UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported):
April 8, 2009
American
Medical Technologies, Inc.
(Exact
name of Registrant as specified in its charter)
|
Delaware
|
0-19195
|
38-2905258
|
|
(State
or other jurisdiction
of
incorporation)
|
(Commission
File
Number)
|
(IRS
Employer
Identification
No.)
|
5655
Bear Lane
Corpus
Christi, TX 78405
(Address
of principal executive offices)
Registrant’s
telephone number, including area code:
(361) 289-1145
Not
Applicable
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
|
|
o
Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
|
|
|
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|
|
|
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|
|
|
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
|
ITEM
1.02 TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT
.
On April 8, 2009, American Medical
Technologies, Inc. (the “Company,” “we,” and “us”) received a letter from Discus
Holdings, Inc. terminating the Exclusive License Agreement and the Manufacturing
Agreement for the Spectrum tooth whitening product line (the “Termination
Notice”). The loss of this product line and the other product lines
described below, combined with the continued decrease in revenues from the
Company’s remaining product lines will not generate enough cash flow for the
Company to continue its operations. As a result, on April 9, 2009,
the Company terminated or gave notice of termination to all employees and
effectively ceased its business operations (the “Termination
Date”).
At the time business operations ceased,
the Company was undergoing an audit of its financial statements for the year
ended December 31, 2008, and was in the process of completing its Annual Report
on Form 10-K for the same period. The cessation of business
operations necessitated a change in the accounting basis for the presentation of
the financial statements and an audit of the revised financial statements for
the year ended December 31, 2008. The Company does not have the
resources to complete these changes.
As such,
the Company will be unable to complete and file its Annual Report on Form 10-K
for the year ended December 31, 2008; but has provided information below from
the Company’s Annual Report on Form 10-K which was in the process of being
completed when its business operations ceased. The below disclosures
come from the draft unaudited financial statements for the years ended December
31, 2008 and 2007, attached hereto as Exhibit 99.1, which financial information
has not been audited by and/or approved by our independent auditing firm, but
which have been supplied for informational purposes only.
Moving
forward, the Company plans to file a Form 15 and terminate its filing
obligations with the Securities and Exchange Commission.
ITEM
2.04 TRIGGERING EVENTS THAT ACCELERATE OR INCREASE A DIRECT FINANCIAL OBLIGATION
OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT.
On
December 21, 2006, the Company entered into a secured line of credit
agreement with Texas State Bank. The funds available under the line of
credit were $600,000. The Company invested $300,000 with funds drawn
against the line of credit in a Certificate of Deposit with a term of one year
as collateral for the loan. Interest on the line of credit was set at the
prime rate plus 1%. The interest rate on the line of credit was 9.25% as
of December 31, 2006. The principal on the loan was payable in one
payment on December 20, 2007, with interest on the outstanding amount
payable monthly. The Company borrowed an additional $100,000 against the
line of credit in December 2006. In February 2007, Texas State
Bank increased the line of credit to $800,000 using the Company’s accounts
receivable and inventory as collateral. In January 2008, the Company
renewed the secured line of credit agreement. The terms of the original
line of credit remained the same with the exception of the payment date which
was extended to January 2009. In August 2008, Texas State Bank
became part of Compass Bank. The interest rate on the line of credit
was 4.25% as of December 31, 2008. The balance outstanding was
$690,000 at December 31, 2008.
In
February 2009, the Company entered into a Change in Terms Agreement with Compass
Bank related to the Company’s line of credit with Compass Bank. In
connection with the Change in Terms Agreement, the Company’s $326,000
certificate of deposit was used by Compass Bank to repay amounts the Company
owed to Compass Bank. Additionally, the Change in Terms Agreement
reduced the amount that Compass Bank is required to loan the Company under the
line of credit to $375,000. The variable interest rate on the line of
credit under the Change of Terms Agreement is 2.5% over the prime interest rate,
adjustable daily, with an initial interest rate of 5.75%, subject to a 5.75%
floor. Monthly interest payments will begin on March 20, 2009 with
the entire outstanding principal and unpaid accrued interest due in one payment
on February 6, 2010. The balance on the line of credit was
approximately $361,892 as of the date of the entry into the Change in Terms
Agreement.
As a
result of the Termination Notice, the Company will be unable to repay Compass
Bank, it is likely that Compass Bank will foreclose on the Company’s
assets.
ITEM
8.01 OTHER EVENTS.
The
information below comes from the Company’s draft Form 10-K, which the Company
will be unable to file with the Commission. The financial statements
and the presentation of the financial statement information below for the years
ended December 31, 2008 and 2007, has not been audited and as stated above, does
not reflect the termination of the Company’s business operations and related
affects on the Company’s operations. The information below is being
provided to the Company’s investors only for informational purposes only and
should not be treated as if such information was filed in an Annual Report
and/or such financial information was audited.
Until the
Termination Date, we “distributed”, “manufactured” and “brokered” products
designed primarily for the global general and cosmetic dental industries.
In the distributor function, AMT acted as the manufacturer licensee and global
sales representative of a premium brand of professional tooth whitening.
Outside of dental product sales, AMT also developed, manufactured and marketed
precision air abrasive jet machining, (“AJM”) systems for industrial
applications and operated a parts and maintenance business for past AMT dental
and industrial products.
Previous
Products
Contrast
Tooth Whitening
In
April 2006, the Company entered into a 3 year licensing agreement with
Discus Dental, Inc. (“Discus Dental” or “Discus”) and its wholly-owned
subsidiary, Spectrum Dental, Inc. (“Spectrum” or “Spectrum Dental”) a leading
provider of professional tooth whitening systems, under which AMT was granted
the exclusive worldwide distribution rights of the Spectrum Dental product
line. The products purchased from Discus Dental and resold under the brand
names: Contrast AM, Contrast PM, Contrast PM Plus, FastDam, FastTrack and other
ancillary products (collectively “Contrast Tooth Whitening”), utilize hydrogen
peroxide or carbamide peroxide in various concentrations to safely and
effectively whiten discolored teeth. Although the safety and efficacy of
these technologies are well tested, due to the relative strength of the
materials, Contrast tooth whitening products are only available and administered
by dental professionals.
As full
consideration, the Company granted to Discus a ten year warrant (the “Warrant”)
to purchase up to 2,500,000 shares of its common stock at $0.20 per share. The
shares subject to the Warrant vest 500,000 after the first year and an
additional 41,667 shares on each successive full one-month periods thereafter
until the fifth anniversary of the date of grant; however vesting ceases upon
the sale of Spectrum to the Company as contemplated by the Option Agreement
described below, which sale did not occur. The shares subject to the Warrant are
adjusted upon the occurrence of certain events including a stock dividend,
reclassification, merger and stock split, and upon the issuance of shares for a
consideration per share less than the applicable conversion price of the
Warrant, with certain exceptions for compensation paid in stock. As of December
31, 2008, a total of 833,336 of the Warrant shares had vested to
Discus.
Option
Agreement
On the
same date, the Company and Discus entered into a Put and Call Option Agreement
(the “Option Agreement”) whereby Discus has a put option to compel the Company
to purchase all the outstanding shares of capital stock of Spectrum, and the
Company has a call option to compel Discus to sell such shares, at any time
after April 11, 2007 and before the earlier to occur of the termination or
expiration of the License Agreement or five years. Notwithstanding the
foregoing, the Company may not exercise its call option if the price at which
its shares of common stock are trading, or the average trading price of its
shares during the preceding 30 day period, is less than $0.60 per
share.
Spectrum
Dental products accounted for 56% and 53% of AMT’s total revenues in 2008 and
2007, respectively. As stated above, pursuant to the Termination
Notice, the Discus licensing agreement was terminated by Discus in April
2009. The Company does not anticipate that the Option Agreement will
ever be exercised.
KCP
Cavity Preparation Systems
AMT has
patented the method whereby a dentist can remove tooth decay by means of a
narrow, high velocity stream of minute particles delivered by compressed air to
the tooth through a lightweight dental handpiece, which is known as an air
abrasive kinetic cavity preparation system or “KCP.” In many cases the KCP
lessens the patient sensitivity and, as such, may be used to treat a patient
without anesthesia. The KCP shapes restorations, removes old composite
materials, and modifies the underlying hard tissue, often helping to increase
bond strength in restorative procedures. It is also used for sealant
preparations; surface stain removal and intra-oral porcelain removal and
repair. The KCP can often be used in place of a traditional dental
drill.
In 2003
and 2004, the Company introduced “Hydrobrasion” technology. Hydrobrasion
is the patented use of air, water and micro particles which are combined to form
an effective cutting slurry that safely removes dental tooth structure and tooth
decay in a minimally invasive manner. In 2004, the Company introduced this
technology in the KCP “Flexijet®”, an air abrasion unit with an integrated water
system that dramatically diminishes overspray, minimizes patient sensitivity,
and produces faster, more precise cutting. In 2005, the Company developed
and introduced the “Hydro Jet®” product which utilizes the Company’s patented
“Hydrobrasion” technology.
KCP
products accounted for 4% and 3% of AMT’s total revenues in 2008 and
2007, respectively. As of the Termination Date, the Company has
ceased all operations relating to KCP Products.
Industrial
Products
AMT
developed, manufactured and marketed its precision AJM systems for industrial
applications. The AJM system has a wide range of applications, including
drilling, cutting, abrading, deburring, dressing, beveling, etching, shaping and
polishing. Its principal advantage over conventional machining is that the
AJM process, which accomplishes its work through kinetic particle displacement
(an erosion process), produces no heat, shock or vibration.
Industrial
products accounted for 15% and 18% of AMT’s total revenues in 2008 and
2007, respectively. As of the Termination Date, the Company has ceased all
operations relating to products for industrial applications.
DirectCrown
Temporary Crown and Bridge Materials:
In
April 2007, AMT entered into a license agreement with CrownBeav LLC, an
Oregon limited liability company (“CrownBeav”) to represent the unique
DirectCrown brand of temporary crown and bridge shell materials.
DirectCrown, a low-cost alternative to conventional temporary crown and bridge
materials, is a pre-formed shell made of a high-impact, flexible, carbon
polymer. When filled with the system’s resin and molded over the prepared
teeth, the result is a hard and wear-resistant restoration that is easier and
less expensive for the dentist than traditional temporary materials and
techniques. Because of the simplicity and low cost natures of the product,
DirectCrown shells are ideal for patients of all ages.
License
Agreement
On
April 1, 2007, the Company entered into a License Agreement with CrownBeav
under which the Company became the nonexclusive distributor for the United
States and Canada and the exclusive distributor for the rest of the world of
CrownBeav’s DirectCrown brand of temporary crown and bridge material. The
license agreement was for a term of ten years with automatic renewals
thereafter, contains minimum requirements for sale of the products by the
Company, and may be terminated (i) for cause upon 60 days notice,
(ii) upon the Company’s failure to comply with applicable securities laws,
(iii) upon the occurrence of certain other customary events of
default. In full consideration, the Company granted to CrownBeav a five
year option to purchase (the “Option”) 1,000,000 shares of common stock at $0.20
per share. The Option vests two years from the Effective Date of the
agreement. The option agreement includes a guaranteed trading price of
$0.40 per share for the 30-day period prior to vesting. As such, the right
to purchase additional shares will be granted for the difference if the market
price of the shares is below $0.40 during the 30-day period (the “Option
Guarantee”), such that the total value of the Option shares issuable to
CrownBeav totals $400,000.
Commissions
received by AMT for DirectCrown products accounted for 4% and 3% of AMT’s total
revenues in 2008 and 2007, respectively. The contract to represent
this product line was terminated by CrownBeav in the first quarter of
2009.
BriteSmile
Professional Tooth Whitening
In
December 2007, AMT entered into a partnership with Discus Dental to
represent the BriteSmile professional tooth whitening systems in select
international markets. BriteSmile, one of the world’s most highly
recognized tooth whitening brand names, is a tooth whitening procedure which is
performed by a dental professional in a dentist office. By applying light
technology to a proprietary gel and activator system, the patient experiences
dramatic whitening results in approximately one hour. To supplement the
procedure, the BriteSmile brand also includes professional take home whitening
gels, a whitening toothpaste, a refreshing mouth rinse and a unique “Whitening
to Go” paint on whitening stick. AMT’s key role is to act as the sales and
technical service detailer for the existing global BriteSmile business as well
as to prospect for new distributors and new countries.
No
revenue was recognized for the representation of BriteSmile products in 2008 or
2007. The contract to represent this product line expired on December
31, 2008 and was not renewed.
BreathRx
Professional Oral Care Products
In
conjunction with the above mentioned BriteSmile agreement, in December 2007
AMT also entered into a partnership with Discus Dental, Inc. to represent
the BreathRx line of professional oral care products in select international
markets. The BreathRx brand, sold primarily in the USA through major
retail drug and supermarket outlets, is a comprehensive system used to eliminate
oral malodor or bad breath. Through the three step
process of rinsing, scraping and
brushing, a patient will experience a clinically proven reduction in
bad
breath. The proprietary active ingredients in the system help to kill odor
causing bacteria while delivering a fresh minty flavor to the mouth.
Ancillary products such as whitening toothpaste, chewing gum, breath mints and
breath spray help to fill out the product offering. AMT’s role is to offer
BreathRx to its established distribution network which then sells the product to
dental professionals.
No
revenue was recognized for the representation of BreathRx products in 2008 or
2007. The contract to represent this product line expired on December 31, 2008
and was not renewed.
SheerVision
dental headlights and loupes
In
December 2007, AMT entered into a partnership agreement with the company
SheerVision, Inc. (“SheerVision”) (OTC: BB: SVSO:OB) to represent advanced
proprietary surgical loupes and light-emitting diode (“LED”) head light systems
for the dental, medical and veterinary markets. Under the terms of the
agreement, AMT acts as the sales and technical service representative, selling
SheerVision products through its international federation of international
distributors (described in greater detail below). AMT is compensated on a
commission basis for all products sold in the international
territory.
At the
time of the agreement, SheerVision announced they were making some engineering
upgrades to their existing “Infinity” Firefly dental
headlight.
No
revenue was recognized for commissions for SheerVision in 2008 or
2007. The contract to represent this product line was terminated in
the first quarter of 2009.
Parts,
Maintenance and Consumable Sales
In
support of the Flexijet, Hydrojet and Plasma Arc Curing (“PAC”) lights that have
been sold primarily in the USA and in Europe, AMT offered a “for fee” repair and
part service for the units which were past their original manufacturer’s
warranty period. AMT generated revenue and profit by performing repairs
and maintenance on such past sold units.
Parts,
Maintenance and Consumable Sales accounted for 20% and 19% of AMT’s total
revenues in 2008 and 2007, respectively. As of the Termination Date, the
Company has ceased all operations relating to parts, maintenance and consumable
sales.
Recent
Transactions
On or
around March 25, 2009, the Company and Judd Hoffman, the Company's former Chief
Executive Officer and Director entered into a Settlement Agreement and Mutual
Release (the "Release"). Pursuant to the Release, the parties agreed
to settle certain disputes between the parties related solely to the alleged
requirement to reimburse Mr. Hoffman for certain business expenses, and the
Company's contention that certain business expenses claimed by Mr. Hoffman were
non-reimbursable expenses (collectively the "Dispute"). Pursuant to
the terms of the Release, the parties agreed to compromise and settle the
Dispute. Specifically, Mr. Hoffman agreed to pay the Company a confidential sum
and to release the Company from any and all causes of actions or claims
whatsoever that he has against the Company or any of its related parties or
assigns relating to the Dispute and the Company agreed to release Mr. Hoffman
from any and all causes of action or claims that the Company had against Mr.
Hoffman or his related parties or assigns relating to the
Dispute. The Company also transferred to Mr. Hoffman the ownership of
a computer and printer in connection with the Release.
Patents
In the
United States, AMT has patents related to dental air abrasive systems and
methods for using an air abrasive stream for dentistry that do not begin
expiring until 2011, technology patents for air abrasive cavity preparation
systems which will begin expiring in 2012, and industrial air abrasive patents
which have expiration dates ranging from 2011 to 2017. AMT also holds
industrial air abrasive patents in various other
countries.
Research
and Development
Historically,
most research and development, prototype production and testing activities for
the products previously manufactured by AMT have taken place at the Company’s
Corpus Christi, Texas facility, although some research and development work was
performed for AMT by consultants. No further major new product development
is anticipated by the Company.
AMT’s
research and development expenditures for 2008 and 2007 were $0 and $17,596,
respectively.
Product
Liability Exposure
AMT’s
prior business operations involved the inherent risk of product liability
claims. If such claims arise, they could have an adverse effect on
AMT. AMT currently maintains product liability insurance with coverage in
the aggregate of $7 million, however, AMT does not plan to maintain such
insurance moving forward. There is no assurance that such coverage, if
maintained, will be sufficient to protect AMT from all risks to which it may be
subject or that product liability insurance will be available at a reasonable
cost, if at all, in the future.
Employees
Effective
as of March 12, 2009, the Company had twelve full-time employees and as of the
filing of this report had two employees who have been given notice of
termination.
Forward
Looking Statements
The
Company makes forward-looking statements in this report and may make such
statements in future filings with the Securities and Exchange Commission.
The Company may also make forward-looking statements in its press releases or
other public shareholder communications. The Company’s forward-looking
statements are subject to risks and uncertainties and include information about
its expectations and possible or assumed future results of operations.
When the Company uses any of the words “believes”, “expects”, “anticipates”,
“estimates” or similar expressions, it is making forward-looking
statements.
To the
extent available, the Company claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995 for all of its forward-looking statements. While the Company
believes that its forward-looking statements are reasonable, you should not
place undue reliance on any such forward-looking statements, which speak only as
of the date made. Except as required by applicable law, the Company does
not undertake any obligation to publicly release any revisions which may be made
to any forward-looking statements to reflect events or circumstances occurring
after the date of this report.
RISK
FACTORS
Financial
Position Risk And Risk That We Will File A Form 15 and No Longer Be Subject to
Reporting Obligations with the Securities and Exchange Commission.
The
Company has suffered recurring losses from operations, and its total liabilities
exceed its total assets. This raises substantial doubt about the Company’s
ability to continue as a going concern. Additionally, as of the Termination
Date, the Company has ceased substantially all of its business
operations. Additionally, our management is currently analyzing
steps to no longer be subject to the reporting requirements of the
SEC. In the event that the Company is no longer subject to the
reporting requirements of the SEC, the Company’s stock would likely trade on the
Pinksheets and would likely have less liquidity on such market and may trade at
a lower share price than it currently trades.
It
Is Uncertain When We Will Have Significant Operating Income Or Cash Flow From
Operations Sufficient To Sustain Our Operations.
As of
December 31, 2008, our cash balance was approximately $40,000. As of the
Termination Date, we ceased all operations. We are currently behind in payments
to vendors and have temporarily suspended note payments. If financing
is available, it may involve issuing securities senior to our common stock or
equity financings, which are dilutive to holders of our common stock. In
addition, in the event we do not raise additional capital from conventional
sources, such as our existing investors or commercial banks, there is a
likelihood that our lending source may foreclose on our assets and we may be
forced into bankruptcy. If this were to happen our securities could become
worthless.
The
Issuance of Additional Stock Options to CrownBeav LLC Pursuant to our Option
Agreement with CrownBeav LLC Could Cause Substantial Dilution to Our Common
Stock Holders if Exercised.
The option agreement with CrownBeav LLC
includes a guaranteed trading price of $0.40 per share for the 30-day period
prior to the vesting date of such option, April 1, 2009. As such,
there are approximately 2,700,000 additional options to be granted under the
terms of the option agreement as of the date of this filing. The
Company is in discussions with CrownBeav to modify the option agreement and to
reduce the number of additional options to be granted, but there can be no
assurance that the Company will be successful in its
negotiations. The granting of additional options and subsequent
exercise of such options will cause substantial dilution to the Company’s common
stock holders and could impair the Company’s ability to sell equity or debt
securities in the future for funding or business expansion.
Our
Success Depends On Key Members Of Our Management, The Loss Of Whom Could Disrupt
Our Business Operations.
We depend
to a large extent on the services of some of our executive officers and
directors. Specifically, the loss of the services of Jeffrey Goodman, our Chief
Executive Officer, with whom we currently have a consulting agreement (through
Mr. Goodman’s entity, Corestrength, Inc.). We may not be able to retain our
executive officers, including Mr. Goodman. We do not currently maintain key man
insurance against the loss of Mr. Goodman. Failure to retain key
members of our management may have a material adverse effect on our continued
operations.
The Market Price Of Our Common Stock
Historically Has Been Volatile.
The
market price of our common stock historically has fluctuated significantly based
on, but not limited to, such factors as general stock market trends,
announcements of developments related to our business, actual or anticipated
variations in our operating results, our ability or inability to generate new
revenues.
Our
common stock is traded on the OTCBB under the symbol “ADLI”. In recent years,
the stock market in general has experienced extreme price fluctuations that have
oftentimes been unrelated to the operating performance of the affected
companies. Similarly, the market price of our common stock may fluctuate
significantly based upon factors unrelated or disproportionate to our operating
performance. These market fluctuations, as well as general economic, political
and market conditions, such as recessions, interest rates or international
currency fluctuations may adversely affect the market price of our common
stock.
We
Currently Have A Sporadic, Illiquid, Volatile Market For Our Common Stock, And
The Market For Our Common Stock May Remain Sporadic, Illiquid, And Volatile In
The Future.
We
currently have a highly sporadic, illiquid and volatile market for our common
stock, which market is anticipated to remain sporadic, illiquid and volatile in
the future and will likely be subject to wide fluctuations in response to
several factors, including, but not limited to:
|
|
(1)
|
actual
or anticipated variations in our results of operations;
|
|
|
(2)
|
our
ability or inability to generate revenues;
|
|
|
(3)
|
the
number of shares in our public float;
|
|
|
(4)
|
increased
competition; and
|
|
|
(5)
|
conditions
and trends in the market for dental and dental related products and
services.
|
Furthermore,
because our common stock is traded on the Over The Counter Bulletin Board, our
stock price may be impacted by factors that are unrelated or disproportionate to
our operating performance. These market fluctuations, as well as general
economic, political and market conditions, such as recessions, interest rates or
international currency fluctuations may adversely affect the market price of our
common stock. Shareholders and potential investors in our common stock should
exercise caution before making an investment in the Company, and should not rely
on the publicly quoted or traded stock prices in determining our common stock
value, but should instead determine the value of our common stock based on the
information contained in the Company's public reports, industry information, and
those business valuation methods commonly used to value private
companies.
Investors
May Face Significant Restrictions On The Resale Of Our Common Stock Due To
Federal Regulations Of Penny Stocks.
Our
common stock will be subject to the requirements of Rule 15(g)9, promulgated
under the Securities Exchange Act as long as the price of our common stock is
below $5.00 per share. Under such rule, broker-dealers who recommend low-priced
securities to persons other than established customers and accredited investors
must satisfy special sales practice requirements, including a requirement that
they make an individualized written suitability determination for the purchaser
and receive the purchaser's consent prior to the transaction. The Securities
Enforcement Remedies and Penny Stock Reform Act of 1990, also requires
additional disclosure in connection with any trades involving a stock defined as
a penny stock. Generally, the Commission defines a penny stock as any equity
security not traded on an exchange or quoted on NASDAQ that has a market price
of less than $5.00 per share. The required penny stock disclosures include the
delivery, prior to any transaction, of a disclosure schedule explaining the
penny stock market and the risks associated with it. Such requirements could
severely limit the market liquidity of the securities and the ability of
purchasers to sell their securities in the secondary market.
In
addition, various state securities laws impose restrictions on transferring
"penny stocks" and as a result, investors in the common stock may have their
ability to sell their shares of the common stock impaired.
Properties
As
previously reported in the Company’s Form 8-K, filed with the SEC on
April 17, 2006, the Company, on April 11, 2006, sold to and leased
back from Bear Street Associates LLC (formerly Sepulveda Group, LLC, “Bear
Street”), a California limited liability company affiliated with Discus Dental,
Inc., its former 45,000 square foot building and property located at 5655 Bear
Lane, Corpus Christi, Texas. The gross sale proceeds were $1.9 million, and the
Company’s monthly lease back rent for the facility was $20,385 per month for a
five year term commencing April 11, 2006, with a 3% yearly increase and an
option to extend the lease term for an additional five years.
On
May 9, 2008, the building at 5655 Bear Lane, Corpus Christi, Texas was sold
by Bear Street and the lease between Bear Street and AMT was terminated.
In consideration of the early lease termination, AMT entered into an agreement
to pay $250,000 to Bear Street. The Company fully recognized the
deferred gain on the 2006 sale of the building and the lease termination fee in
other income in the quarter ended June 30, 2008. The recognized gain
offset by the lease termination fee was recorded in other
income.
The
Company entered into a three year lease agreement with WTF Properties LLC
effective May 9, 2008 and will continue to occupy a portion, approximately
9,610 square feet of office space of the building.
The Company’s rent for the
facility is $3,844 per month for the first year and $5,766 per month for the
second and third years of the lease. The lease also includes a three
year renewal option in the Company’s discretion.
Legal Proceedings
In the
normal course of business, we may become involved in various legal
proceedings. Except as stated below, we know of no pending or threatened
legal proceeding to which we are or will be a party which, if successful, might
result in material adverse change in our business properties or financial
condition. However, as with most businesses, we are occasionally parties
to lawsuits incidental to our business, none of which are anticipated to have a
material adverse impact on our financial position, results of operations,
liquidity or cash flows. We estimate the amount of potential exposure it
may have with respect to litigation claims and assessments.
On
November 20, 2006, a demand for arbitration and statement of claim was
filed against the Company, alleging that the Company had breached agreements to
pay the claimant royalties and consulting fees. The original demand sought
damages of $47,800. The demand for arbitration sought an award of
$125,000. The original demand of $47,800 was included in “other accrued
liabilities” in the Company’s December 2006 balance sheet. In
October 2007, a preliminary settlement was reached through arbitration in
the amount of $32,500. The settlement and release were finalized and the
settlement was paid in the first quarter of 2008.
Unaudited
Results of Operations For The
Years Ended December 31,
2008 and December 31, 2007
The below disclosures come from the
draft unaudited financial statements for the years ended December 31, 2008 and
2007, attached hereto as Exhibit 99.1, which financial information has not been
audited by and/or approved by our independent auditing firm, but which have been
supplied for informational purposes only.
For the year ended December 31, 2008
revenues were $2,480,667 compared to $3,165,399 for the year ended December 31,
2007, a decrease of $684,732 or approximately 22%. For the year ended
December 31, 2008, domestic revenues decreased 14% and international revenues
decreased 36% compared to the year ended December 31, 2007.
The decrease in revenues included a
$209,000 decrease in sales in the industrial product line primarily attributable
to a large one time international sale in the amount of $136,000 in 2007, a
reduction of $81,600 in sales to major distributors in 2008 and a decrease of
$30,000 to two primary domestic customers in 2008. These decreases
were partially offset by a one-time $57,100 international sale in
2008.
The decrease in revenues included a
$289,000 decrease in sales in the Spectrum tooth whitening product
line. The decrease in Spectrum revenues included a decrease of
$70,000 in domestic sales primarily due to the increase in market share of
over-the-counter tooth whitening products and economic
concerns. Revenues related to the international sales of the Spectrum
product line decreased approximately $219,000 primarily attributable to
regulatory issues, the underperformance of international distributors and
general economic concerns.
The decrease in revenues included a
$124,000 decrease in the sales of parts and repairs which was related to the
historical decrease in the Company’s sales of equipment.
Additionally, the year ended December
31, 2007 included approximately $105,000 in revenues from the sale of inventory
from discontinued product lines.
Royalties were $24,235 and $26,075 for
the years ended December 31, 2008 and December 31, 2007,
respectively.
Gross profit as a percentage of
revenues was approximately 67% for the year ended December 31, 2008 compared to
54% for the year ended December 31, 2007. The increase in gross
profit as a percentage of revenues is primarily attributable to the addition of
$228,000 in the inventory reserve in 2007 compared to the sale and usage of
$61,100 in 2008 of inventory previously included in the Company’s inventory
valuation allowance.
Selling, general and administrative
expenses were $2,119,941 and $2,845,731, for the years ended December 31, 2008
and December 31, 2007, respectively, constituting a decrease of $725,790 or
approximately 26% from the prior period. For the year ended December
31, 2008 compared to December 31, 2007; payroll decreased approximately
$107,700, mostly related to a reduction in stock option expenses; show expenses
decreased approximately $32,800 as a result of AMT’s distributors representing
the Company’s product lines on the Company’s behalf; occupancy expenses
decreased approximately $61,900 and insurance expense decreased approximately
$27,300, primarily due to the sale of the building by Bear Street and the lease
of a portion of the building in May 2008; office expenses decreased
approximately $23,800; marketing expenses decreased approximately $26,000; and
other professional fees decreased approximately $428,300, primarily related to
legal and accounting fees in 2007 related to new product contract negotiations
and accounting fees related to the cost of complying with the Sarbanes-Oxley Act
of 2002.
There
were no research and development expenses in the year ended December 31, 2008
compared to $17,596 in the year ended December 31, 2007. The research
and development expenses in the year ended December 31, 2007 were related to new
product research for the Company’s tooth whitening product line. The
Company is not currently working on the research or development of any product
lines.
Other income (expense) was $311,687 and
$242,918 for the years ended December 31, 2008 and December 31, 2007,
respectively. Other income (expense) for 2008 included approximately
$202,000 related to the recognition of the deferred gain on the building which
was partially offset by the early lease termination fee. Other income
(expenses) for the year ended December 31, 2008 also included approximately;
$10,000 related to the recovery of accounts receivable invoices previously
included in the reserve, $49,000 related to the write-off of old liabilities and
$36,000 in rents received for a portion of the building. Other
income (expense) for the year ended December 31, 2007, included approximately
$94,000 related to compensation for consulting services, $46,000 is related to
the write-off of unused customer credits from prior years and $15,300 is related
to the adjustment of a legal settlement accrued in 2006.
The Company had $12,442 of net realized
and unrealized gains on investments for the year ended December 31, 2008,
compared to $15,064 for the year ended December 31, 2007, a decrease of $2,622
or 17.4% from the prior period. The Company had a $76,101 decrease in
gain on sale of machinery for the year ended December 31, 2008, to no gain on
the sale of machinery for the year ended December 31, 2008, compared to $76,101
of gain on sale of machinery for the year ended December 31,
2007. The Company had a $68,769 or 28.3% increase in other income to
$311,687 for the year ended December 31, 2008, compared to $242,918 for the year
ended December 31, 2007.
The Company had a $12,129 or 23.1%
decrease in interest expense, to $40,442 for the year ended December 31, 2008,
compared to $52,571 for the year ended December 31, 2007, which decrease was
mainly due to the repayment of all margin loans in 2007.
The Company had a change in the fair
value of a warrant subject to registration rights representing a gain of
$374,411 for the year ended December 31, 2008 compared to a loss of $49,484 for
the year ended December 31, 2007, which change was due to a decrease in the
market price of the Company’s common stock.
The Company had net income of $194,364
for the year ended December 31, 2008, compared to a net loss of $926,893 for the
year ended December 31, 2007, a increase in net income of $1,121,257 or 121%
from the prior period. The main reasons for the increase in net
income was the $700,486 or 60.2% decrease in loss from operations, mainly due to
decreases in selling, general and administrative expenses, and the $420,771 or
177.3% increase in total other income (expense), mainly due to other income and
change in fair value of warrant, for the year ended December 31, 2008, compared
to the year ended December 31, 2007.
Liquidity
and Capital Resources
The
Company had total assets of $1,530,526 as of December 31, 2008, consisting of
total current assets of $792,319, consisting of cash and cash equivalents of
$40,620, restricted certificate of deposit of $326,392, accounts receivable less
allowance for doubtful accounts of $186,414, inventories net of $133,837,
prepaid expenses and other current assets of $105,056; and non-current assets
consisting of property and equipment, net of $51,736; and intangible assets, net
of $686,471.
The
Company had current liabilities of $1,691,403 as of December 31, 2008, which
included line of credit of $690,000 (described below), the Bear Street note of
$145,000 (as described below), accounts payable of $583,116, compensation and
employee benefits of $58,437, accrued restructuring costs of $65,892, warrants
subject to registration rights of $74,999 and other accrued liabilities of
$73,959.
The
Company had long-term liabilities of $48,656 as of December 31, 2008 which
represented deferred revenues.
The
Company had negative working capital of $899,084 and total accumulated deficit
of $44,516,956 as of December 31, 2008.
The
Company’s operating activities used $160,419 in cash resources in the year ended
December 31, 2008, mainly due to $503,202 of gain recognized on sale of building
and $374,411 of change in fair value of warrant offset by $194,364 of net
income, $162,559 of amortization and $145,000 of change in Bear Street
note.
The
Company’s investing activities used $5,024 in the year ended December 31, 2008,
which was solely due to $5,024 of purchases of property, plant and
equipment.
The
Company’s financing activities provided $190,000 for the year ended December 31,
2008 in funds received from the Company’s line of credit with Compass
Bank.
On
December 21, 2006, the Company entered into a secured line of credit
agreement with Texas State Bank. The funds available under the line of
credit were $600,000. The Company invested $300,000 with funds drawn
against the line of credit in a Certificate of Deposit with a term of one year
as collateral for the loan. Interest on the line of credit was set at the
prime rate plus 1%. The interest rate on the line of credit was 9.25% as
of December 31, 2006. The principal on the loan was payable in one
payment on December 20, 2007, with interest on the outstanding amount
payable monthly. The Company borrowed an additional $100,000 against the
line of credit in December 2006. In February 2007, Texas State
Bank increased the line of credit to $800,000 using the Company’s accounts
receivable and inventory as collateral. In January 2008, the Company
renewed the secured line of credit agreement. The terms of the original
line of credit remained the same with the exception of the payment date which
was extended to January 2009. In August 2008, Texas State Bank
became part of Compass Bank. The interest rate on the line of credit
was 4.25% as of December 31, 2008. The balance outstanding was
$690,000 at December 31, 2008.
In
February 2009, the Company entered into a Change in Terms Agreement with Compass
Bank related to the Company’s line of credit with Compass Bank. In
connection with the Change in Terms Agreement, the Company’s $326,000
certificate of deposit was used by Compass Bank to repay amounts the Company
owed to Compass Bank. Additionally, the Change in Terms Agreement
reduced the amount that Compass Bank is required to loan the Company under the
line of credit to $375,000. The variable interest rate on the line of
credit under the Change of Terms Agreement is 2.5% over the prime interest rate,
adjustable daily, with an initial interest rate of 5.75%, subject to a 5.75%
floor. Monthly interest payments will begin on March 20, 2009 with
the entire outstanding principal and unpaid accrued interest due in one payment
on February 6, 2010. The current balance on the line of credit was
approximately $361,892 as of the date of the entry into the Change in Terms
Agreement. The reduction of available credit may have a negative
impact on the Company’s ability to continue its current business strategy and
its future operations.
On
April 11, 2006, the Company entered into a licensing agreement with Discus
Dental Holdings, Inc. (“Discus”) and its wholly owned subsidiary, Spectrum
Dental, Inc. (“Spectrum Dental”), a leading provider of professional tooth
whitening products under the brand names of “Contrastpm”, “Contrastpmplus” and
“Contrastam”, under which AMT became the exclusive distributor of the Spectrum
Dental product line. In full payment for the license, the Company
issued Discus a warrant to purchase 2,500,000 shares of common stock at $0.20
per share.
The
fair value of the warrants issued to Discus is estimated at the end of each
period using the Black-Scholes option pricing model with the following
assumptions used on December 31, 2008: risk free interest rate of
1.55%; dividend yield of 0%; volatility factors of 354%, and the estimated life
of the warrant of 6.42 years. The calculated fair value of the warrant as
of December 31, 2008 was $74,999. The calculated fair value of the
warrant on the grant date was $549,530 which the Company capitalized as an
intangible asset and is recognizing as a licensing fee over the vesting period
of five years.
In April 2006, the
Company sold to and leased back from Bear Street Associates
LLC (formerly, the Sepulveda Group, LLC, “Bear Street”), a
building and property located in Corpus Christi, Texas. The gross sale
proceeds were $1.9 million. A gain of $778,447 was recognized, $503,202 of
which was deferred at December 31, 2007 and was being amortized over the
term of the lease. On May 9, 2008, the building at 5655 Bear
Lane, Corpus Christi, Texas was sold by Bear Street and the lease between Bear
Street and AMT was terminated. In consideration of the early lease
termination, AMT entered into an agreement to pay Bear Street $250,000 over a 10
month period beginning in June 2008. The Company fully recognized the
deferred gain on the 2006 sale of the building and the lease termination fee in
other income in the quarter ended June 30, 2008. The recognized gain
offset by the lease termination fee is recorded in other income. In the
fourth quarter of 2008, the early lease termination fee was amended and the
monthly payment amount was changed to $15,000. The balance owed on
the early lease termination fee was $145,000 at December 31,
2008. The Company entered into a three year lease agreement with WTF
Properties LLC effective May 9, 2008 and will continue to occupy a portion
of the building.
In 2008
and 2007, the Company continued to include the KCP and PAC product lines in its
product offering, selling through its existing international network of dealers;
however, no significant investment was made to upgrade the product
technology or to market the products.
As a
result of the Termination Notice, the Company will be unable to repay Compass
Bank, it is likely that Compass Bank will foreclose on the Company’s assets
and/or force the Company into bankruptcy proceedings.
On April
9, 2009, the Company terminated all employees and effectively ceased its
business operations
The
following table summarizes AMT’s contractual obligations as of December 31,
2008:
|
|
|
2009
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
Total
|
|
|
Line
of credit *
|
|
$
|
692,434
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
692,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corpus
Christi lease
|
|
|
61,504
|
|
|
|
61,504
|
|
|
|
20,501
|
|
|
|
—
|
|
|
|
—
|
|
|
|
143,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CA
office suite lease(1)
|
|
|
12,900
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
766,838
|
|
|
$
|
61,504
|
|
|
$
|
20,501
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
848,843
|
|
*
Variable interest rate on note. Interest rate used was as of December 31,
2008.
(1) This lease has since been
terminated.
Off
Balance Sheet Arrangements
As of
December 31, 2008, the Company has no off balance sheet
arrangements.
New
Accounting Standards and Disclosures
In
June 2006, FASB Interpretation (FIN) No. 48, “Accounting for
Uncertainty in Income Taxes”, an interpretation of FASB Statement 109 Accounting
for Income Taxes, was issued. FIN No. 48 describes accounting for
uncertainty in income taxes, and includes a recognition threshold and
measurement attribute for recognizing the effect of a tax position taken or
expected to be taken in a tax return. FIN No. 48 is effective for
fiscal years beginning after December 15, 2006. The Company’s
adoption of FIN No. 48 on January 1, 2007, had no material
effect on the Company’s financial condition, results of operations, or cash
flows.
In
February 2007, the FASB issued Statement of Financial Accounting Standards
No. 159 (SFAS 159), “The Fair Value Option for Financial Assets and
Financial Liabilities — Including an amendment of FASB Statement No. 115.”
SFAS 159 permits entities to measure eligible assets and liabilities at fair
value. Unrealized gains and losses on items for which the fair value option has
been elected are reported in earnings. SFAS 159 is effective for fiscal years
beginning after November 15, 2007. As of January 1, 2008, the Company
did not elect the fair value option on any financial instruments or certain
other items as permitted by SFAS 159.
In
December 2007, the FASB issued Statement of Financial Accounting Standards
No. 141 (revised 2007) (SFAS 141R), “Business Combinations,” which replaces
SFAS 141. SFAS 141R establishes principles and requirements for how an acquirer
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, any non-controlling interest in the acquiree
and the goodwill acquired. The Statement also establishes disclosure
requirements that will enable users to evaluate the nature and financial effects
of the business combination. SFAS 141R is effective for fiscal years
beginning
after December 15, 2008. The adoption of SFAS 141R is not expected to have
a material impact on the Company’s results from operations or financial
position.
In
December 2007, the FASB also issued Statement of Financial Accounting
Standards No. 160 (SFAS 160), “Non-controlling Interests in Consolidated
Financial Statements — an amendment of ARB No. 51.” SFAS 160 requires that
accounting and reporting for minority interests be re-characterized as
non-controlling interests and classified as a component of equity. SFAS 160 also
establishes reporting requirements that provide sufficient disclosures that
clearly identify and distinguish between the interests of the parent and the
interests of the non-controlling owners. SFAS 160 applies to all entities that
prepare consolidated financial statements, except not-for-profit organizations,
but will affect only those entities that have an outstanding non-controlling
interest in one or more subsidiaries or that deconsolidate a subsidiary. This
statement is effective for fiscal years beginning after December 15, 2008.
The adoption of SFAS 160 is not expected to have a material impact on our
results from operations or financial position.
Fair Value Measurement –
We
adopted SFAS 157 effective January 1, 2008 for financial assets and
liabilities measured on a recurring basis. SFAS 157 applies to all
financial assets and financial liabilities that are being measured and reported
on a fair value basis. In February 2008, the FASB issued FSP 157-2,
which delayed the effective date of SFAS 157 to fiscal years beginning after
November 15, 2008 for nonfinancial assets and liabilities. Fair
value, as defined in SFAS 157, is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. SFAS 157 affects the Company in the
fair value measurement of warrants subject to registration rights which must be
classified in one of the following categories:
Level
1 Inputs
These
inputs come from quoted prices (unadjusted) in active markets for identical
assets or liabilities.
Level
2 Inputs
These
inputs are other than quoted prices that are observable, for an asset or
liability. This includes: quoted prices for similar assets or
liabilities in active markets; quoted prices for identical or similar assets or
liabilities in markets that are not active; inputs other than quoted prices that
are observable for the asset
or
liability; and inputs that are derived principally from or corroborated by
observable market data by correlation or other means.
Level
3 Inputs
These are
unobservable inputs for the asset or liability which require the Company’s own
assumptions.
As
required by SFAS 157, financial assets and liabilities are classified based on
the lowest level of input that is significant to the fair value
measurement. Our assessment of the significance of a particular input to
the fair value measurement requires judgment, and may affect the valuation of
the fair value of assets and liabilities and their placement within the fair
value hierarchy levels.
|
|
The
following table summarizes the valuation of our financial instruments by
SFAS 157 input levels as of December 31,
2008:
|
|
|
|
Fair Value Measurement
|
|
|
Description (Liabilities)
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Current
liabilities (Warrants subject to registration rights)
|
|
$
|
—
|
|
|
$
|
74,999
|
|
|
$
|
—
|
|
|
$
|
74,999
|
|
|
Total
|
|
$
|
—
|
|
|
$
|
74,999
|
|
|
$
|
—
|
|
|
$
|
74,999
|
|
|
Directors,
Executive Officers and Corporate
Governance
|
The
following sets forth information as to the current directors and executive
officers of the Company, including their ages, positions held, and the period of
time each has served. The term of office of each director is three years, with
the term of one-third of the directors expiring each year. The term of the
Class I directors expires at the annual meeting of shareholders in 2009,
the Class II directors in 2010 and the Class III directors in 2011, in
each case subject to earlier resignation or removal and until their respective
successors are elected and qualified
|
Name
|
|
Age
|
|
Position with the Company
|
|
Officer/Director Since
|
|
|
Jeffrey
Goodman
|
|
53
|
|
Class
II Director and Chief Executive Officer
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
Judd
D. Hoffman
|
|
34
|
|
Former
Director and CEO (resigned February 2009 as an officer and March 2009 as a
Director)
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Gary
A. Chatham
|
|
64
|
|
Class I
Director
|
|
1999
|
|
|
|
|
|
|
|
|
|
|
|
William
D. Maroney
|
|
71
|
|
Former
Director (resigned March 2009)
|
|
1997
|
|
|
|
|
|
|
|
|
|
|
|
Bertrand
R. Williams
|
|
80
|
|
Class II
Director
|
|
1990
|
|
|
|
|
|
|
|
|
|
|
|
Barbara
D. Woody
|
|
47
|
|
Vice
President, Administration and Finance
|
|
2002
|
|
Biographical
Information of Current Directors and Officers
The Board
of Directors appointed Jeffrey Goodman to serve as the Chief Executive Officer
and President of the Company effective February 23, 2009, to fill the vacancy
left by Mr. Hoffman’s departure. Mr. Goodman has been appointed to the Board of
Directors of the Company effective February 23, 2009.
Mr.
Goodman founded Corestrength, Inc., a management consulting company, in 2003 and
has served as the Chief Executive Officer of Corestrength, Inc. since August
2003. From October 2000 to June 2003, Mr. Goodman served as President of Dent-X
in Elmsford, New York. From March 1998 to August 2000, Mr. Goodman
served as Chief Executive Officer and President of Dexpo.com in
Pennsylvania. Mr. Goodman has broad experience in dental
manufacturing and distribution, having also served as the President of ESPE
America, and the Director of Marketing of Benco Dental. In addition to his
experience in the dental industry, Mr. Goodman founded, developed and sold
Business Technology Group, a distribution-oriented software developer. He
received a B.A. in Accounting and Economics from Muhlenberg College in 1977, and
an MBA in Finance from Northeastern University in 1981.
Judd D. Hoffman
was elected
by the Board to serve as the Company’s Chief Executive Officer effective
January 1, 2007 and resigned as an officer of the Company in February 2009
and as a Director of the Company in March 2009. Mr. Hoffman served as
a sales consultant to the Company beginning July 2006, until his
appointment as the Company’s Vice President of World Wide Sales and Operations
in September 2006 and he was elected as a director of the Company in
November 2006. He served as Vice President of World Wide Sales for
Remedent, Inc., a manufacturer and distributor of cosmetic dentistry
products, including a full line of professional and dental and retail
“Over-The-Counter” tooth whitening products which are distributed in Europe, and
recently in Asia and the United States, from September 1, 2005 until
June 1, 2006. Prior to joining Remedent, Inc. and since
March 2003, Mr. Hoffman served as Executive Director of International
Sales and Operations for Discus Dental, Inc. (“Discus), a leading global
direct manufacturer and marketer of professional and consumer dental
products. Prior to joining Discus, he served as an independent consultant
for international sales and operations for various clients after his prior
employer, Junroo Netcommunications, Inc. (“Junroo”) was acquired in
February 2002. At Junroo, Mr. Hoffman served as Chief Operating
Officer and Sr. Vice President of Global Business Development, since co-founding
the company in 1998.
Gary A. Chatham
currently
serves as Marketing Director for Combex Westhem, LLC, a manufacturer of
structural insulated panels located in Robstown, Texas, a position he has held
since February 2003. Mr. Chatham is also a principal in that firm. His
principal responsibilities include product development, domestic and
international market development for projects incorporating the company’s
products, and the development of a franchise program for expanding the company’s
manufacturing presence into other countries. He is also President of Gary
Chatham and Associates, Inc., a project planning and management consulting
firm he has operated since 1981. Mr. Chatham was a director of Texas
Airsonics Inc. from 1988 until its merger with the Company in
August 1996. Mr. Chatham obtained a Bachelors Degree in Business
Management from Texas State University in 1969.
William D. Maroney
is a
private investor. From January 1987 to December 1996, Mr. Maroney
had been in private law practice in New York City, New York. Prior thereto,
Mr. Maroney was a senior tax counsel for ITT Corporation and an associate
attorney with the international law firm of Coudert Brothers,
New York
City, New York. Mr. Maroney previously served as a director of the Company
from May 1990 to May 1993. On March 27, 2009, Mr. Maroney
resigned his position as Director of the Company.
Bertrand R. Williams
has been
the chief executive officer of Global Focus Marketing and Distribution (“GFMD”)
since February 1995. GFMD sells specialized clinical laboratory supplies
and diagnostics, research and industrial equipment. Since 1981, he has also been
chairman of the board and chief executive officer of Immuno Concepts, Inc.,
a manufacturer of immuno-diagnostic and virology products in Sacramento,
California.
Barbara D. Woody
was
appointed Controller in December 2002 and promoted to Vice President of
Administration and Finance in 2007. Prior to joining the Company, she had served
as Controller for Roy Smith Shoes, Inc. from December 1999 to August 2002
and Aves Audio Visual from August 2002 to December 2002 and as Business Manager
for Henley Healthcare, Inc. from January 1981 to December
1999.
Family
Relationships
There are
no family relationships among the directors and executive officers.
Involvement
in Certain Legal Proceedings
None of
the directors or executive officers has, during the past five
years:
(a) Had
any bankruptcy petition filed by or against any business in which such person
was a general partner or executive officer either at the time of the bankruptcy
or within two years prior to that time;
(b) Been
convicted in a criminal proceeding or subject to a pending criminal
proceeding;
(c) Been
subject to any order, judgment, or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining, barring, suspending or otherwise limiting his involvement in any type
of business, securities, futures, commodities or banking activities;
and
(d) Been
found by a court of competent jurisdiction (in a civil action), the Securities
and Exchange Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the judgment has
not been reversed, suspended or vacated.
Code
of Ethics
Our Board
of Directors has adopted a Code of Ethics for our senior officers or persons
performing similar functions.
Compensation
of Directors
Directors
who are not officers or employees of the Company are entitled to a fee of $1,000
for each Board meeting attended and are reimbursed for expenses incurred in
connection with their attendance at meetings; however no directors’ fees were
paid in 2008. These fees have been waived by the directors.
Summary
Compensation Table
The
following executive compensation disclosure reflects all compensation awarded
to, earned by or paid to the executive officers below for the years ended
December 31, 2008 and December 31, 2007. The following table summarizes all
compensation for the fiscal years 2008 and 2007 received by our former Chief
Executive Officer who was the only executive officer who earned more than
$100,000 in fiscal years 2008 and 2007.
Summary Compensation Table
|
Name and
principal
position
|
Year
|
|
Salary (1)
$
|
|
Bonus (1)
($)
|
Stock
Awards
($)
|
|
Option
Awards
($)
|
Non-
Equity
Incentive
Plan
($)
|
Non-
qualified
Deferred
Compen-
sation
Earnings
($)
|
All
other
compen-
sation
($)
|
Total
($)
|
|
(a)
|
(b)
|
|
(c)
|
|
(d)
|
(e)
|
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
|
Judd
D. Hoffman (1)
Former
Chief
Executive
Officer
and
President
|
2008
|
|
$
|
220,500
|
|
—
|
—
|
|
$
|
49,875
|
—
|
—
|
—
|
$
|
270,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Judd
D. Hoffman (1)
Former
Chief
Executive
Officer
and
President
|
2007
|
|
$
|
250,000
|
|
—
|
—
|
|
$
|
169,540
|
—
|
—
|
$
|
—
|
$
|
379,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Effective on February 17, 2009, Mr. Hoffman resigned as the Chief Executive
Officer and President of the Company and Mr. Jeffrey Goodman was appointed to
serve as the Chief Executive Officer of the Company effective February 23,
2009.
The
following table sets forth certain information concerning unexercised stock
options for each named executive officer. There were no stock awards
outstanding as of the end of fiscal year 2008.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
|
OPTION AWARDS
|
|
STOCK AWARDS
|
|
|
Name
|
|
Number
of
securities
underlying
unexercised
options
(#)
Exercisable
|
|
Number
of
securities
underlying
unexercised
options
(#)
Unexercis-
able
|
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
underlying
unexercised
unearned
options
(#)
|
|
Option
exercise
price
($)
|
|
Option
expiration
date
|
|
Number
of
shares
or
units
of
stock
that
have
not
vested
(#)
|
|
Market
value
of
shares
or
units
of
stock
that
have
not
vested
($)
|
|
Equity
incentive
plan
awards:
number
of
unearned
shares,
units
or
other
rights
that
have
not
vested
(#)
|
|
Equity
incentive
plan
awards:
Market
or
payout
value
of
unearned
shares,
units
or
other
rights
that
have
not
vested
($)
|
|
|
Judd
D. Hoffman (1)
|
|
100,000
|
|
—
|
|
—
|
|
0.27
|
|
06/21/2016
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Judd
D. Hoffman (1)
|
|
600,000
|
|
250,000
|
|
—
|
|
020
|
|
12/31/2017
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1)
Effective on February 17, 2009, Mr. Hoffman resigned as the Chief Executive
Officer and President of the Company and Mr. Jeffrey Goodman was appointed to
serve as the Chief Executive Officer of the Company effective February 23,
2009.
Option
Holdings
There
were 950,000 unexercised outstanding options held by Mr. Hoffman as of
December 31, 2008. Mr. Hoffman resigned as an officer and as a
Director of the Company in February and March 2009,
respectively. There were 250,000 unvested outstanding options
canceled on the date of Mr. Hoffman’s resignation.
Employment
Agreements
Judd D.
Hoffman -
The Company entered into an employment agreement with
Mr. Hoffman effective January 1, 2007, naming him as the Company’s
President and Chief Executive Officer for a term ending December 31,
2009. The employment agreement provides for an annual base salary of
$210,000, an increase of not less than 5% on each anniversary date, an incentive
bonus in 2007 based on profit and an option grant to purchase 850,000 shares of
stock at a price of $.20 per share. The options vest as follows:
100,000 immediately and 250,000 vesting on the last day of the first, second and
third years of the employment term. Additionally, in June 2006,
Mr. Hoffman was granted an option to purchase 100,000 shares of stock at a
price of $0.27/share. This option vested on September 16, 2006 The
employment agreement can be terminated for cause if Mr. Hoffman fails to
perform his duties with the Company, engages in gross misconduct in connection
with his work for the Company, commits a breach of this agreement or commits a
felonious or fraudulent act against the Company. If his employment is
terminated
without
cause, Mr. Hoffman is entitled to 12 month’s salary and any portion of
stock options will immediately vest and be exercisable for a period of 90
days.
Effective
February 17, 2009, Mr. Judd Hoffman resigned his position as Chief Executive
Officer and President of the Company. Mr. Hoffman resigned from
the Board of Directors on March 11, 2009. There were 250,000 unvested
outstanding options canceled on the date of Mr. Hoffman’s
resignation.
The
Company entered into a consulting agreement with Corestrength, Inc., a Florida
Corporation which agreed to provide the services of Jeffrey
Goodman. The Company has retained Mr. Goodman as Chief Executive
Officer and as a director. The consulting agreement commenced on
February 23, 2009 with an initial period ending May 31, 2009. After
the conclusion of the initial period, the Company has the right to renew the
contract for an additional three month term. In the event the
contract is not extended for an additional three month term, and/or after such
extension, the contract will automatically renew for additional monthly periods,
unless either party provides ten (10) days written notice of their intention to
terminate the agreement. In consideration for Mr. Goodman’s service
to the Company, the Company will pay a monthly fee of $12,000 to Corestrength,
Inc. of which Mr. Goodman is a beneficial owner.
Corestrength,
Inc. provides domestic and Canadian sales representation services for Spectrum
Dental products, which the Company has an exclusive worldwide license to
distribute and receives $3,000 per month plus 13.5% of any Spectrum sales in
consideration for such sales representation services.
Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
The
following table sets forth certain information, as of March 15, 2009 with
respect to the holdings of (1) each person who is the beneficial owner of
more than five percent of our common stock, (2) each of our directors,
(3) each named executive officer, and (4) all of our directors and
executive officers as a group.
Beneficial
ownership of the common stock is determined in accordance with the rules of
the Securities and Exchange Commission and includes any shares of common stock
over which a person exercises sole or shared voting or investment powers, or of
which a person has a right to acquire ownership at any time within 60 days of
March 15, 2009. Except as otherwise indicated, and subject to applicable
community property laws, the persons named in this table have sole voting and
investment power with respect to all shares of common stock held by them.
Applicable percentage ownership in the following table is based on 10,389,306
shares of common stock outstanding as of March 15, 2009 plus, for each
individual, any securities that individual has the right to acquire within 60
days of March 15, 2009.
|
Name and Address
|
|
Number of
Common
Shares
|
|
Percent
of Class
|
|
|
Irene
M. Myers - 29877 Telegraph Road Southfield, MI
48034
|
|
945,337
|
(1)
|
7.5
|
%
|
|
Robert
Hayman - 8550 Higuera Street Culver City, CA 90232
|
|
890,536
|
|
7.0
|
%
|
|
Michael
F. Radner - 16500 North Park Dr., # 1507 Southfield, MI
48075
|
|
532,601
|
|
4.2
|
%
|
|
Barbara
Woody, VP of Administration and Finance - 5655 Bear Lane Corpus Christi,
TX 78405
|
|
300,000
|
(2)
|
2.4
|
%
|
|
William
D. Maroney, Director - 5655 Bear Lane Corpus Christi, Texas
78405
|
|
911,453
|
(3)
|
7.2
|
%
|
|
Bertrand
R. Williams, Sr., Director - 5655 Bear Lane Corpus
Christi, TX 78405
|
|
258,457
|
(4)
|
2.0
|
%
|
|
Gary
Chatham, Director - 5655 Bear Lane Corpus Christi, TX
78405
|
|
6,937
|
(5)
|
|
*
|
|
Judd
D. Hoffman, former CEO and Director - 5655 Bear Lane Corpus Christi, TX
78405
|
|
705,000
|
(6)
|
5.6
|
%
|
|
Discus
Dental Holdings 8550 Higuera St. Culver City, CA 90232
|
|
1,291,673
|
(7)
|
10.2
|
%
|
|
Jeffrey
Goodman, CEO and Director - 5655 Bear Lane Corpus Christi, TX
78405
|
|
0
|
|
0
|
%
|
|
All
current executive officers and directors as a group (5
persons)
|
|
1,476,847
|
(8)
|
11.6
|
%
|
* Less
than one percent.
|
|
(1)
Includes 459,047 shares owned by the Irene M. Myers Revocable Trust
and 486,290 shares owned by the William D. Myers Irrevocable Marital
Trust. Mrs. Myers as trustee for both of those trusts has voting and
dispositive power with respect to all of those shares.
|
|
|
|
|
|
(2)
Includes 300,000 shares of Common Stock purchasable within 60 days
pursuant to the exercise of options or warrants.
|
|
|
|
|
|
(3)
Includes 936 shares of Common Stock purchasable within 60 days
pursuant to the exercise of options or warrants, 308,666 shares of Common
Stock and 500,000 shares of Common Stock owned by Mr. Maroney’s
wife, and 7,692 shares owned jointly by Mr. and Mrs. Maroney, as
to which Mr. Maroney shares voting and dispositive
power.
|
|
|
|
|
|
(4)
Includes 936 shares of Common Stock purchasable within 60 days
pursuant to the exercise of options or warrants.
|
|
|
|
|
|
(5)
Includes 936 shares of Common Stock purchasable within 60 days
pursuant to the exercise of options or warrants.
|
|
|
|
|
|
(6)
Includes 700,000 shares of Common Stock purchasable within 60 days
pursuant to the exercise of options or warrants. Former officer
and Director.
|
|
|
|
|
|
(7)
Includes 1,291,673 shares of Common Stock purchasable within 60
days pursuant to the exercise of options or warrants.
|
|
|
|
|
|
(8)
Includes 302,808 shares of Common Stock purchasable within 60 days
pursuant to the exercise of options or
warrants.
|
Certain
Relationships and Related Transactions
, and Director
Independence
Corestrength,
Inc., which is owned by our Chief Executive Officer, Jeffrey Goodman, provides
domestic and Canadian sales representation services for Spectrum Dental
products, which the Company has an exclusive worldwide license to distribute and
receives $3,000 per month plus 13.5% of any Spectrum sales in consideration for
such sales representation services.
ITEM
9.01 FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit
Number
Description
|
99.1
|
Draft
of Unaudited Financial Statements of the Company for the year ended
December 31, 2008 and 2007
|
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 hereunto
duly authorized.
|
|
AMERICAN MEDICAL
TECHNOLOGIES, INC.
|
|
|
|
|
|
April
14, 2009
|
By:
|
/s/ Jeffrey Goodman
|
|
|
|
Jeffrey
Goodman
|
|
|
|
Chief
Executive Officer
|
American Medical Technol... (CE) (USOTC:ADLI)
Historical Stock Chart
Von Apr 2024 bis Mai 2024
American Medical Technol... (CE) (USOTC:ADLI)
Historical Stock Chart
Von Mai 2023 bis Mai 2024
