As filed with the Securities and Exchange Commission on February 14, 1997.
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 December 31, 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, 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 February 13, 1997 was 12,696,904.
<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 December 31, 1996
and September 30, 1996 (unaudited)................ 1
Consolidated Statements of Operations for the
three months ended December 31, 1996
and 1995 (unaudited)............................. 2
Consolidated Statements of Cash Flows for the
three months ended December 31, 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.............. 5
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings................................... 8
Item 2. Changes in Securities............................... 8
Item 3. Defaults Upon Senior Securities..................... 8
Item 4. Submission of Matters to a Vote
Of Security Holders............................... 8
Item 5. Other Information................................... 8
Item 6. Exhibits and Reports on Form 8-K.................... 8
SIGNATURE....................................................... 9
<PAGE>
AMERICAN MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
December 31, September 30,
1996 1996
------------ ------------
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents .............................. $ 379,641 $ 582,108
Accounts receivable, net of allowance of
$187,305 and $184,900, respectively ............... 6,052,919 5,651,980
Inventories ............................................ 3,691,376 3,341,486
Prepaid expenses and other assets ...................... 324,355 239,621
------------ ------------
Total current assets ............................... 10,448,291 9,815,195
Investment in 3CI, at market value ........................ 638,607 893,914
Property, plant and equipment, at cost .................... 1,741,012 1,601,145
Accumulated depreciation ............................... (1,001,410) (928,762)
------------ ------------
Net property, plant and equipment ................. 739,602 672,383
Intangible assets, net of accumulated amortization
of $591,862 and $556,546, respectively ................ 901,975 937,291
Other assets ............................................... 106,128 44,360
------------ ------------
Total assets ....................................... $ 12,834,603 $ 12,363,143
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term notes payable ............................... $ 4,050,550 $ 4,128,886
Accounts payable ....................................... 2,574,981 1,857,601
Accrued liabilities .................................... 1,230,213 1,607,885
------------ ------------
Total current liabilities .......................... 7,855,744 7,594,372
Long-term debt ............................................. 640,000 640,000
------------ ------------
Total liabilities .................................. 8,495,744 8,234,372
------------ ------------
Commitments and contingencies
Shareholders' Equity:
Common stock, $.01 par value, authorized 100,000,000
shares; issued and outstanding 12,517,404
and 12,397,404 shares, respectively ............... 125,174 123,974
Additional paid-in capital ............................. 10,860,073 10,801,273
Accumulated deficit .................................... (5,738,087) (6,143,482)
Unrealized loss on investment in 3CI ................... (908,301) (652,994)
------------ ------------
Total shareholders' equity ......................... 4,338,859 4,128,771
------------ ------------
Total liabilities and shareholders' equity ......... $ 12,834,603 $ 12,363,143
============ ============
</TABLE>
See accompanying notes to consolidated financial statements
1
<PAGE>
AMERICAN MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended December 31,
1996 1995
----------- -----------
Revenues .................................... $ 6,256,136 $ 4,118,508
Cost of sales ............................... 4,041,381 2,656,715
----------- -----------
Gross profit ............................ 2,214,755 1,461,793
Selling, general and administrative.......... 1,564,964 1,113,132
Depreciation and amortization ............... 108,330 86,961
----------- -----------
Operating income ........................ 541,461 261,700
Interest expense, net ...................... 136,066 61,192
----------- -----------
Net income .................................. $ 405,395 $ 200,508
=========== ===========
Net income per share ........................ $ 0.03 $ 0.02
=========== ===========
Shares used to calculate net income per share 15,316,909 12,096,655
=========== ===========
See accompanying notes to consolidated financial statements
2
<PAGE>
AMERICAN MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31,
-------------------------------
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income ............................................. $ 405,395 $ 200,508
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization ...................... 108,330 86,961
Changes in assets and liabilities:
Accounts receivable, net ....................... (400,939) (466,310)
Note and other receivable ...................... -- 2,300,000
Inventories .................................... (349,890) (607,137)
Prepaid expenses and other assets .............. (146,868) 82,459
Accounts payable and accrued liabilities ....... 339,708 (678,950)
----------- -----------
Net cash provided by (used in) operating activities (44,264) 917,531
----------- -----------
Cash flows from investing activities:
Purchases of property, plant and equipment ............. (139,867) (23,706)
----------- -----------
Net cash used in investing activities .............. (139,867) (23,706)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of notes payable ................ 139,666 260,000
Repayments of notes payable ............................ (158,002) (1,115,819)
----------- -----------
Net cash used in financing activities .............. (18,336) (855,819)
----------- -----------
Net increase (decrease) in cash and cash equivalents (202,467) 38,006
Cash and cash equivalents at beginning of period ........... 582,108 233,765
----------- -----------
Cash and cash equivalents at end of period ................. $ 379,641 $ 271,771
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid for interest ................................. $ 123,271 $ 84,464
=========== ===========
Supplemental disclosure of noncash financing activity:
Conversion of note payable to common stock ............. $ 60,000 $ --
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
<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 December 31, 1996 and the related statements of
operations and cash flows for the three months ended December 31, 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 Annual
Report on Form 10-K for the year ended September 30, 1996.
(2) INVENTORIES
Inventories consist of the following at December 31, 1996 and September 30,
1996:
December 31, September 30,
1996 1996
----------- -----------
Raw materials ............ $ 3,218,420 $ 2,061,659
Work in process .......... 463,899 740,627
Finished goods ........... 368,595 916,246
Other (demo) ............. 116,462 98,954
----------- -----------
4,167,376 3,817,486
Inventory reserve ........ (476,000) (476,000)
----------- -----------
$ 3,691,376 $ 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 ended December 31, 1996 and 1995.
4
<PAGE>
(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 DECEMBER 31, 1996 COMPARED TO THREE MONTHS ENDED
DECEMBER 31, 1995
REVENUES increased $ 2,137,628 for the three months ended December 31, 1996
compared to the three months ended December 31, 1995. Revenues for the three
months ended December 31, 1996 and 1995 are broken down by individual
product in the following table:
NET SALES(000'S) Increase
------------------------ ----------
PRODUCT LINE 1996 1995 (Decrease)
------------ ------- ------- ---------
AnyCardTM $ 4,227 $ 1,857 $ 2,370
TACC 1,337 1,595 (258)
Parts, service
and other 521 407 114
EMS 171 260 (89)
------- ------- -------
$ 6,256 $ 4,119 $ 2,137
======= ======= =======
AnyCardTM sales increased 127% due to strong demand for the single cassette
model automated teller machine, which was introduced in November 1995 as an
alternative to the tube-type model. Sales of the single cassette model
accounted for 100% and 87% of AnyCard sales for the three months ended
December 31, 1996 and 1995, respectively.
TACC sales decreased 16% 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.
5
<PAGE>
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 segment is expected to
become significant.
COST OF SALES remained constant at 65% percent of revenues for the three
months ended December 31, 1996 and 1995. Management believes that cost of
sales, as a percentage of revenues, should be slightly reduced over the
remainder of the year due to improved manufacturing efficiencies.
SELLING, GENERAL AND ADMINISTRATIVE expense increased $451,832 for the three
months ended December 31, 1996 as compared to the same period in 1995. This
increase was attributable to higher marketing expenses related to the
promotion of the AnyCard product line and the addition of new personnel.
Selling, general and administrative expense was 25% of revenues for the
three months ended December 31, 1996, a decrease from 27% of revenues for
the same period in 1995.
DEPRECIATION AND AMORTIZATION increased $21,369, or 25%, from 1995, due to
the recent addition of property, plant and equipment utilized in the
development of new automated teller machine products.
INTEREST EXPENSE increased from $61,192 in 1995 to $136,066 in 1996, as a
result of increased indebtedness. Management believes that interest expense
will be greatly reduced during the year, as the Company expects to retire
substantial short-term indebtedness with the proceeds from the exercise of
presently outstanding 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, as reflected in the following key
indicators as of December 31, 1996 and September 30, 1996:
December 31, September 30,
1996 1995
---------- -----------
Shareholders' equity ................... $4,338,859 $4,128,771
Tangible net worth ..................... 3,436,884 3,191,480
Working capital ........................ 2,592,547 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 December 31, 1996, $2,780,053 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. All of the shares are
currently pledged to secure outstanding notes payable with aggregate
principal balances of $1,535,000.
6
<PAGE>
The Company's recently filed registration statement covering the offering
and sale by selling shareholders of the Company's common stock was declared
effective on January 29, 1997. This registration statement includes common
stock underlying all of the Company's 5,517,500 outstanding warrants. If all
of the warrants are exercised, the net proceeds to the Company are estimated
to be approximately $5,690,000. Approximately one-half of the Company's
outstanding warrants are scheduled to expire on March 30, 1997. While there
can be no assurance that these warrants will be exercised, substantial
proceeds would be generated should such event occur, thereby improving the
Company's working capital position.
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
three months ended December 31, 1996, $279,207 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
December 31, 1996. 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.
7
<PAGE>
Sales to major customers were as follows for the three months ended December
31, 1996 and 1995:
1996 1995
---------- ----------
Customer A .............. $ 833,489 $ 171,840
Customer B .............. 666,220 94,930
Customer C .............. 296,697 1,199,150
Foreign sales accounted for 4% and 17% of the Company's total sales during
the three months ended December 31, 1996 and 1995, 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 December
31, 1996.
8
<PAGE>
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: February 14, 1997 By:/S/ JAMES T. RASH
James T. Rash
President, Principal Executive
Officer and Principal Financial
Officer
9
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMPANY'S QUARTERLY REPORT ON FORM 10Q FOR THE PERIOD ENDED DECEMBER
31,1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1996
<CASH> 379,641
<SECURITIES> 0
<RECEIVABLES> 6,052,919
<ALLOWANCES> 187,305
<INVENTORY> 3,691,376
<CURRENT-ASSETS> 10,448,291
<PP&E> 1,741,012
<DEPRECIATION> 1,001,410
<TOTAL-ASSETS> 12,834,603
<CURRENT-LIABILITIES> 7,855,744
<BONDS> 640,000
0
0
<COMMON> 125,174
<OTHER-SE> 4,213,685
<TOTAL-LIABILITY-AND-EQUITY> 12,834,603
<SALES> 6,256,136
<TOTAL-REVENUES> 6,256,136
<CGS> 4,041,381
<TOTAL-COSTS> 4,041,381
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 136,066
<INCOME-PRETAX> 405,395
<INCOME-TAX> 0
<INCOME-CONTINUING> 405,395
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 405,395
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
