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 June 30, 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.
---------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
COLORADO 84-1116894
------------------------------ -------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
12600 West Colfax, Suite C-420, Lakewood, Colorado 80215
--------------------------------------------------------
(Address of principal executive offices)
(303) 238-2000
-------------------------
(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 August 15, 2000, 13,661,786 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 JUNE 30, 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 June 30, 2000
(see Note 7 to the condensed consolidated financial statements).
The financial statements for the three and six month periods ended June 30, 2000
have been restated from amounts previously reported to remove certain amounts
recorded in accounts receivable, prepaid expenses and other assets and equity,
to reduce amortization expense, to reduce the number of common shares
outstanding, to reduce the weighted average number of common shares outstanding,
and to recognize compensation expense associated with shares of common stock
issued and subscribed at a discount to related parties.
PAGE NO.
Item 1. Condensed Consolidated Financial Statements
a. Unaudited Condensed Consolidated Balance Sheets as of June 30,
2000 (as restated) and December 31, 1999.................... 3
b. Unaudited Condensed Consolidated Statements of Operations for
the three months ended June 30, 2000 (as restated) and
1999........................................................ 5
c. Unaudited Condensed Consolidated Statements of Operations for
the six months ended June 30, 2000 (as restated) and 1999... 6
d. Unaudited Condensed Consolidated Statement of Stockholders'
eficit for the six months ended June 30, 2000
(as restated)............................................... 7
e. Unaudited Condensed Consolidated Statements of Cash Flows for
the six months ended June 30, 2000 (as restated) and 1999... 8
f. Notes to Unaudited Condensed Consolidated Financial
Statements................................................. 10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 16
PART II - OTHER INFORMATION
Item 2. Change in Securities....................................... 20
Item 5. Other Information.......................................... 20
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits................................................... 21
b. Reports on Form 8-K........................................ 21
Signatures................................................................... 21
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, December 31,
2000 1999
------- -----------
(As restated,
see Note 7)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .................................................... $ 421 330
Accounts receivable-trade, net of allowance for uncollectible accounts
of $50 at June 30, 2000 and December 31, 1999, respectively .............. 547 445
Accrued revenues, net of allowance for uncollectible accounts
of $15 at June 30, 2000 and December 31, 1999 ............................ 894 324
Prepaid expenses and other assets ............................................ 68 66
------- -------
Total current assets ............................................................ 1,930 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 ............................... (1,624) (1,564)
------- -------
Net equipment, furniture and fixtures ........................................... 445 492
DEFERRED FINANCING COSTS,
net of accumulated amortization of $457 and $158 at
June 30, 2000 and December 31, 1999, respectively ............................ 301 300
CAPITALIZED SOFTWARE DEVELOPMENT COSTS,
net of accumulated amortization of $1,460 and $1,126 at
June 30, 2000 and December 31, 1999, respectively ............................ 1,579 1,566
OTHER ASSETS .................................................................... 355 65
------- -------
Total assets .................................................................... $ 4,610 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)
June 30, December 31,
2000 1999
----------- -----------
(As restated,
see Note 7)
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable ............................................................ $ 430 303
Accrued expenses ............................................................ 876 808
Accrued payroll ............................................................. 120 87
Accrued compensated absences ................................................ 389 412
Noncompete accrual .......................................................... 35 35
Deferred revenue ............................................................ 1,777 1,502
Financing agreements, related party ......................................... 5,400 --
Current portion of capital lease obligations ................................ 149 145
-------- --------
Total current liabilities ...................................................... 9,176 3,292
CAPITAL LEASE OBLIGATIONS, less current portion ................................ 118 179
FINANCING AGREEMENTS, RELATED PARTY, less current portion ...................... -- 4,400
-------- --------
Total liabilities .............................................................. 9,294 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 - 13,412, and 11,638 at June 30, 2000
and December 31, 1999, respectively ...................................... 134 116
Additional paid-in capital .................................................. 29,660 27,158
Common stock subscription receivable ........................................ (160) --
Accumulated deficit ......................................................... (34,318) (31,557)
-------- --------
Total stockholders' deficit .................................................... (4,684) (4,283)
-------- --------
Total liabilities and stockholders' deficit .................................... $ 4,610 3,588
======== ========
See accompanying notes to unaudited condensed consolidated financial statements.
4
GLOBAL MED TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER COMMON SHARE INFORMATION)
Three months ended
June 30,
2000 1999
---- ----
(As restated,
see Note 7)
REVENUES:
Software sales and consulting ........................................... $ 1,059 1,848
Hardware and software sales, obtained from vendors ...................... -- 159
-------- --------
1,059 2,007
-------- --------
COST OF REVENUES:
Software sales and consulting ........................................... 450 660
Hardware and software sales, obtained from vendors ...................... -- 158
-------- --------
450 818
-------- --------
Gross profit ............................................................... 609 1,189
OPERATING EXPENSES:
General and administrative .............................................. 874 635
Sales and marketing ..................................................... 388 432
Research and development ................................................ 141 162
-------- --------
Loss from operations ....................................................... (794) (40)
OTHER INCOME (EXPENSE):
Interest income ......................................................... 4 99
Interest expense ........................................................ (172) (91)
Financing costs ......................................................... (1,135) (702)
Other ................................................................... -- 23
-------- --------
Net loss ................................................................... $ (2,097) (711)
======== ========
Basic and diluted loss per share of common share ........................... $ (0.17) (0.07)
======== ========
Weighted average number of common shares outstanding -
basic and diluted ....................................................... 12,165 10,695
======== ========
See accompanying notes to unaudited condensed consolidated financial statements.
5
GLOBAL MED TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER COMMON SHARE INFORMATION)
Six months ended
June 30,
2000 1999
---- ----
(As restated,
see Note 7)
REVENUES:
Software sales and consulting ........................................... $ 1,998 3,084
Hardware and software sales, obtained from vendors ...................... -- 159
-------- --------
1,998 3,243
-------- --------
COST OF REVENUES:
Software sales and consulting ........................................... 970 1,204
Hardware and software sales, obtained from vendors ...................... -- 158
-------- --------
970 1,362
-------- --------
Gross profit ............................................................... 1,028 1,881
OPERATING EXPENSES:
General and administrative .............................................. 1,469 1,255
Sales and marketing ..................................................... 614 684
Research and development ................................................ 141 178
-------- --------
Loss from operations ....................................................... (1,196) (236)
OTHER INCOME (EXPENSE):
Interest income ......................................................... 5 102
Interest expense ........................................................ (318) (218)
Financing costs ......................................................... (1,252) (4,687)
Other ................................................................... -- 23
-------- --------
Net loss ................................................................... $ (2,761) (5,016)
======== ========
Basic and diluted loss per share of common share ........................... $ (0.23) (0.51)
======== ========
Weighted average number of common shares outstanding -
basic and diluted ....................................................... 11,963 9,786
======== ========
See accompanying notes to unaudited condensed consolidated financial statements.
6
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
(In thousands)
Common Stock Additional Common stock
--------------------- paid-in subscription Accumulated
Shares Amount capital receivable deficit Total
------ ------ ---------- ------------ ----------- -----
Balances, December 31, 1999 ........................... 11,638 $ 116 27,158 -- (31,557) (4,283)
Exercise of stock options ......................... 44 1 41 -- -- 42
Issuance of common stock (as restated,
see Note 7) .................................... 1,320 14 1,727 (160) -- 1,581
Issuance of common stock for financing costs ...... 160 1 298 -- -- 299
Common stock issued for services .................. 250 2 373 -- -- 375
Contributed capital ............................... -- -- 63 -- -- 63
Net loss (as restated, see Note 7) ................. -- -- -- -- (2,761) (2,761)
------- ------- ------- ------- ------- ------
Balances, June 30, 2000 (as restated) ................. 13,412 $ 134 29,660 (160) (34,318) (4,684)
======= ======= ======= ======= ======= ======
See accompanying notes to unaudited condensed consolidated financial statements.
7
GLOBAL MED TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Six months ended
June 30,
2000 1999
---- ----
(As restated,
see Note 7)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ............................................................................ $(2,761) (5,016)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation, amortization and amortization of software
development costs ......................................................... 394 346
Noncash financing costs ........................................................ 1,239 4,687
Changes in allowances for uncollectible amounts ................................ -- 50
Loss on disposal of assets ..................................................... -- 37
Expense related to issuance of common stock, options and
warrants in exchange for services ......................................... 219 241
Changes in operating assets and liabilities:
Accounts receivable-trade, net .............................................. (102) (119)
Accrued revenues, net ....................................................... (570) (241)
Prepaid expenses and other assets ........................................... 4 47
Accounts payable ............................................................ 127 41
Accrued expenses ............................................................ 68 (43)
Accrued payroll ............................................................. 33 155
Accrued compensated absences ................................................ (23) 13
Noncompete accrual .......................................................... -- --
Deferred revenue ............................................................ 275 (151)
------- -------
Net cash provided by (used in) operating activities ................................. (1,097) 47
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalized software development costs .............................................. (347) (572)
Purchases of equipment, furniture and fixtures ...................................... (13) (72)
Proceeds from sales of property and equipment ....................................... -- 6
------- -------
Net cash used in investing activities ............................................... (360) (638)
------- -------
(Continued)
See accompanying notes to unaudited condensed consolidated financial statements.
8
GLOBAL MED TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(IN THOUSANDS)
Six months ended
June 30,
2000 1999
---- ----
(As restated,
see Note 7)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on financing agreements, related party ................................... $ 1,000 450
Sale of common stock ................................................................ 500 --
Exercise of employee stock options .................................................. 42 --
Minority investment in subsidiary ................................................... 63 --
Borrowing on bridge loan ............................................................ -- 200
Repayments on bridge loan ........................................................... -- (200)
Principal payments under capital lease obligations .................................. (57) (91)
------- -------
Net cash provided by financing activities ........................................... 1,548 359
------- -------
Net increase (decrease) in cash and cash equivalents ................................ 91 (232)
Cash and cash equivalents, at beginning of period ................................... 330 821
------- -------
Cash and cash equivalents, at end of period ......................................... $ 421 589
======= =======
SUPPLEMENTAL DISCLOSURES OF OTHER INVESTING AND FINANCING ACTIVITIES:
Forgiveness of debt in exchange for exercise of warrants ......................... $ -- 500
======= =======
Cancellation of common stock issued for services ................................. $ -- (23)
======= =======
Common stock issued for financing fees ........................................... $ 1,239 168
======= =======
Common stock issued for services ................................................. $ 516 23
======= =======
Equipment financed under capital lease ........................................... $ -- 273
======= =======
See accompanying notes to unaudited condensed consolidated financial statements.
9
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of Global
Med Technologies, Inc. and Subsidiary (collectively the Company or Global Med)
have been prepared by management in accordance with accounting principles
generally accepted in the United States of America 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 June 30, 2000 and the results of their operations for the three
months ended June 30, 2000 and 1999 have been included.
The accompanying unaudited condensed consolidated financial statements 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 and six months ended June 30,
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.
The Company's net loss for the six months ended June 30, 2000 is $2.761 million.
Cash flow used by operating activities totaled $1.097 million and the Company
has accumulated deficits of $34.318 million. The Company continues to seek
alternative financing arrangements, equity contributions, and capital support
while the management of the Company evaluates revenue enhancement and cost
containment strategies.
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).
10
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
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.
3. FINANCING AGREEMENTS, RELATED PARTY
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. A
conversion rate of $1.6875 per share was added to the $2,650,000 loan. 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 has been recorded as deferred financing costs and amortized
over the extension period. If the loans' accrued interest or principal is not
repaid in 270 days the loans' interest and principal due date will be
automatically extended to April 15, 2001. The loans will lose their conversion
features. Interest will continue to accrue on the balances at 12% interest per
annum.
If the loans' accrued interest and principal are not repaid in 270 days, a
10-year warrant exercisable to acquire common shares of Global Med at a price of
$0.50 per share 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 of $0.50 per share and the debt will be extended as
discussed above.
The bridge loan with eBanker of $750,000, as extended, 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 has been recorded as deferred financing costs and
amortized over the extension period.
4. PEOPLEMED.COM, INC.
In May 1999, Global Med formed a subsidiary, PeopleMed.com, Inc., (PeopleMed) a
Colorado corporation, which is approximately 85% owned by the Company,
represented by 7,500,000 shares of PeopleMed common stock, 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 who acquired 1,275,000 shares of PeopleMed common stock for $12,750 during
the six months ended June 30, 2000 in payment of subscriptions for common stock.
There is no minority interest reflected in the Company's June 30, 2000 or
December 31, 1999 consolidated balance sheets because PeopleMed had a
stockholders' deficit at those dates.
11
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 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 June 30, 2000, 50,000 shares of PeopleMed's $.001 par value
common stock had been sold at $1.00 per share for a total of $50,000. The cash
payment received during the six months ended June 30, 2000 is reflected as
contributed capital in the accompanying financial statements. In addition, 5,000
shares of PeopleMed common stock were issued to an officer for services valued
at $5,000.
5. STOCKHOLDERS' EQUITY
Stock Option Exercises
During the six months ended June 30, 2000, options to purchase 44,000 shares of
common stock were exercised for a total of $42,000.
Sales of Common Stock
In June 2000, eVision purchased 1,000,000 shares of common stock of the Company
for $500,000. A director subscribed to 150,000 shares of common stock for
$75,000 and 170,000 shares were subscribed to by a shareholder for $85,000. All
of these shares are restricted shares. The 320,000 subscribed shares are
reflected as common stock subscribed in the accompanying financial statements.
In connection with the sales to eVision and the director, the Company recognized
financing costs of $940,000 and compensation expense of $141,000.
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.
12
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
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. Amortization of
investor relations expense related to this agreement was $78 thousand for the
six months ended June 30, 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 as of June 30,
2000.
6. RECLASSIFICATIONS
Certain prior period amounts have been reclassified to conform with the current
period presentation.
7. RESTATEMENT
Subsequent to the issuance of the Company's financial statements for the three
and six months ended June 30, 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 of $375,000 should not have been recorded.
Additionally, management of the Company determined that common stock issued and
subscribed at a discount to related parties during the three months ended June
30, 2000 should have been recorded with corresponding financing costs and
compensation charges and increases in additional paid-in capital and the common
stock subscription should not have been recorded as an account receivable. As a
result, the financial statements for the three and six months ended June 30,
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.
13
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
The effects of the restatement are as follows:
In thousands, except per share amounts
- --------------------------------------
As As previously
As of June 30, 2000: restated reported
- ------------------- -------- -------------
Accounts receivable, net of allowance
for uncollectible accounts ........................... $ 547 707
Prepaid expenses and other assets ....................... $ 68 315
Other assets ............................................ $ 355 410
Common stock, $.01 par value ... ......................... $ 134 137
Additional paid-in capital ............................... $ 29,660 28,956
Common stock subscribed .................................. $ (160) --
Accumulated deficit ...................................... $(34,318) (33,315)
Number of common shares outstanding ...................... 13,412 13,662
14
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
In thousands, except per share amounts
- --------------------------------------
As As previously
For the Three Months Ended June 30, 2000: restated reported
- ---------------------------------------- -------- -------------
General and administrative expense .......................... $ 874 780
Loss from operations ........................................ $ (794) (700)
Financing costs ............................................. $ (1,135) (195)
Net loss .................................................... $ (2,097) (1,063)
Basic and diluted loss per share of common share ............ $ (0.17) (0.09)
Weighted average number of common shares outstanding -
basic and diluted ........................................ 12,165 12,415
In thousands, except per share amounts
- --------------------------------------
As As previously
For the Six Months Ended June 30, 2000 restated reported
- -------------------------------------- -------- -------------
General and administrative expense .......................... $ 1,469 1,405
Loss from operations ........................................ $ (1,196) (1,132)
Financing costs ............................................. $ (1,252) (313)
Net loss .................................................... $ (2,761) (1,758)
Basic and diluted loss per share of common share ............ $ (0.23) (0.14)
Weighted average number of common shares outstanding -
basic and diluted ........................................ 11,963 12,137
15
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.
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. A
conversion rate of $1.6875 per share has been added to the $2,650,000 loan. 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 has been be recorded as
deferred financing costs and amortized over the extension period. If the loans'
accrued interest or principal is not repaid in 270 days the loans' interest and
principal due date will be automatically extended to April 15, 2001. The loans
will lose their conversion features. Interest will continue to accrue on the
balances at 12% interest per annum.
If the loans and accrued interest are not repaid in 270 days, ten-year warrants,
exercisable at $0.50 per share to purchase common stock of Global Med, 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 was 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 has been
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
and six months ended June 30, 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 recorded as
issued and outstanding and the related prepaid asset and investor relations
16
expense should not have been recorded. Additionally management of the Company
determined that common stock issued and subscribed at a discount to related
parties during the three months ended June 30, 2000 should have been recorded
with corresponding financing costs, and compensation charges and increases in
additional paid in capital, and the common stock subscription should not have
been recorded as an account receivable. As a result, the financial statements
for the three and six months ended June 30, 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.
THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999
Revenues. Revenues are comprised of license fees for SAFETRACE and SAFETRACE
Tx(TM), maintenance revenues, implementation and consulting services revenues,
collectively software sales and consulting.
Revenues from software sales and consulting decreased by $789 thousand, or 43%,
for the three months ended June 30, 2000 compared to the same three months in
1999. This decrease in revenues is primarily the result of a contract settlement
received in 1999 offset by increased sales of the SAFETRACE and SAFETRACE Tx(TM)
products in 2000 of $62 thousand. The contract settlement amount recognized
during the three months ended June 30, 1999 was $850 thousand or 46% of software
sales and consulting revenues for the period.
In certain circumstances Global Med sells hardware and software obtained from
outside vendors to its existing customers. Global Med had no such sales during
the three months ended June 30, 2000.
Cost of revenue. Cost of revenue as a percentage of total revenues was 42% and
41% for the three months ended June 30, 2000 and 1999, respectively. This cost
increase was primarily a result of the contract settlement received in 1999 for
which there were no associated costs of revenue, offset by lower costs of
revenues of SAFETRACE TX (TM). SAFETRACE TX (TM) software product licenses are
typically priced at higher profit margins than SAFETRACE.
Gross profit. Gross profit as a percentage of total revenue was 58% and 59% for
the three months ended June 30, 2000 and 1999, respectively. This decrease in
gross profit was primarily due to the factors described above.
General and administrative. General and administrative expenses increased $239
thousand for the three months ended June 30, 2000 compared to the same three
months in 1999. This increase is primarily attributable to the compensation
expense associated with the sale of common stock at a discount to a director of
$141 thousand and amortization expense associated with the consultancy agreement
of $47 thousand for the three months ended June 30, 2000.
Sales and marketing. Sales and marketing expenses decreased $44 thousand for the
three months ended June 30, 2000 compared to the same three months in 1999. This
decrease in sales and marketing expenses included increased sales and marketing
efforts related to SAFETRACE TX(TM) during the three months ended June 30, 2000,
which were offset by the reduction in work force of October 1999.
Research and development. Research and development expenses decreased $21
thousand for the three months ended June 30, 2000 compared to the same three
months in 1999. The decrease in research and development expenses was primarily
due to the reduced development efforts related to existing products.
17
Loss from operations before other income (expense). The Company's loss from
operations during the three months ended June 30, 2000 of $794 thousand is $754
thousand more than the loss for the same three months in 1999 of $40 thousand.
The increased loss experienced during the three months ended June 30, 2000 was
primarily attributable to the contract settlement of $850 thousand received in
June 1999.
Interest expense. Interest expense increased $80 thousand or 88% for the three
months ended June 30, 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 increased $433 thousand primarily due to the
sale of common stock to eVision at a discount of $940 thousand, offset by
decreased financing costs related to the financing agreements extended in 1999.
SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999
Revenues. Revenues from software sales and consulting decreased by $1.086
million, or 35%, for the six months ended June 30, 2000 compared to the same six
months in 1999. This decrease in revenues is primarily the result of the
contract settlement of $850 thousand received in June 1999 as well as decreased
sales of the SAFETRACE and SAFETRACE Tx(TM) products due to lingering Year 2000
effects on potential purchasers of software during the first three months of the
year ending December 31, 2000. Software purchasers were delaying decisions until
more time had passed to ensure no Year 2000 issues surfaced during the first six
months of 2000. These purchasing delays were experienced by the software
industry overall and are not particular to Global Med.
In certain circumstances, Global Med sells hardware and software obtained from
outside vendors to its existing customers. During the six months ended June 30,
2000 Global Med had no such sales.
Cost of revenue. Cost of revenue as a percentage of total revenues was 49% and
42% for the six months ended June 30, 2000 and 1999, respectively. This cost
increase was primarily a result of the contract settlement received in 1999 for
which there were no associated costs of revenue, offset by lower costs of
revenues of SAFETRACE TX (TM). SAFETRACE TX (TM) software product licenses are
typically priced at higher profit margins than SAFETRACE.
Gross profit. Gross profit as a percentage of total revenue was 51% and 58% for
the six months ended June 30, 2000 and 1999, respectively. This decrease in
gross profit was primarily a result of the factors described above.
General and administrative. General and administrative expenses increased $214
thousand for the six months ended June 30, 2000 compared to the same six months
in 1999. This increase includes additional expenses of $78 thousand attributable
to the Consultancy Agreement with OTC Financial, $141 thousand of compensation
expense associated with the sale of common stock at a discount to a director,
offset by decreases in various general and administrative expenses.
Sales and marketing. Sales and marketing expenses decreased $70 thousand or 10%,
for the six months ended June 30, 2000 compared to the same six months in 1999.
This decrease in sales and marketing expenses was primarily due to the leveling
off of the increased sales and marketing efforts related to SAFETRACE TX(TM) of
1999.
Research and development. Research and development expenses decreased $37
thousand to $141 thousand, for the six months ended June 30, 2000 compared to
the same six months in 1999. The increase in research and development expenses
was primarily due to costs incurred for the PeopleMed product.
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Loss from operations before other income (expense). The Company's loss from
operations during the six months ended June 30, 2000 of $1.196 million is $960
thousand more than the loss for the same six months in 1999. The increased loss
experienced during the six months ended June 30, 2000 was primarily attributable
to the contract settlement of $850 thousand received in June 1999 offset by
decreased sales of SAFETRACE TX(TM).
Interest expense. Interest expense increased $100 thousand or 46% for the six
months ended June 30, 2000 compared to the same six months in 1999. This
increase was primarily due to the borrowings on the financing agreements.
Financing costs. Financing costs decreased $3.435 million from the six month
period ended June 30, 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 six months ended
June 30, 2000, the financing costs relate primarily to the sale of common stock
to eVision at a discount of $940 thousand.
Net loss. The Company's net loss for the six months ended June 30, 2000 and 1999
was $2.761 million and $5.016 million, respectively. The difference of $2.255
million relates primarily to the noncash financing costs.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and cash equivalents of $421 thousand of June 30, 2000
compared to $330 thousand at December 31, 1999, none of which was restricted.
The Company had a net working capital deficit of $7.246 million as of June 30,
2000 and $2.127 million 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 June 30, 2000.
The Company used $1.097 million in net cash for operating activities during the
six months ended June 30, 2000. Net cash used by investing activities was $360
thousand during the six months ended June 30, 2000 compared to $638 thousand
during the same period of 1999. The Company invested $347 thousand and $572
thousand in software development during the six months ended June 30, 2000 and
1999, respectively.
Net cash provided by financing activities was $1.548 million during the six
months ended June 30, 2000, compared to net cash provided by financing
activities of $359 thousand during the six months ended June 30, 1999. These
amounts primarily include proceeds from the financing agreements and sales of
common stock.
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
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.
19
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 2. CHANGES IN SECURITIES
(C) Recent Sales of Unregistered Securities
During the quarter ended June 30, 2000, Global Med issued 160,000 shares of
common stock in payment of financing fees. The issuance of shares for payment of
financing fees were made in reliance upon the exemption from registration
provided by Section 4(2) of the Securities Act of 1933, as amended (1933 Act).
The purchaser had access to full information concerning the Company. The
certificates for the shares contain a restrictive legend advising that the
shares may not be offered for sale, sold or otherwise transferred without having
first been registered under the 1933 Act or pursuant to an exemption from
registration under the 1933 Act. No underwriters were involved in the
transaction.
In June 2000, Global Med sold a total of 1,320,000 shares of its common stock to
various parties. The issuances of shares were made in reliance upon the
exemption from registration provided by Section 4(2) of the 1933 Act. The
purchasers had access to full information concerning the Company. The
certificates for the shares contain a restrictive legend advising that the
shares may not be offered for sale, sold or otherwise transferred without having
first been registered under the 1933 Act or pursuant to an exemption from
registration under the 1933 Act. No underwriters were involved in the
transaction.
In April 2000, Global Med issued a total of 500,000 shares of its common stock
to a consultant in exchange for services, per a February 2000 agreement. Of the
total shares, 250,000 are held in an escrow account. The issuance of shares in
exchange for services was made in reliance upon the exemption from registration
provided by Section 4(2) of the 1933 Act. The purchaser had access to full
information concerning the Company. The certificates for the shares contain a
restrictive legend advising that the shares may not be offered for sale, sold or
otherwise transferred without having first been registered under the 1933 Act or
pursuant to an exemption from registration under the 1933 Act. No underwriters
were involved in the transaction.
ITEM 5. OTHER INFORMATION
In July 2000, Alan K. Geddes, Vice President, Finance, Treasurer, and Chief
Financial Officer, resigned from his position with the Company.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit No. Description
---------- -----------------------------------------------
10.1 Agreement between Shared Medical Systems and Global Med
Technologies dated September 23, 1999.
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the three months ended
June 30, 2000.
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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