (8,634)
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
--------------------------------------
2000 1999
------------- --------------
<S> <C> <C>
Operating Activities
Net Income (Loss) from Continuing Operations $ 374 $ 51
------------- --------------
Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided (Used) by Operating Activities:
Depreciation and Amortization 193 255
(Increase) Decrease in:
Accounts Receivable (294) 266
Inventories 311 (136)
Prepaids and Other (17) (106)
Increase (Decrease) in:
Accounts Payable and Other Accrued Liabilities (146) 12
------------- --------------
Total Adjustments 47 291
------------- --------------
Net Cash Provided by Continuing Operations 421 342
------------- --------------
Investing Activities
Expended for Property and Equipment (78) (55)
Expended for Product Development (173) (44)
Expended for Patents and Other Assets (2) (2)
------------- --------------
Net Cash (Used) by Investing Activities of Continuing Operations (253) (101)
------------- --------------
Financing Activities
Payments on Notes Payable and Long-Term Debt (231) (272)
Advances (To) From Affiliates - Discontinued Operations 54 (174)
Proceeds from Borrowing on Notes Payable and Long-Term Debt 0 0
------------- --------------
Net Cash (Used) by Financing Activities of Continuing Operations (177) (446)
------------- --------------
Net (Decrease) in Cash - Continuing Operations (9) (205)
Cash at Beginning of Period - Continuing Operations 172 205
------------- --------------
Cash at End of Period - Continuing Operations $ 163 $ 0
============= ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and notes 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-month period ended June 30, 2000
are not necessarily indicative of the results that may be expected for the year
ended March 31, 2001. The unaudited condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto included in the Company's annual report on Form 10-K for the year
ended March 31, 2000.
The consolidated financial statements include the accounts of the Company
and its subsidiaries, MTS Packaging Systems, Inc. ("MTS Packaging"), Medical
Technology Laboratories, Inc. ("MTL") and LifeServ Technologies, Inc.
("LifeServ"). MTL and LifeServ represent discontinued operations, and
accordingly, the discontinued segments' net liabilities are shown as one amount
under the captions "Net Liabilities of Discontinued Operations" for fiscal 2001
and fiscal 2000. The results of operations of the discontinued segment for
fiscal 2001 and fiscal 2000 has been excluded from the components of "Income
(Loss) from Continuing Operations" and shown under the caption "Loss from
Operations of Discontinued Operations" in the Statements of Operations.
NOTE B - INVENTORIES
The components of inventory consist of the following:
<TABLE>
<CAPTION>
June 30, March 31,
2000 2000
---------------- ----------------
(In Thousands)
<S> <C> <C>
Raw Materials $ 845 $ 967
Finished Goods and Work in Progress 914 1,103
Less: Inventory Valuation Allowance (40) (40)
---------------- ----------------
$ 1,719 $ 2,030
================ ================
</TABLE>
Inventories are stated at the lower of cost (first-in, first-out) or
market.
NOTE C - EARNINGS PER SHARE
Net income per common share is computed by dividing net income by the basic
and diluted weighted average number of shares of common stock outstanding. For
diluted weighted average shares outstanding, the Company used the Treasury stock
method to calculate the common stock equivalents that stock options would
represent. The effect of all options and warrants were not included in the
calculation of net income per diluted common share as the effect would have been
anti-dilutive.
6
<PAGE>
NOTE D - DISCONTINUED OPERATIONS
During fiscal year 2000, the Company implemented a strategy of focusing its
resources on its core business, MTS Packaging, and divesting the other two
business segments it historically operated. The Company sold the principal
assets of its Health Care Information Systems business, LifeServ, in May 1999
and its Clinical Laboratory Services business, MTL, in January 2000. During the
first quarter of fiscal 2000, the operations of the discontinued operations
resulted in a loss of $524,000. The sale of the assets of LifeServ occurred in
the first quarter of fiscal 2000 and resulted in a gain on disposal of $1.8
million.
The sale of MTL did not occur until the fourth quarter of fiscal 2000. As
part of that sale, the Company retained certain assets and liabilities of MTL.
The assets are primarily comprised of accounts receivable that the Company
continues to attempt to collect. The operations of MTL during the first quarter
of fiscal 2001 were primarily confined to the collection of accounts receivable.
The Company estimated the realizable value of the accounts receivable at the end
of fiscal 2000 to be $1,000,000. Since the date of the sale, approximately
$260,000 of accounts receivable were collected.
The carrying value of the net assets of discontinued operations at June 30,
2000 and March 31, 2000 is comprised of the following.
<TABLE>
<CAPTION>
Total
Discontinued
Operations
------------------------------------
June 30, March 31,
2000 2000
------------- ------------
<S> <C> <C>
Current Assets $ 936 $ 1,078
Other Assets 0 0
------------- ------------
Total Assets $ 936 $ 1,078
------------- ------------
Current Liabilities $ 1,426 $ 1,567
Long-Term Liabilities 141 116
------------- ------------
Total Liabilities $ 1,567 $ 1,683
------------- ------------
Net Assets (Liabilities) of
Discontinued Operations $ (631) $ (605)
============= ============
</TABLE>
NOTE E - LONG-TERM DEBT
Long-term debt related to continuing operations consists of the following:
<TABLE>
<CAPTION>
June 30, March 31,
2000 2000
------------ --------------
(In Thousands)
<S> <C> <C>
Bank Term Loan; payable in installments of interest at 7.5% and principal
monthly for ten years ending September 1, 2006, with a lump sum payment of
approximately $7.7 million on that date secured by all tangible and
intangible assets of the Company. $ 13,232 $ 13,376
Unsecured Notes Payable plus interest at 18% through December 2000. 116 150
Unsecured Notes Payable due March 2001 plus interest at 13%. 106 142
Unsecured Note Payable plus interest at 3%, payable in monthly installments
of $2,394 through September 2006. 164 169
Unsecured Note Payable under settlement agreement with State of Florida
Department of Revenue, payable in monthly installments of $2,500-$3,500
over a period of four to eight years. 251 260
Other Notes and Agreements; interest and principal payable monthly and
annually at various amounts through March 2001. 63 66
------------ -------------
Total Long -Term Debt 13,932 14,163
Less Current Portion (1,006) (1,052)
------------ -------------
LONG-TERM DEBT DUE AFTER 1 YEAR $ 12,926 $ 13,111
============ =============
</TABLE>
The bank notes payable are collateralized by the Company's accounts
receivables, inventory, equipment and intangibles.
On July 6, 2000, the Company and its lender entered into an amendment to
their loan agreement that included a waiver of certain defaults that may have
occurred up to and including that date. In addition, the amendment provided for
an increase in the monthly principal payments, a modification of the excess cash
flow payment formula and a one-time principal payment of $200,000 that
represented the excess cash flow payments that were due and payable through
March 31, 2000.
In August 1998, the Company borrowed $150,000 from three individuals,
including $100,000 from the Chairman and C.E.O. to support the operations of
Medical Technology Laboratories, Inc. ("MTL"). The terms and conditions of these
obligations provided for repayment within six months from the borrowing date
including interest payable at 12% per annum. In addition, the notes provide the
lenders with warrants to purchase 88,500 shares of common stock of the Company
at $.75 per share for a period of ten (10) years. The fair value assigned to the
warrants is insignificant. The obligations matured without repayment, and the
Company and its lenders agreed to a repayment schedule with monthly installments
commencing in March 2000 and ending in December 2000 including interest at the
default rate of 18%.
7
<PAGE>
In October 1998, the Company borrowed $200,000 from an individual to
support the operations of MTL. The terms and conditions of this obligation
included repayment on September 1, 1999 including interest at 12% per annum. The
notes provide the lenders with warrants to purchase 118,000 shares of common
stock of the Company at $.75 per share for a period of ten (10) years. The fair
value assigned to the warrants is insignificant. The obligation matured without
repayment, and the Company and the lender agreed to a repayment schedule with
monthly installments commencing in October 1999 and ending in September 2001
including interest at 13%. In the event that the Company defaults on its
obligations under the promissory note, the lender is entitled to receive
warrants to purchase up to 800,000 and 18,000 shares of common stock at $.05 and
$.75 per share, respectively, for a period of ten (10) years. In addition, the
note is secured by 290,313 shares of the Company's common stock owned by the
Chairman and C.E.O.
NOTE F - CONTINGENCIES
On November 19, 1998, MTL received a refund request in the amount of $1.8
million from Medicare Program Safeguards ("MPS") and $104,000 from the State of
Florida Agency for Health Care Administration ("AHCA"). The request follows an
onsite review in May 1997, by federal and state agencies, of MTL's Medicare and
Medicaid billing practices in 1996. MTL has conducted an internal review of the
billing procedures, records and services in question and disputes MPS's findings
and determination. On December 17, 1998, MTL responded to the MPS determination
and subsequently received a response from MPS in which MPS informed MTL that
recoupment of the refund amount would be stayed while MPS reviewed MTL's
response. Although MTL believes that MPS's determination and the request for
refund are without merit, there can be no assurance that this matter will be
resolved over the near term or that the ultimate outcome of the matter will not
result in a recoupment effort by HCFA directed at the proceeds of the collection
of accounts receivable that MTL retained as part of the sale of the business.
Certain creditors of LifeServ and MTL have commenced legal actions against
the Company seeking payment of liabilities assumed by the buyers of LifeServ and
MTL. The Company intends to vigorously defend these actions and seek appropriate
remedies from the buyers.
The Company is involved in certain claims and other legal actions arising
in the ordinary course of business. There can be no assurances that these
matters will be resolved on terms acceptable to the Company. In the opinion of
management, based upon advice of counsel and consideration of all facts
available at this time, the ultimate disposition of these matters will not have
a material adverse effect on the financial position, results of operations or
liquidity of the Company.
NOTE G - SUBSEQUENT EVENT
On July 27, 2000, the Board of Directors approved a recapitalization plan
for the Company. The plan includes the exchange of 4,000,000 shares of common
stock for 6,500,000 shares of voting preferred stock and also a reverse stock
split of 1 share of common stock for 2.5 shares of common stock after the
exchange of common stock for preferred stock. The recapitalization plan was
ratified subject to shareholder approval and the consent of the Company's
lender. If the recapitalization plan had been completed at the beginning of the
three-month period ended June 30, 2000, the number of shares outstanding for
purposes of calculating earnings per share would have been 4,217,000 and the
earnings per basic and diluted common share for continuing operations for the
three months ended June 30, 2000 and June 30, 1999 would have been $.09 and $.01
respectively. The earnings per basic and diluted common share for discontinued
operations for the three months ended June 30, 2000 and June 30, 1999 would have
been $.01 and $.31 respectively.
8
<PAGE>
NOTE H - OTHER
In June 2000, the Company entered into a one-year agreement with National
Securities Corporation ("National") for investment banking services. As part of
the compensation for services to be provided, the Company will issue to National
200,000 warrants to purchase shares of common stock at $.34 per share. In
addition, the Company will issue to National 100,000 warrants to purchase shares
of common stock at $.34 per share if the Company's common stock qualifies for a
listing on an exchange. The Company has estimated the fair value of the warrants
to be approximately $45,000 and will amortize this cost over the term of the
agreement.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Form 10-Q contains forward-looking statements within the meaning of
that term in Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Additional written or oral forward-looking
statements may be made by the Company from time to time, in filings with the
Securities and Exchange Commission or otherwise. Statements contained herein
that are not historical facts are forward-looking statements made pursuant to
the safe harbor provisions described above. Forward-looking statements may
include, but are not limited to, projections of revenues, income or losses,
capital expenditures, plans for future operations, the elimination of losses
under certain programs, financing needs or plans, compliance with financial
covenants in loan agreements, plans for sale of assets or businesses, plans
relating to products or services of the Company, assessments of materiality,
predictions of future events and the effects of pending and possible litigation,
as well as assumptions relating to the foregoing. In addition, when used in this
discussion, the words "anticipates", "estimates", "expects", "intends", "plans'
and variations thereof and similar expressions are intended to identify
forward-looking statements.
Forward-looking statements are inherently subject to risks and
uncertainties, some of which can be predicted or quantified based on current
expectations. Consequently, future events and actual results could differ
materially from those set forth in, contemplated by, or underlying the
forward-looking statements contained herein. Statements in Quarterly Report,
particularly in "Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Notes to Condensed Consolidated
Financial Statements, describe factors, among others, that could contribute to
or cause such differences. Other factors that could contribute to or cause such
differences include, but are not limited to, unanticipated increases in
operating costs, labor disputes, capital requirements, increases in borrowing
costs, product demand, pricing, market acceptance, intellectual property rights
and litigation, risks in product and technology development and other risk
factors detailed in the Company's Securities and Exchange Commission filings.
Readers are cautioned not to place undue reliance on any forward-looking
statements contained herein, which speak only as of the date hereof. The Company
undertakes no obligation to publicly release the result of any revisions of
these forward-looking statements that may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of unexpected
events.
RESULTS OF OPERATIONS
Three Months Ended June 30, 2000 and 1999
-----------------------------------------
Net sales for the three months ended June 30, 2000 increased 22.0% to $4.7
million from $3.8 million during the same period the prior year. Net Sales
increased primarily as a result of an increase in the amount of disposable punch
cards sold to new and existing customers. Prices for disposable products
decreased approximately 1% during the first quarter of fiscal 2001. The Company
anticipates that pricing on disposables could continue to experience downward
pressure because reimbursement amounts received by customers from the end user
of the products sold continue to be reduced. The volume of disposable cards is
anticipated to continue to grow as a result of reduced medication dispensing
cycles. The reduced cycles implemented by pharmacies has resulted from
reductions in reimbursements introduced with the Medicare prospective payment
system beginning in July 1999. In addition, the development of new markets for
the Company's disposable products has contributed to the increase in net sales.
Cost of sales for the three months ended June 30, 2000 increased 29.7% to
$2.7 million from $2.1 million during the same period the prior year. Cost of
sales as a percentage of sales increased to 57.6% from 54.1% during the same
period the prior year. The increase is primarily due to increased material and
shipping costs as well as increased labor costs. In addition, the Company
offered certain discounts to new customers as a way of obtaining long-term
commitments for purchase of disposables.
10
<PAGE>
Selling, general and administration expenses for the three months ended
June 30, 2000 increased 4.4% to $1,124,000 from $1,1077,000 in the same period
during the prior year primarily due to increases in selling costs associated
with increased revenue.
Research and development expenses for three months ended June 30, 2000
decreased 67.5% to $27,000 from $83,000 during the same period the prior year.
The decrease resulted primarily from the fact that the Company directed its
development resources to the completion of new products during the first quarter
of fiscal 2001 compared to the first quarter of the prior year when development
resources were directed more towards researching new products.
Depreciation and amortization expenses for the three months ended June 30,
2000 decreased 24.3% to $193,000 from $255,000 during the same period the prior
year. This decrease is a result of older assets becoming fully depreciated.
Interest expense for the three months ended June 30, 2000 decreased 8.8% to
$268,000 from $294,000 during the same period the prior year. The decrease
results from a decrease in existing debt that has resulted from the regular
monthly amortization of principal and the sale of MTL in the fourth quarter of
fiscal year 2000.
LIQUIDITY AND CAPITAL RESOURCES
During the first quarter ended June 30, 2000, the Company had net income
from continuing operations of $374,000 compared to net income from continuing
operations of $51,000 the prior year. Cash provided by operating activities of
continuing operations was $421,000 during the three months ended June 30, 2000
compared to $342,000 provided in the prior year. The Company had working capital
of $1,885,000 at June 30, 2000.
The increase in cash provided by operating activities of continuing
operations during the three months ended June 30, 2000 compared to the same
period the prior year was primarily due to increases in profitability.
Investing activities used $253,000 during three months ended June 30, 2000
as a result of expenditures for capital equipment and product development.
Financing activities used $177,000 during the three months ended June 30,
2000 primarily as a result of payments made to the Company's principal lenders.
The Company's short-term and long-term liquidity is primarily dependent on
its ability to generate cash flow from operations. Inventory levels are not
expected to change significantly based upon the Company's current level of
operation. Increases in revenue have generally resulted in corresponding
increases in accounts receivable. Cash flow from operations is anticipated to
support an increase in accounts receivable.
The Company has several new product development projects underway that are
expected to be funded by cash flow from operations. These projects are monitored
on a regular basis to attempt to ensure that the anticipated costs associated
with them do not exceed the Company's ability to fund them from cash flow from
operations.
The Company believes that cash generated from operations will be sufficient
to meet its capital expenditures, product development and working capital needs
for at least the next twelve months.
11
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
None
B. Reports on Form 8-K
8-K dated July 17, 2000
Signature
---------
Pursuant to the requirements 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.
MEDICAL TECHNOLOGY SYSTEMS, INC.
Date: August 9, 2000 By: /s/ Michael P. Conroy
________________________________________
Michael P. Conroy
Vice President & Chief Financial Officer
