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 March 31, 1997
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, Suite 900
Houston, Texas 77057
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713)783-8200
----------------------
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 May 14, 1997 was 14,648,379.
<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 March 31, 1997
and September 30, 1996 (unaudited) ........................ 1
Consolidated Statements of Operations for the three
months and six months ended March 31, 1997
and 1996 (unaudited) ...................................... 2
Consolidated Statements of Cash Flows for the six
months ended March 31, 1997 and 1996 (unaudited) .......... 3
Notes to Consolidated Financial
Statements (unaudited) .................................... 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ....................... 5
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 ............................................................... 11
<PAGE>
AMERICAN MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
ASSETS 1997 1996
------------ ------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents .......................... $ 969,798 $ 582,108
Trade accounts receivable, net of allowance
of $207,448 and $184,900, respectively ......... 6,639,746 5,234,307
Notes and other receivables ........................ 1,216,300 417,673
Inventories ........................................ 4,092,081 3,341,486
Prepaid expenses and other assets .................. 271,285 239,621
------------ ------------
Total current assets ........................... 13,189,210 9,815,195
Investment in 3CI, at market value ..................... 595,716 893,914
Property, plant and equipment, at cost ................. 1,961,052 1,601,145
Accumulated depreciation ........................... (1,047,541) (928,762)
------------ ------------
Net property, plant and equipment .............. 913,511 672,383
Intangible assets, net of accumulated amortization
of $627,178 and $556,546, respectively ............. 866,659 937,291
Other assets ........................................... 113,457 44,360
------------ ------------
Total assets ................................... $ 15,678,553 $ 12,363,143
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term notes payable ........................... $ 3,748,267 $ 4,128,886
Accounts payable ................................... 3,270,943 1,857,601
Accrued liabilities ................................ 1,487,516 1,607,885
------------ ------------
Total current liabilities ...................... 8,506,726 7,594,372
Long-term debt ......................................... -- 640,000
------------ ------------
Total liabilities .............................. 8,506,726 8,234,372
------------ ------------
Commitments and contingencies
Shareholders' Equity:
Common stock, $.01 par value, authorized 100,000,000
shares; issued and outstanding 14,613,379
and 12,397,404 shares, respectively ............ 146,134 123,974
Additional paid-in capital ......................... 13,201,679 10,801,273
Accumulated deficit ................................ (5,224,794) (6,143,482)
Unrealized loss on investment in 3CI ............... (951,192) (652,994)
------------ ------------
Total shareholders' equity ..................... 7,171,827 4,128,771
------------ ------------
Total liabilities and shareholders' equity ..... $ 15,678,553 $ 12,363,143
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
AMERICAN MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED MARCH 31, ENDED MARCH 31,
--------------------------- ---------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues .......................... $ 6,802,255 $ 4,837,926 $13,058,391 $ 8,956,434
Cost of sales ..................... 4,512,266 3,000,679 8,553,647 5,657,394
----------- ----------- ----------- -----------
Gross profit .................. 2,289,989 1,837,247 4,504,744 3,299,040
Selling, general and administrative 1,526,806 1,300,684 3,091,770 2,411,784
Depreciation and amortization ..... 115,003 85,307 223,333 172,268
----------- ----------- ----------- -----------
Operating income .............. 648,180 451,256 1,189,641 714,988
Interest expense, net ............. 134,887 95,087 270,953 158,311
----------- ----------- ----------- -----------
Net income ........................ $ 513,293 $ 356,169 $ 918,688 $ 556,677
=========== =========== =========== ===========
Net income per share .............. $ 0.04 $ 0.03 $ 0.06 $ 0.04
=========== =========== =========== ===========
Weighted average common and
common equivalent shares ...... 14,078,385 12,568,194 14,437,783 12,454,137
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
AMERICAN MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31,
----------------------------
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income ............................................ $ 918,688 $ 556,677
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization ..................... 223,333 172,268
Changes in assets and liabilities:
Trade accounts receivable, net ................ (1,405,439) (2,088,784)
Notes and other receivables ................... (55,627) 2,300,000
Inventories ................................... (750,595) (934,804)
Prepaid expenses and other assets ............. (101,127) (17,514)
Accounts payable and accrued liabilities ...... 1,292,973 (581,281)
----------- -----------
Net cash used in operating activities ............. 122,206 (593,438)
----------- -----------
Cash flows from investing activities:
Purchases of property, plant and equipment ............ (432,613) (42,320)
Proceeds from sale of property, plant and equipment ... 39,150 --
----------- -----------
Net cash used in investing activities ............. (393,463) (42,320)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of notes payable ............... 895,000 1,444,372
Repayments of notes payable ........................... (1,816,869) (755,894)
Proceeds from exercise of warrants .................... 1,580,816 161,250
----------- -----------
Net cash provided by financing activities ......... 658,947 849,728
----------- -----------
Net increase in cash and cash equivalents ......... 387,690 213,970
Cash and cash equivalents at beginning of period .......... 582,108 233,765
----------- -----------
Cash and cash equivalents at end of period ................ $ 969,798 $ 447,735
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid for interest ................................ $ 300,645 $ 168,250
=========== ===========
Supplemental disclosure of noncash financing activities:
Exercise of warrants in exchange for notes receivable $ 743,000 $ --
=========== ===========
Exercise of warrants in exchange for retirement of
note payable ...................................... $ 38,750 $ --
=========== ===========
Conversion of note payable to common stock ............ $ 60,000 $ --
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<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 March 31, 1997 and the related
statements of operations for the three months and six months ended March
31, 1997 and 1996, and the related statements of cash flows for the six
months ended March 31, 1997 and 1996 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
Annual Report on Form 10-K for the year ended September 30, 1996.
(2) INVENTORIES
Inventories consist of the following at March 31, 1997 and September 30,
1996:
March 31, September 30,
1997 1996
----------- -----------
Raw materials .................. $ 3,171,803 $ 2,061,659
Work in process ................ 656,848 740,627
Finished goods ................. 553,059 916,246
Other (demo) ................... 189,371 98,954
----------- -----------
4,571,081 3,817,486
Inventory reserve .............. (479,000) (476,000)
----------- -----------
$ 4,092,081 $ 3,341,486
=========== ===========
(3) NET INCOME PER SHARE
Net income per share is computed by dividing the net income by the
weighted average number of common and common equivalent shares outstanding
during the period. For purposes of this calculation, outstanding warrants
and employee stock options are considered common stock equivalents. Fully
diluted earnings per share is materially equal to primary earnings per
share for the three months and six months ended March 31, 1997 and 1996.
(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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31,
1996
REVENUES increased $1,964,329 for the three months ended March 31, 1997
compared to the three months ended March 31, 1996. Revenues for the three
months ended March 31, 1997 and 1996 are broken down by individual product
in the following table:
Net Sales (000's)
-------------------- Increase
Product Line 1997 1996 (Decrease)
------------ ------ ------ -------
AnyCard ................... $4,497 $2,519 $ 1,978
TACC ...................... 1,501 1,594 (93)
Parts, service and other .. 529 491 38
EMS ....................... 275 234 41
------ ------ -------
$6,802 $4,838 $ 1,964
====== ====== =======
AnyCard(TM) sales increased 79% due to continued strong demand for the
single cassette model automated teller machine, which was introduced in
November 1995 as an alternative to the tube-type model.
TACC sales decreased 6% due to the shift of marketing emphasis to the
automated teller machine products. Management believes that this trend
will continue throughout the rest of the year.
All marketing activities for EMS products have terminated 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 machines are sold, and the level of
transactions per machine increases, this revenue component is expected to
become significant.
COST OF SALES was 66% and 62% of revenues for the three months ended March
31, 1997 and 1996, respectively. A portion of this increase was
attributable to certain sales discounts and allowances.
SELLING, GENERAL AND ADMINISTRATIVE expense was 22% of revenues for the
three months ended March 31, 1997, a decrease from 27% of revenues for the
same period in 1996. Management believes that selling, general and
administrative expense, as a percentage of revenues, should continue to
decrease over the remainder of the year.
DEPRECIATION AND AMORTIZATION increased $29,696, or 35%, from 1996 due to
the recent addition of property, plant and equipment utilized in the
development of new automated teller machine products.
INTEREST EXPENSE increased from $95,087 in 1996 to $134,887 in 1997 as a
result of increased indebtedness. Management believes that interest
expense will be reduced during the remainder of the year due to repayments
of short-term indebtedness with the proceeds from the exercise of warrants
as discussed more fully hereinbelow.
SIX MONTHS ENDED MARCH 31, 1997 COMPARED TO SIX MONTHS ENDED
MARCH 31, 1996
REVENUES increased $4,101,957 for the six months ended March 31, 1997
compared to the six months ended March 31, 1996. Revenues for the six
months ended March 31, 1997 and 1996 are broken down by individual product
in the following table:
Net Sales (000's)
--------------------- Increase
Product Line 1997 1996 (Decrease)
------------ ------- ------ -------
AnyCard .................... $ 8,724 $4,376 $ 4,348
TACC ....................... 2,838 3,189 (351)
Parts, service and other ... 1,050 897 153
EMS ........................ 446 494 (48)
------- ------ -------
$13,058 $8,956 $ 4,102
======= ====== =======
AnyCard sales increased 99% due to continued strong demand for the single
cassette model automated teller machine, which was introduced in November
1995 as an alternative to the tube-type model.
TACC sales decreased 11% due to the shift of marketing emphasis to the
automated teller machine products. Management believes that this trend
will continue throughout the rest of the year.
All marketing activities for EMS products have terminated 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 17% due to slightly higher
demand for replacement parts. As more AnyCard machines are sold, and the
level of transactions per machine increases, this revenue component is
expected to become significant.
COST OF SALES was 66% and 63% of revenues for the six months ended March
31, 1997 and 1996, respectively. A portion of this increase was
attributable to certain sales discounts and allowances.
SELLING, GENERAL AND ADMINISTRATIVE expense was 24% of revenues for the
six months ended March 31, 1997, a decrease from 27% of revenues for the
same period in 1996. Management believes that selling, general and
administrative expense, as a percentage of revenues, should continue to
decrease over the remainder of the year.
DEPRECIATION AND AMORTIZATION increased $51,065, or 30%, from 1996 due to
the recent addition of property, plant and equipment utilized in the
development of new automated teller machine products.
INTEREST EXPENSE increased from $158,311 in 1996 to $270,953 in 1997 as a
result of increased indebtedness. Management believes that interest
expense will be reduced during the remainder of the year due to repayments
of short-term indebtedness with the proceeds from the exercise of warrants
as discussed more fully hereinbelow.
LIQUIDITY AND CAPITAL RESOURCES
The financial position of the Company continues to improve primarily as a
result of profitable operations and the infusion of capital from the
exercise of warrants, as reflected in the following key indicators as of
March 31, 1997 and September 30, 1996:
March 31, September 30,
1997 1996
---------- ----------
Shareholders' equity .......... $7,171,827 $4,128,771
Tangible net worth ............ 6,305,168 3,191,480
Working capital ............... 4,682,484 2,220,823
During March 1996, the Company extended its revolving credit note until
May 31, 1997 and increased the maximum borrowing line to $3,000,000. Upon
maturity of the note, the Company expects to renew or replace its
borrowing facility at essentially the same terms and for an amount
required to satisfy its needs for the foreseeable future. At March 31,
1997, $2,582,856 was outstanding pursuant to the note as compared to
$2,640,387 at September 30, 1996.
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. At present,
480,818 shares are pledged to secure an outstanding note payable in the
principal amount of $400,000.
The Company's registration statement covering the offering and sale by
selling shareholders of the common stock underlying all of the Company's
5,517,500 outstanding warrants was declared effective on January 29, 1997.
As of March 31, 1997, warrants to purchase 2,095,975 shares have been
exercised generating net proceeds to the Company of approximately
$2,324,000, and warrants for the purchase of 718,780 shares have expired.
As of March 31, 1997, the Company has outstanding warrants to purchase
2,702,745 shares of common stock, which if exercised would generate
proceeds to the Company of approximately $2,263,000.
Of the total warrants exercised, certain directors purchased 700,000
shares through a contribution of cash and promissory notes. The notes,
which are due March 31, 1998, have an aggregate prinicipal balance of
$743,000, bear interest at 10% per annum, and are secured by a pledge of
all of the shares.
The Company's research and development budget for fiscal 1997 has been
estimated at $1,300,000. The majority of these expenditures are applicable
to enhancements of the existing product lines, development of new
automated teller machine products and the development of new technology to
facilitate the dispensing of products such as postage stamps, money
orders, and prepaid telephone cards, as well as multiple denominations of
currency. During the six months ended March 31, 1997, $468,889 had been
expended for research and development.
With its present capital resources, its potential capital from the
exercise of warrants, and with its borrowing facility, the Company should
have sufficient resources to meet its operating needs for the foreseeable
future and to provide for debt maturities and capital expenditures.
The Company does not anticipate paying dividends on shares of its common
stock in the foreseeable future.
SEASONALITY
The Company can experience seasonal variances in operations 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 any downturn during the three
months ended March 31, 1997. 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. Sales to major customers were as
follows for the three and six months ended March 31, 1997 and 1996:
Three months ended Six months ended
March 31, March 31,
---------------------- ------------------------
1997 1996 1997 1996
---------- -------- ---------- ----------
Customer A $1,802,920 $ -- Customer A $2,277,994 $ --
Customer B 515,847 1,223,846
Foreign sales accounted for 7% and 10% of the Company's total sales during
the three months ended March 31, 1997 and 1996, respectively, and 6% and
13% of the Company's total sales during the six months ended March 31,
1997 and 1996, respectively.
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 March
31, 1997.
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: May 14, 1997 By: /s/ JAMES T. RASH
James T. Rash
Principal Executive
and Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMPANY'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDING MARCH 31, 1997 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 969,798
<SECURITIES> 0
<RECEIVABLES> 6,639,746
<ALLOWANCES> 207,448
<INVENTORY> 4,092,081
<CURRENT-ASSETS> 13,189,210
<PP&E> 1,961,052
<DEPRECIATION> 1,047,541
<TOTAL-ASSETS> 15,678,553
<CURRENT-LIABILITIES> 8,506,726
<BONDS> 0
0
0
<COMMON> 146,134
<OTHER-SE> 7,025,693
<TOTAL-LIABILITY-AND-EQUITY> 15,678,553
<SALES> 13,058,391
<TOTAL-REVENUES> 13,058,391
<CGS> 8,553,647
<TOTAL-COSTS> 8,553,647
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 270,953
<INCOME-PRETAX> 918,688
<INCOME-TAX> 0
<INCOME-CONTINUING> 918,688
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 918,688
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
