FORM 10-QSB/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
Commission file number 000-22083
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GLOBAL MED TECHNOLOGIES, INC.
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(Exact name of small business issuer as specified in its charter)
COLORADO 84-1116894
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
12600 West Colfax, Suite C-420, Lakewood, Colorado 80215
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(Address of principal executive offices)
(303) 238-2000
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(Issuer's telephone number)
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
As of May 15, 2000, 12,091,786 shares of the issuer's Common Stock were
outstanding.
Transitional Small Business Disclosure Format Yes [ ] No [X]
GLOBAL MED TECHNOLOGIES, INC.
FORM 10-QSB/A
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
EXPLANATORY NOTE:
Pursuant to this Form 10-QSB/A, Global Med Technologies, Inc. amends "ITEM 1.
Consolidated Financial Statements" and "ITEM 2. Management's Discussion and
Analysis of Financial Condition and Results of Operations" of Part I of its
Quarterly Report on Form 10-QSB for the quarterly period ended March 31, 2000
(see Note 7 to the condensed consolidated financial statements).
The financial statements for the three month period ended March 31, 2000 have
been restated from amounts previously reported to remove certain amounts
recorded in prepaid expenses and other assets and equity, to reduce amortization
expense and to reduce the number of common shares outstanding and the weighted
average number of common shares outstanding. In addition, the accumulated
amortization of certain software development costs were inadvertently recorded
in the accumulated amortization account related to equipment, furniture and
fixtures.
PAGE NO.
Item 1. Condensed Consolidated Financial Statements
a. Unaudited Condensed Consolidated Balance Sheets as of March 31,
2000 (as restated) and December 31, 1999......................... 3
b. Unaudited Condensed Consolidated Statements of Operations for the
three months ended March 31, 2000 (as restated) and 1999......... 5
c. Unaudited Condensed Consolidated Statement of Stockholders' Deficit
for the three months ended March 31, 2000 (as restated).......... 6
d. Unaudited Condensed Consolidated Statements of Cash Flows for the
three months ended March 31, 2000 (as restated) and 1999........ 7
e. Notes to Unaudited Condensed Consolidated Financial
Statements..................................................... 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................................. 13
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits....................................................... 16
b. Reports on Form 8-K............................................ 16
Signatures................................................................... 17
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
2000 1999
--------- ------------
(As restated,
see Note 7)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ....................................................... $ 387 330
Accounts receivable-trade, net of allowance for uncollectible accounts
of $50 at March 31, 2000 and December 31, 1999, respectively ................ 368 445
Accrued revenues, net of allowance for uncollectible accounts of
$15 at March 31, 2000 and December 31, 1999 ................................. 481 324
Prepaid expenses and other assets ............................................... 68 66
------- -------
Total current assets ............................................................... 1,304 1,165
EQUIPMENT, FURNITURE AND FIXTURES, AT COST:
Furniture and fixtures .......................................................... 167 167
Machinery and equipment ......................................................... 306 306
Computer hardware and software .................................................. 1,596 1,583
------- -------
2,069 2,056
Less accumulated depreciation and amortization .................................. (1,594) (1,564)
------- -------
Net equipment, furniture and fixtures .............................................. 475 492
DEFERRED FINANCING COSTS,
net of accumulated amortization of $10,969 and $10,853 at
March 31, 2000 and December 31, 1999, respectively .............................. 184 300
CAPITALIZED SOFTWARE DEVELOPMENT COSTS,
net of accumulated amortization of $1,291 and $1,126 at
March 31, 2000 and December 31, 1999, respectively .............................. 1,525 1,566
OTHER ASSETS ....................................................................... 409 65
------- -------
Total assets ....................................................................... $ 3,897 3,588
======= =======
See accompanying notes to unaudited condensed consolidated financial statements.
3
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In thousands)
March 31, December 31,
2000 1999
----------- -----------
(As restated
see Note 7)
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable ................................................................ $ 195 303
Accrued expenses ................................................................ 677 808
Accrued payroll ................................................................. 98 87
Accrued compensated absences .................................................... 408 412
Noncompete accrual .............................................................. 35 35
Deferred revenue ................................................................ 1,558 1,502
Financing agreements, related party ............................................. 5,100 --
Current portion of capital lease obligations .................................... 123 145
-------- --------
Total current liabilities .......................................................... 8,194 3,292
CAPITAL LEASE OBLIGATIONS, less current portion .................................... 171 179
FINANCING AGREEMENTS, RELATED PARTY, less current portion .......................... -- 4,400
-------- --------
Total liabilities .................................................................. 8,365 7,871
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT:
Preferred stock, $.01 par value: Authorized shares - 10,000;
none issued or outstanding ................................................... -- --
Common stock, $.01 par value: Authorized shares - 40,000;
issued and outstanding shares - 11,932 and 11,638 at March 31, 2000
and December 31, 1999, respectively .......................................... 119 116
Additional paid-in capital ...................................................... 27,634 27,158
Accumulated deficit ............................................................. (32,221) (31,557)
-------- --------
Total stockholders' deficit ........................................................ (4,468) (4,283)
-------- --------
Total liabilities and stockholders' deficit ........................................ $ 3,897 3,588
======== ========
See accompanying notes to unaudited condensed consolidated financial statements.
4
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share information)
Three months ended
March 31,
2000 1999
---- ----
(As restated,
see Note 7)
REVENUES:
License fee and maintenance revenues ................................. $ 625 905
Implementation and consulting services revenues ...................... 313 331
-------- --------
938 1,236
-------- --------
COST OF REVENUES:
Software sales and consulting ........................................ 528 530
Hardware and software sales, obtained from vendors ................... -- 14
-------- --------
528 544
-------- --------
Gross profit ............................................................ 410 692
OPERATING EXPENSES:
General and administrative ........................................... 586 717
Sales and marketing .................................................. 226 155
Research and development ............................................. -- 16
-------- --------
Loss from operations before other income (expense) ...................... (402) (196)
OTHER INCOME (EXPENSE):
Interest income ...................................................... 2 3
Interest expense ..................................................... (148) (127)
Financing costs ...................................................... (116) (3,985)
-------- --------
Net loss ................................................................ $ (664) (4,305)
======== ========
Basic and diluted loss per common share ................................. $ (0.06) (0.49)
======== ========
Weighted average number of common shares outstanding-
basic and diluted .................................................... 11,761 8,868
======== ========
See accompanying notes to unaudited condensed consolidated financial statements.
5
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
(In thousands)
Common Stock Additional
-------------------- paid-in Accumulated
Shares Amount capital Deficit Total
------ ------ ---------- ----------- -----
Balances, December 31, 1999 ................................ 11,638 $ 116 27,158 (31,557) (4,283)
Exercise of stock options ............................... 44 1 40 -- 41
Common stock issued for services (as restated,
see Note 7) ........................................... 250 2 373 -- 375
Contributed capital ..................................... -- -- 63 -- 63
Net loss (as restated, see Note 7) ...................... -- -- -- (664) (664)
------- ------- ------- ------- -------
Balances, March 31, 2000 (as restated) ..................... 11,932 $ 119 27,634 (32,221) (4,468)
======= ======= ======= ======= =======
See accompanying notes to unaudited condensed consolidated financial statements.
6
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three months ended
March 31,
2000 1999
---- ----
(As restated,
see Note 7)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .................................................................... $ (664) (4,305)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation, amortization and amortization of
software development costs ........................................... 195 176
Noncash financing costs ................................................ 116 3,985
Changes in allowances for uncollectible amounts ........................ -- 5
Loss on disposal of assets ............................................. -- 38
Common stock, options and warrants issued
for services and other, net .......................................... -- (20)
Changes in operating assets and liabilities:
Accounts receivable-trade ........................................... 77 (7)
Accrued revenues, net ............................................... (157) (245)
Prepaid expenses and other assets ................................... 29 76
Accounts payable .................................................... (108) (16)
Accrued expenses .................................................... (131) (171)
Accrued payroll ..................................................... 11 69
Accrued compensated absences ........................................ (4) 14
Deferred revenue .................................................... 56 (86)
------ ------
Net cash used in operating activities ....................................... (580) (487)
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment, furniture and fixtures .............................. (13) (54)
Proceeds from sales of equipment ............................................ -- 5
Increase in software development costs ...................................... (124) (345)
------ ------
Net cash used in investing activities ....................................... (137) (394)
------ ------
(continued)
See accompanying notes to unaudited condensed consolidated financial statements.
7
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(In thousands)
Three months ended
March 31,
2000 1999
---- ----
(As restated,
see Note 7)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on financing agreements .................................. $ 700 850
Exercise of common stock options .................................... 41 --
Contributed capital ................................................. 63 --
Principal payments on short-term debt ............................... -- (400)
Principal payments under capital lease obligations .................. (30) (37)
----- -----
Net cash provided by financing activities ........................... 774 413
----- -----
Net increase (decrease) in cash and cash equivalents ................ 57 (468)
Cash and cash equivalents at beginning of period .................... 330 821
----- -----
Cash and cash equivalents at end of period .......................... $ 387 353
===== =====
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest .............................................. $ 273 127
===== =====
Common stock issued to consultant for future services ............... $ 375 --
===== =====
See accompanying notes to unaudited condensed consolidated financial statements.
8
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of Global
Med Technologies, Inc. and Subsidiary (the Company or Global Med) have been
prepared by management in accordance with generally accepted accounting
principles for interim financial information and with the regulations of the
Securities and Exchange Commission. Accordingly, they do not include all
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of only normal recurring adjustments) considered necessary for a
fair presentation of their financial position at March 31, 2000 and the results
of their operations for the three months ended March 31, 2000 and 1999 have been
included.
The accompanying unaudited condensed consolidated financial statements should be
read in conjunction with the audited consolidated financial statements and the
notes thereto contained in the Company's Annual Report on Form 10-KSB for the
year ended December 31, 1999, as filed with the Securities and Exchange
Commission. The interim results of operations for the three months ended March
31, 2000 are not necessarily indicative of the results that may be expected for
any other interim period of 2000 or for the year ending December 31, 2000.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires the Company's
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. Global Med provides information management
software products and services to the health care industry and operates in one
business segment.
Management believes that the net proceeds generated by the financing agreements,
as discussed in Note 3, are sufficient to fund the Company's liquidity and
capital requirements excluding acquisitions or major new product development
initiatives. Management anticipates that the net proceeds from the financing
agreements, proceeds from the exercise of warrants, and any future financing
activities will be used to fund the Company's anticipated research and software
development costs, sales and marketing efforts, and negative cash flows during
the remainder of 2000 and for general working capital purposes.
2. RELATED PARTIES
Global Med is effectively controlled by Online Credit International Limited
(Online International), formerly Heng Fung Holdings Company Limited, and its
subsidiary Online Credit Limited, formerly Heng Fung Finance Company Limited
(Online Credit) per the terms of the 1998 financing agreements. In addition,
Online International is a significant shareholder of Global Med. Online
International also is a majority shareholder of eVision USA.Com, Inc. (eVision)
and of a subsidiary of eVision, eBanker USA.com, Inc. (eBanker). eVision holds
warrants to purchase 1,000,000 shares of common stock of Global Med at $0.25 per
share issued in 1998. Global Med has outstanding balances on various financing
agreements with eBanker. (See Note 3). eBanker owns a significant number of
shares of common stock of Global Med and holds warrants to purchase 9,000,000
shares of common stock of Global Med at $0.25 per share issued in 1998. eVision
has a wholly owned subsidiary, American Fronteer Financial Corporation (American
Fronteer or AFFC) which is a broker dealer. Online International, Online Credit,
eVision, eBanker and AFFC are related parties to Global Med.
9
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
3. FINANCING AGREEMENTS, RELATED PARTY
In April 2000, the loan agreements with eBanker for $2,650,000 and $2,000,000
that were due in April 2000 were extended to January 9 and January 7, 2001,
respectively. Payment of interest was also extended to the respective dates in
January 2001. The conversion rate of the $2,650,000 loan agreement was increased
to $1.6875 per share. In consideration of the extension, Global Med agreed to
pay a fee of 137,778 shares of its common stock. Based on the market price of
the stock on the date of the agreements, the shares have a value of $262,130,
which will be recorded as deferred financing costs and amortized over the
extension period. If the loan's accrued interest or principal is not repaid in
270 days the loan's interest and principal due date will be automatically
extended to April 15, 2001. The loan will lose its conversion features. Interest
will continue to accrue on the balance at 12% interest per annum.
If the loan's accrued interest or principal is not repaid in 270 days, a 10-year
warrant exercisable to acquire common shares of Global Med at an exercise price
of $0.50 will be issued to eBanker. The number of shares authorized by the
warrant will be equal to the entire principal and interest amount divided by the
new exercise price and the debt will be extended as discussed above.
The bridge loan with eBanker of $750,000, as extended at December 31, 1999, was
due to mature on September 30, 2000. In April 2000, eBanker agreed to extend the
due date to January 1, 2001. Payment of interest was also extended to January 1,
2001. Global Med agreed to pay a fee of 22,222 shares of its common stock. Based
on the market price of the stock on the date of the agreements, the shares have
a value of $37,500, which will be recorded as deferred financing costs and
amortized over the extension period.
4. PEOPLEMED.COM, INC.
During 1999, Global Med formed a subsidiary, PeopleMed.com, Inc., (PeopleMed) a
Colorado corporation, which is approximately 85% owned by the Company, to
develop a software application designed to give HMO providers and other third
party payers access to clinical information for chronic disease patients. This
application will allow doctors and other medical employees access to a patient's
history. The remaining 15% of PeopleMed is owned by certain officers and
directors of Global Med. PeopleMed received $12,750 during the three months
ended March 31, 2000 in payment of subscriptions for common stock. There is no
minority interest reflected in the March 31, 2000 or December 31, 1999 balance
sheets because PeopleMed had a stockholders' deficit at those dates. PeopleMed's
operations were not material for the three months ended March 31, 2000.
In February 2000, PeopleMed commenced a private placement of 2,000,000 shares of
its $.001 par value common stock at $1.00 per share for a possible total of
$2,000,000. As of March 31, 2000, the Company had received proceeds of $50,000
for 50,000 shares. The cash payments received during the three months ended
March 31, 2000 are reflected as contributed capital in the accompanying
financial statements.
10
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
5. STOCKHOLDERS' EQUITY
Stock Option Exercises
During the three months ended March 31, 2000, options to purchase 44,000 shares
of common stock were exercised for a total of $41,000.
Consultancy Agreement
The Company entered into a consultancy agreement, effective as of February 24,
2000, for a period of twenty-four (24) months, with National Financial
Communications Corporation, dba OTC Financial Network (OTC Financial). OTC
Financial will provide consulting services, with the expressed intent and goal
of getting the Company, or its successor or assigns, listed on the Nasdaq Stock
Market which include providing financial community and investor relations for
the Company; and advising the Company, as requested, regarding the financial
community and investor relations.
Upon execution of this agreement, the Company agreed to: (a) issue to OTC
Financial, or its assigns, 250,000 shares of restricted common stock; and (b)
deposit into escrow, in the name of OTC Financial, or its assigns, an additional
250,000 shares of restricted common stock. Upon the Company's listing on the
Nasdaq Stock Market, the stock held in escrow will be released to the
consultant. The shares of common stock held in escrow may be returned to the
Company if: (a) the term of the consultancy agreement should expire before the
Company is listed on the Nasdaq Stock Market; or (b) the agreement is terminated
before the Company is listed on the Nasdaq Stock Market; or (c) the Company
gives notice to OTC Financial of OTC Financial's breach of the agreement.
On the effective date of the agreement, the 250,000 shares of common stock that
were not held in escrow had a fair value of $375,000 based on quoted market
prices of the Company's common stock. The amount has been recorded as a prepaid
expense and is being amortized over the term of the agreement or until
successful listing is obtained on the Nasdaq Stock Market, at which time any
unamortized amounts would be expensed. Amortization of investor relations
expense related to this agreement was $31,000 for the three months ended March
31, 2000.
The shares held in escrow will be released upon their meeting certain criteria
discussed above. Upon the performance of the criteria discussed above, the
Company will recognize an investor-relations expense equal to the then current
fair value of the 250,000 shares currently held in escrow. The 250,000 shares
held in escrow are not included in the common shares outstanding.
6. RECLASSIFICATIONS
Certain prior period amounts have been reclassified to conform with the current
period presentation.
11
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
7. RESTATEMENT
Subsequent to the issuance of the Company's financial statements for the three
months ended March 31, 2000, management determined that common stock placed in
an escrow account for consulting services (See Note 5) should not have been
recorded as issued and outstanding and the related prepaid asset and investor
relations expense should not have been recorded. In addition, the accumulated
amortization of certain software development costs were inadvertently recorded
in the accumulated amortization account related to equipment, furniture and
fixtures. As a result, the financial statements for the three months ended March
31, 2000, have been restated from amounts previously reported. The common stock
placed in an escrow account for consulting services and the related expense will
be recorded in the period in which those shares are earned.
The effects of the restatement are as follows:
(In thousands, except per share amounts)
As As previously
As of March 31, 2000: restated reported
- -------------------- -------- --------------
Prepaid expenses and other assets .............................. $ 68 443
Total current assets ........................................... $ 1,304 1,679
Accumulated depreciation and amortization ...................... $ (1,594) (1,699)
Capitalized software development costs, net .................... $ 1,525 1,630
Other assets ................................................... $ 409 378
Total assets ................................................... $ 3,897 4,241
Common stock, $0.01 par value .................................. $ 119 122
Additional paid-in capital ..................................... $ 27,634 28,006
Accumulated deficit ............................................ $(32,221) (32,252)
For the Three Months Ended March 31, 2000:
- -----------------------------------------
General and administrative expenses ............................ $ 586 617
Loss from operations before other income (expense) ............. $ (402) (433)
Net loss ....................................................... $ (664) (695)
Loss per common share, basic and diluted ....................... $ (0.06) (0.06)
Weighted average number of common shares outstanding-
basic and diluted ......................................... 11,761 11,860
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
"ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations" is hereby amended and restated to read as follows:
Overview
Global Med Technologies, Inc. and subsidiary (the Company or Global Med),
designs, develops, markets and supports information management software products
for blood banks, hospitals, centralized transfusion centers and other healthcare
related facilities. Revenues are derived from the licensing of software, the
provision of consulting and other value-added support services and the resale of
hardware and software obtained from vendors.
In April 2000, the loan agreements with eBanker for $2,650,000 and $2,000,000
that were due in April 2000 were extended to January 9 and January 7, 2001,
respectively. Payment of interest was also extended to the respective dates in
January 2001. The conversion rate of the $2,650,000 loan agreement was increased
to $1.6875 per share. Other terms of the loans remain the same. In consideration
of the extension, Global Med agreed to pay a fee of 137,778 shares of its common
stock. Based on the market price of the stock on the date of the agreements, the
shares have a value of $262,130, which will be recorded as deferred financing
costs and amortized over the extension period. If the loan's accrued interest or
principal is not repaid in 270 days the loan's interest and principal due date
will be automatically extended to April 15, 2001. The loan will lose its
conversion features. Interest will continue to accrue on the balance at 12%
interest per annum.
If the loans and accrued interest are not repaid in 270 days, ten-year warrants,
exercisable to purchase common stock of Global Med at an exercise price of $0.50
per share, will be issued to eBanker. The number of common shares to be included
in the warrant to be issued will be equal to the entire principal and interest
amount divided by the exercise price of $0.50.
The bridge loan with eBanker of $750,000 matures on September 30, 2000. In April
2000, eBanker agreed to extend the due date to January 1, 2001. Payment of
interest was also extended to January 1, 2001. Global Med agreed to pay a fee of
22,222 shares of its common stock. Based on the market price of the stock on the
date of the agreements, the shares have a value of $37,500, which will be
recorded as deferred financing costs and amortized over the extension period.
The following discussion of the Company's results of operations and of its
liquidity and capital resources is derived from and should be read in
conjunction with the unaudited financial statements and the related notes
herein.
RESULTS OF OPERATIONS
Subsequent to the issuance of the Company's financial statements for the three
months ended March 31, 2000, management determined that common stock placed in
an escrow account for consulting services (See Note 5 to the unaudited condensed
consolidated financial statements) should not have been
13
recorded as issued and outstanding and the related prepaid expense of $375,000
should not have been recorded. As a result, the financial statements for the
three months ended March 31, 2000, have been restated from amounts previously
reported. The common stock and related expenses will be recorded as issued in
the period in which those shares are earned.
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999
Revenues. Revenues are comprised of license fee and maintenance revenues and
implementation and consulting services revenues.
Revenues from license fee and maintenance revenues decreased by $280,000, or
30.9%, for the three months ended March 31, 2000 compared to the same three
months in 1999. This decrease in license fee and maintenance revenues is
primarily the result of decreased sales of the SAFETRACE and SAFETRACE Tx(TM)
products due to lingering Year 2000 effects on potential purchasers of software.
Although the Company experienced no adverse results when the Year 2000 occurred,
software purchasers were delaying decisions until more time had passed to ensure
no Year 2000 issues surfaced during the first three months of 2000. These
purchasing delays were experienced by the software industry overall and are not
particular to Global Med.
Implementation and consulting services revenues decreased marginally,
approximately 5.4%, during the three months ended March 31, 2000 compared to the
same three months in 1999. This decrease was primarily due to decreases in the
number of customers which required these services.
Cost of revenue. Cost of revenue as a percentage of total revenues was 56.3% and
44.0% for the three months ended March 31, 2000 and 1999, respectively. This
cost increase was primarily a result of decreased revenues derived from sales of
SAFETRACE(R) and SAFETRACE Tx (TM) software product licenses which are typically
priced at higher profit margins than revenues from consulting and implementatiOn
related services.
Gross profit. Gross profit as a percentage of total revenue was 43.7% and 55.9%
for the three months ended March 31, 2000 and 1999, respectively. This decrease
in gross profit was primarily a result of the decreased revenues derived from
sales of the higher margin SAFETRACE(R) and SAFETRACE TX(TM) software products
discussed above.
General and administrative. General and administrative expenses decreased
$131,000, or 18.3%, for the three months ended March 31, 2000 compared to the
same three months in 1999. This decrease was attributable primarily to the
reduction in force in October 1999 and reductions in other administrative
overhead costs such as rent and professional services, which was partially
offset by the Consultancy Agreement with OTC Financial.
Sales and marketing. Sales and marketing expenses increased $71,000 or 45.8%,
for the three months ended March 31, 2000 compared to the same three months in
1999. This increase in sales and marketing expenses was primarily due to the
increased sales and marketing efforts related to SAFETRACE TX(TM) and the
introduction of PeopleMed during the three months ended March 31, 2000.
14
Research and development. Research and development expenses decreased $16,000 to
zero, for the three months ended March 31, 2000 compared to the same three
months in 1999. The decrease in research and development expenses was primarily
due to the capitalization of software development costs of $229,000 for the
three months ended March 31, 2000; for a total of capitalized software
development costs of $2,921,000 through March 31, 2000, resulting from SAFETRACE
TX(TM) achieving technological feasibility in 1999.
Loss from operations before other income (expense). The Company's loss from
operations during the three months ended March 31, 2000 of $402,000 is $206,000
more than the loss for the same three months in 1999 of $196,000. The increased
loss experienced during the three months ended March 31, 2000 was primarily
attributable to the decrease in sales due to the Year 2000 concerns and the
introduction of PeopleMed.
Interest expense. Interest expense increased $21,000 or 16.5% for the three
months ended March 31, 2000 compared to the same three months in 1999. This
increase was primarily due to the borrowings on the financing agreements.
Financing costs. Financing costs decreased $3.869 million from the three month
period ended March 31, 1999. In 1999, portions of the financing costs associated
with the warrants to purchase shares of common stock of Global Med in connection
with the 1998 financing agreements were recognized. During the three months
ended March 31, 2000, the financing costs relate primarily to the extensions of
the due dates on the various financing agreements until April 2000.
Net loss. The Company's net loss for the three months ended March 31, 2000 and
1999 was $664,000 and $4,305,000, respectively. The difference of $3,641,000
relates primarily to the noncash financing costs incurred in 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and cash equivalents of $387,000 as of March 31, 2000
compared to $330,000 at December 31, 1999, none of which was restricted.
The Company had a net working capital deficit of $6,890,000 as of March 31, 2000
and $2,127,000 at December 31, 1999. The primary reason for the decrease in
working capital is the classification of the financing agreements as current
liabilities as of March 31, 2000.
The Company used $475,000 in net cash for operating activities during the three
months ended March 31, 2000. The cash used during the three months ended March
31, 2000 consisted primarily of the loss from operations of $664,000, net of the
changes in operating assets and liabilities.
Net cash used by investing activities was $242,000 during the three months ended
March 31, 2000 compared to $394,000 during the same period of 1999. The Company
invested $229,000 and $345,000 in software development during the three months
ended March 31, 2000 and 1999, respectively.
Net cash provided by financing activities was $774,000 during the three months
ended March 31, 2000, compared to net cash provided by financing activities of
$413,000 during the three months ended March 31, 1999. These amounts primarily
include proceeds from the financing agreements.
In view of the Company's current cash position, financing activities, and
projected cash flow, management believes the Company has the financial
resources, or can obtain the financial resources, to maintain its planned level
of operations for the next twelve months, although the Company anticipates that
it may continue to incur operating losses, negative cash flows and capital
expenditures during that period.
Management believes that the net proceeds generated by the financing agreements
as discussed above, are sufficient to fund the Company's liquidity and capital
requirements excluding acquisitions or major new product development
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initiatives. Management anticipates that the net proceeds from the financing
agreements, proceeds from the exercise of warrants, and any future financing
activities will be used to fund the Company's anticipated research and software
development costs, sales and marketing efforts, and negative cash flows during
the remainder of 2000 and for general working capital purposes.
As stated above, Global Med is in the process of negotiating possible
alternative financing arrangements.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements," which provides guidance with respect to revenue recognition issues
and disclosures. As amended by SAB No. 101B, the Company is required to
implement the provisions of SAB No. 101 no later than the fourth quarter of the
fiscal year ending December 31, 2000. The Company does not believe SAB No. 101
will have a material impact on its financial statements.
In June 1998, SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, was issued which was effective for all fiscal years beginning after
June 15, 1999. In July 1999, SFAS No. 137, Accounting for Derivative Instruments
and Hedging Activities - Deferral of the Effective Date of FASB Statement No.
133 was issued. This statement defers the effective date of SFAS No. 133 to all
fiscal quarters of all fiscal years beginning after June 15, 2000. Historically,
Global Med has not engaged in any hedging activity using derivative instruments.
Accordingly, management does not believe the impact of SFAS No. 133 will be
material to the financial statements.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit No. Description
---------- ----------------------------------------------------
10.1 Agreement between eBanker and Global Med Technologies dated April
12, 2000 pertaining to the extension of the $2,000,000 note
receivable
10.2 Agreement between eBanker and Global Med Technologies dated April
14, 2000 pertaining to the extension of the $2,650,000 note
receivable
10.3 Agreement between eBanker and Global Med Technologies dated April
14, 2000 pertaining to the extension of the $750,000 note
receivable
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the three months ended
March 31, 2000.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
GLOBAL MED TECHNOLOGIES, INC.
A Colorado Corporation
Date: April 16, 2001 By /s/ Michael I. Ruxin
---------------------------------------
Michael I. Ruxin, Chairman of the Board
and Chief Executive Officer, and
Principal Accounting Officer
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