<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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, 1996
or
[ ] 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 000-17288
---------
AMERICAN MEDICAL TECHNOLOGIES, INC.
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 75-2193593
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5847 San Felipe, San Felipe Plaza, Suite 900, Houston, Texas 77057
---------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713)783-8200
-------------
---------------------------------------------------------------------
(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 requirement 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 [ ] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares of Common Stock outstanding as of the close of
business on June 30, 1996, was 12,517,404.
<PAGE>
AMERICAN MEDICAL TECHNOLOGIES, INC.
I N D E X
PAGE
NUMBER
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1996
and September 30, 1995 (unaudited) . . . . . . . . . . . . 1
Consolidated Statements of Operations for the
three months and nine months ended June 30, 1996
and 1995 (unaudited) . . . . . . . . . . . . . . . . . 2
Consolidated Statements of Cash Flows for the
nine months ended June 30, 1996
and 1995 (unaudited) . . . . . . . . . . . . . . . . . 3
Notes to Consolidated Financial
Statements (unaudited) . . . . . . . . . . . . . . . . 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . 6
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . 10
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . 10
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . 10
Item 4. Submission of Matters to a Vote
Of Security Holders. . . . . . . . . . . . . . . . . . 10
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . 10
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . 10
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
<PAGE>
AMERICAN MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
JUNE 30, SEPTEMBER 30,
ASSETS 1996 1995
-------- -------------
Current Assets:
Cash and cash equivalents $ 420,071 $ 233,765
Trade accounts receivable, net of
allowance of $161,263 and $161,143,
respectively 4,410,531 1,279,271
Note and other receivable -- 2,300,000
Inventories 3,127,436 2,196,065
Prepaid expenses and other assets 152,585 155,928
----------- ----------
Total current assets 8,110,623 6,165,029
Investment in 3CI, at market value 1,106,330 340,409
Property, plant and equipment, at cost 1,323,357 1,249,870
Accumulated depreciation (881,867) (730,733)
----------- ----------
Net property, plant and equipment 441,490 519,137
Intangible assets, net of accumulated
amortization of $521,230 and $415,282,
respectively 972,607 1,078,555
Other assets 48,838 89,870
----------- ----------
Total assets $10,679,888 $8,193,000
----------- ----------
----------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term notes payable $ 3,691,052 $2,014,318
Accounts payable 1,235,186 2,100,619
Accrued liabilities 1,563,623 1,411,165
----------- ----------
Total current liabilities 6,489,861 5,526,102
Long-term notes payable -- 640,000
----------- ----------
Total liabilities 6,489,861 6,166,102
----------- ----------
Shareholders' Equity:
Common stock, $.01 par value,
authorized 100,000,000 shares;
issued and outstanding 12,517,404
shares and 11,882,404, respectively 125,174 118,824
Additional paid-in capital 10,860,073 10,473,173
Accumulated deficit (6,354,642) (7,358,600)
Unrealized loss on investment in 3CI (440,578) (1,206,499)
----------- ----------
Total shareholders' equity 4,190,027 2,026,898
----------- ----------
Total liabilities and shareholders'
equity $10,679,888 $8,193,000
----------- ----------
----------- ----------
See accompanying notes to consolidated financial statements.
1
<PAGE>
AMERICAN MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
THREE MONTHS ENDED JUNE 30, NINE MONTHS ENDED JUNE 30,
-------------------------- --------------------------
1996 1995 1996 1995
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $5,626,753 $2,235,051 $14,583,187 $ 9,077,505
Cost of sales 3,483,337 1,404,174 9,140,731 5,469,094
---------- ---------- ----------- -----------
Gross profit 2,143,416 830,877 5,442,456 3,608,411
Selling, general and administrative 1,513,151 1,607,426 3,931,222 4,580,596
Depreciation and amortization 84,849 126,944 257,117 414,299
---------- ---------- ----------- -----------
Operating income (loss) 545,416 (903,493) 1,254,117 (1,386,484)
Other income (expense):
Interest expense, net (99,837) (74,430) 258,149) (206,278)
Other income 1,702 392 7,990 27,580
---------- ---------- ----------- -----------
Total other expense (98,135) (74,038) (250,159) (178,698)
---------- ---------- ----------- -----------
Net income (loss) $ 447,281 $ (977,531) $ 1,003,958 $(1,565,182)
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Net income (loss) per common and
and common equivalent share:
Primary:
Net income (loss) $ 0.03 $ (0.08) $ 0.08 $ (0.13)
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Weighted average shares
outstanding 14,376,392 11,784,000 13,041,536 11,681,000
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Fully diluted:
Net income (loss) $ 0.03 $ (0.08) $ 0.07 $ (0.13)
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
Weighted average shares
outstanding 15,345,820 11,784,000 14,804,141 11,681,000
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
AMERICAN MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
NINE MONTHS ENDED JUNE 30,
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,003,958 $ (1,565,182)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 257,117 414,299
Gain on sale of property and equipment -- (29,369)
Changes in assets and liabilities:
Trade accounts receivable, net (3,131,260) 685,955
Note and other receivable 2,300,000 --
Inventories (931,371) (854,367)
Prepaid expenses and other assets 44,340 73,771
Accounts payable and accrued liabilities (704,975) 626,438
------------ ------------
Net cash used in operating activities (1,162,191) (648,455)
------------ ------------
Cash flows from investing activities:
Purchases of property and equipment (73,487) (258,805)
Proceeds from sale of property and equipment -- 84,626
------------ ------------
Net cash used in investing activities (73,487) (174,179)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of notes payable 2,515,769 774,030
Repayments of notes payable (1,296,035) (326,589)
Proceeds from exercise of warrants 175,250 183,050
------------ ------------
Net cash provided by financing activities 1,421,984 630,491
------------ ------------
Net increase (decrease) in cash and cash equivalents 186,306 (192,143)
Cash and cash equivalents at beginning of period 233,765 363,735
------------ ------------
Cash and cash equivalents at end of period $ 420,071 $ 171,592
------------ ------------
------------ ------------
Supplemental disclosure:
Cash paid for interest $ 272,398 $ 206,261
------------ ------------
------------ ------------
Notes payable converted to common stock $ 210,000 $ --
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
AMERICAN MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
(1) CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheets of American Medical Technologies, Inc.,
d/b/a AMT Industries, Inc. (the "Company"), a Delaware corporation, and its
wholly owned subsidiaries as of June 30, 1996 and the related statements of
operations for the three months and nine months ended June 30, 1996 and
1995, and the related statements of cash flows for the nine months ended
June 30, 1996 and 1995 are unaudited. In the opinion of management, all
adjustments, which include only normal recurring adjustments necessary to
present fairly the financial position, results of operations and cash flows
for the periods presented, have been made. All significant intercompany
items have been eliminated in consolidation.
Certain disclosures and other information required by generally accepted
accounting principles have been omitted from these financial statements as
permitted by reference to other Securities and Exchange Commission filings.
These statements should be read in conjunction with the Company's Form 10-K
Annual Report as of September 30, 1995.
(2) INVENTORIES
Inventories at June 30, 1996 and September 30, 1995 consisted of the
following:
June 30, September 30,
1996 1995
---------- -------------
Raw materials $2,775,156 $ 1,596,657
Work in process 231,815 262,181
Finished goods 561,799 1,004,472
Other (demo) 86,666 61,755
---------- ----------
3,655,436 2,925,065
Inventory reserve (528,000) (729,000)
---------- ----------
$3,127,436 $2,196,065
---------- ----------
---------- ----------
(3) NET INCOME (LOSS) PER SHARE
Net income (loss) per share was computed by dividing the net income (loss)
by the weighted average number of common and common equivalent shares
outstanding during the period. For purposes of this calculation, dilutive
outstanding warrants and employee stock options are considered common stock
equivalents.
4
<PAGE>
AMERICAN MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
(4) INVESTMENT IN 3CI
The Company owns 680,818 shares of the common stock of 3CI Complete
Compliance Corporation. The investment is carried at market value.
(5) LITIGATION
The Company and its subsidiaries are each subject to certain litigation and
claims arising in the ordinary course of business. In the opinion of the
management of the Company, the amounts ultimately payable, if any, as a
result of such litigation and claims will not have a materially adverse
effect on the Company's financial position.
A wholly owned subsidiary of the Company, Tidel Engineering, Inc., was
previously involved in substantial litigation relating to a dispute with a
major customer and a major supplier relative to the Company's environmental
monitoring systems product line. Pursuant to a settlement agreement with
the customer and supplier in September 1995, the Company received
$2,000,000 in October 1995. Such amount had previously been recorded as a
receivable as of September 30, 1995. In connection with the settlement,
the Company and Tidel Engineering, Inc. were released by the other parties
from all liability.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has financed its operating and growth
requirements through funds generated from the private placements of common
stock and debt securities with detachable warrants.
In 1995, the Company experienced working capital shortages as a result of
increased expenses relating to litigation concerning its EMS products. As
discussed in Note 5 to the accompanying financial statements, the
litigation has now been settled and the Company received $2,000,000 in
October 1995 in connection therewith. As a result of the settlement and
much improved operations, the overall liquidity position of the Company has
been favorably impacted. At June 30, 1996, working capital was $1,620,762
as compared to $638,927 at September 30, 1995.
The Company renewed its revolving credit agreement on March 29, 1996. The
agreement provides, under certain terms and conditions, for working capital
advances up to a maximum amount of $3,000,000 until May 31, 1997. As of
June 30, 1996, $2,036,642 was outstanding pursuant to the agreement as
compared to $984,873 at September 30, 1995.
The Company continues to own 680,818 shares of 3CI common stock subsequent
to its divestiture of a majority interest in February 1994. The Company
has no immediate plans for the disposal of the shares, and accordingly, the
shares may be utilized to collateralize borrowings. All of the shares are
currently pledged to secure outstanding notes payable with aggregate
principal balances of $1,100,000.
The Company presently has outstanding warrants for the purchase of
approximately 4,300,000 shares of its common stock for an aggregate
purchase price of approximately $4,500,000. A substantial portion of the
warrants expire sixty days after the effective date of a registration
statement by the Company covering the offering of common stock underlying
warrants. Substantial proceeds would be generated upon the exercise of the
warrants and would be available for general working capital purposes,
although there can be no assurance that this event will occur.
The Company's research and development budget for fiscal 1996 has been
estimated at $862,000. Approximately $656,000 had been expended for
research and development during the nine months ended June 30, 1996.
No major additions of property, plant and equipment are contemplated during
fiscal 1996.
The Company does not anticipate paying dividends on shares of its common
stock in the foreseeable future.
6
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE 30, 1995
REVENUES increased $3,391,702 for the three months ended June 30, 1996
compared to the three months ended June 30, 1995. Revenues for the three
months ended June 30, 1996 and 1995 are broken down by individual product in
the following table:
Net Sales (000's)
--------------------------------
Increase
Product Line 1996 1995 (Decrease)
------------ ------ ------ ----------
AnyCard-TM- $3,616 $ 228 $3,388
TACC 1,239 1,188 51
EMS 247 350 (103)
Parts, service and other 525 469 56
------ ------ ------
$5,627 $2,235 $3,392
------ ------ ------
------ ------ ------
AnyCard-TM- sales have increased significantly due to the successful
introduction of the single cassette model in November 1995 as an alternative
to the tube-type model of automated teller machine. The Company continues to
carry the tube-type models in inventory, but sales of the single cassette
model contributed most of the revenue from this product line.
TACC sales remained flat due to the shift of marketing emphasis to the
automated teller product recently introduced and fewer international
shipments during the period. Management believes that this trend will
continue throughout the rest of the year.
EMS sales to new accounts will continue to decline as the marketing focus of
the Company is shifted to other product lines. Management believes that
certain existing customers will continue to purchase these products, however,
to complete retrofit projects that are currently in progress.
Parts, service and other revenues increased due to slightly higher demand for
replacement parts. As more AnyCard-TM- machines are sold, and the level of
transactions per machine increases, this revenue segment is expected to
become significant.
COST OF SALES, as a percentage of revenues, decreased from 63% for the three
months ended June 30, 1995 to 62% for the three months ended June 30, 1996.
A portion of the decline resulted from an adjustment of reserves for
slow-moving raw materials.
SELLING, GENERAL AND ADMINISTRATIVE expense decreased $94,275, or 6%, for the
three months ended June 30, 1996 as compared to the same period in 1995. The
decrease was attributable to reduced legal fees and lower administrative
expenses in the corporate office.
DEPRECIATION AND AMORTIZATION decreased $42,095, or 33%, from 1995, due to
the write-off of certain intangible costs related to the EMS product line at
September 30, 1995.
7
<PAGE>
INTEREST EXPENSE increased from $74,430 in 1995 to $99,837 in 1996, as a
result of increased indebtedness.
OTHER INCOME arose primarily from gains on sales of surplus equipment for the
three months ended June 30, 1996 and 1995.
NINE MONTHS ENDED JUNE 30, 1996 COMPARED TO NINE MONTHS ENDED JUNE 30, 1995
REVENUES increased $5,505,682 for the nine months ended June 30, 1996
compared to the nine months ended June 30, 1995. Revenues for the nine
months ended June 30, 1996 and 1995 are broken down by individual product in
the following table:
Net Sales (000's)
--------------------------------
Increase
Product Line 1996 1995 (Decrease)
------------ ------- ------ ----------
AnyCard-TM- $ 7,992 $2,227 $5,765
TACC 4,429 4,511 (82)
EMS 741 1,058 (317)
Parts, service and other 1,421 1,282 39
------- ------ ------
$14,583 $9,078 $5,505
------- ------ ------
------- ------ ------
AnyCard-TM- sales have increased significantly due to the successful
introduction of the single cassette model in November 1995 as an alternative
to the tube-type model of automated teller machine. The Company continues to
carry the tube-type models in inventory, but sales of the single cassette
model contributed most of the revenue from this product line.
TACC sales remained flat due to the shift of marketing emphasis to the
automated teller product recently introduced and fewer international
shipments during the period. Management does not foresee any significant
change in this trend for the remainder of the year.
EMS sales to new accounts will continue to decline as the marketing focus of
the Company is shifted to other product lines. Management believes that
certain existing customers will continue to purchase these products, however,
to complete retrofit projects that are currently in progress.
Parts, service and other revenues increased due to slightly higher demand for
replacement parts. As more AnyCard-TM- machines are sold, and the level of
transactions per machine increases, this revenue segment is expected to
become significant.
COST OF SALES, as a percentage of revenues, increased from 60% to 63% for the
nine months ended June 30, 1996 as compared to the same period last year.
Management believes that a significant portion of these expenses are
applicable to the startup costs incurred in the development of the
AnyCard-TM- SC, and accordingly, margins should improve over the next several
quarters.
8
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE expense decreased $649,374, or 14%, for
the nine months ended June 30, 1996 as compared to the same period in 1995.
The decrease was attributable to reduced legal fees and lower administrative
expenses in the corporate office.
DEPRECIATION AND AMORTIZATION decreased $157,182, or 38%, from 1995, due to
the write-off of certain intangible costs related to the EMS product line at
September 30, 1995.
INTEREST EXPENSE increased from $206,278 in 1995 to $258,149 in 1996, as a
result of increased indebtedness.
OTHER INCOME for the nine months ended June 30, 1996 and 1995 arose primarily
from gains on sales of surplus equipment.
SEASONALITY
The Company can experience seasonal variances in operations which are closely
associated with the construction of convenience stores and service stations
and historically has its lowest dollar volume sales months between November
and March. With the favorable sales of its new automated teller machine,
however, the Company did not experience this trend in the current year. The
Company's operating results for any particular quarter may not be indicative
of the results for the future quarter or for the year.
MAJOR CUSTOMERS AND CREDIT RISKS
The Company generally does not require collateral or other security from its
customers and would incur an accounting loss equal to the carrying value of
the accounts receivable if a customer failed to perform according to the
terms of the credit arrangements. The Company has a concentration of credit
risk, as a significant portion of its revenues is from customers in the
retail and petroleum marketing industries. Sales to major customers were as
follows for the three months and nine months ended June 30, 1996 and 1995:
Three months ended Nine months ended
June 30, June 30,
----------------------- -------------------------
1996 1995 1996 1995
---------- -------- ---------- --------
Customer A $1,086,673 $ -- $1,086,673 $ --
Customer B $ 699,500 $ -- $ 699,500 $ --
Customer C $ 582,328 $ -- $1,026,134 $281,997
Customer D $ 191,951 $256,301 $ 442,484 $613,985
Foreign sales accounted for 2% and 12% of the Company's total sales during
the three months ended June 30, 1996 and 1995, respectively, and 9% and 16%
of the Company's total sales during the nine months ended June 30, 1996 and
1995, respectively.
9
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The Company filed no Reports on Form 8-K during the quarter ended June 30,
1996.
SIGNATURE
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 TECHNOLOGIES, INC.
(Registrant)
DATE: August 14, 1996 By: /s/ JAMES T. RASH
----------------------------------------
James T. Rash
President, Principal Executive Officer
and Principal Financial Officer
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND
IN THE COMPANY'S FORM 10-Q FOR THE YEAR-TO-DATE, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 420,071
<SECURITIES> 0
<RECEIVABLES> 4,410,531
<ALLOWANCES> 161,263
<INVENTORY> 3,127,436
<CURRENT-ASSETS> 8,110,623
<PP&E> 1,323,357
<DEPRECIATION> 881,867
<TOTAL-ASSETS> 10,679,888
<CURRENT-LIABILITIES> 6,489,861
<BONDS> 0
0
0
<COMMON> 125,174
<OTHER-SE> 4,064,853
<TOTAL-LIABILITY-AND-EQUITY> 10,679,888
<SALES> 14,583,187
<TOTAL-REVENUES> 14,583,187
<CGS> 9,140,731
<TOTAL-COSTS> 9,140,731
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 258,149
<INCOME-PRETAX> 1,003,958
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,003,958
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,003,958
<EPS-PRIMARY> .08
<EPS-DILUTED> .07
</TABLE>
