Attached files
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| EX-31.1 - ADVANCED MEDICAL INSTITUTE INC. | v177657_ex31-1.htm |
| EX-31.2 - ADVANCED MEDICAL INSTITUTE INC. | v177657_ex31-2.htm |
| EX-32.1 - ADVANCED MEDICAL INSTITUTE INC. | v177657_ex32-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM
10-Q
(Amendment
No. 1)
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Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
For
the quarterly period ended December 31, 2008
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or
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Transition
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
For the transition period
from
to
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Commission
File Number: 000-29531
ADVANCED
MEDICAL INSTITUTE INC.
(Exact
Name of Registrant as Specified in Its Charter)
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NEVADA
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88-0409144
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification
No.)
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Level
1, 204-218 Botany Road
Alexandria,
NSW
Australia
2015
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(Address
of Principal Executive Offices) (Zip
Code)
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(61)
2 9640 5253
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(Registrant’s
Telephone Number, Including Area Code)
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(Former
Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
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Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Securities Exchange Act). Yes o No
x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definition of “large accelerated filer, ” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated Filer
o
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Accelerated Filer
o
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Non-Accelerated Filer
o
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Smaller Reporting Company
x
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(Do not check if a smaller reporting company)
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There were 53,507,450
shares of the Registrant’s Common Stock issued and outstanding on February 13,
2009.
This
Amendment No. 1 to the Quarterly Report on Form 10-Q for the quarter ended
December 31, 2008 of Advanced Medical Institute Inc. (the "Company"), originally
filed on February 17, 2009 (the "Quarterly Report"), is being filed by the
Company to amend:
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·
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the
disclosure under Liquidity and Capital Resources in Part I, Item 2;
and
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·
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the
disclosure under Controls and Procedures in Part I, Item
4(T).
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No other
changes to the Quarterly Report have been made. In addition, pursuant to the
Securities and Exchange Commission rules, the Company is including currently
dated certifications as Exhibits 31 and 32.
TABLE OF
CONTENTS
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Page
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Part
I.
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Financial
Information
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Item
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
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3
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Item
4T. Controls and Procedures
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9
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Part
II.
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Other
Information
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Item
6. Exhibits
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9
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SIGNATURES
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10
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2
PART I - FINANCIAL
INFORMATION
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE
FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE INFORMATION
CONTAINED IN THE FINANCIAL STATEMENTS OF THE COMPANY AND THE NOTES THERETO
APPEARING ELSEWHERE HEREIN AND IN CONJUNCTION WITH THE MANAGEMENT’S DISCUSSION
AND ANALYSIS SET FORTH IN THE COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED JUNE 30, 2008.
Preliminary
Note Regarding Forward-Looking Statements
The
statements contained in this Form 10-Q that are not purely historical are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. These include statements about the Company’s expectations, beliefs,
intentions or strategies for the future, which are indicated by words or phrases
such as “anticipate,” “expect,” “intend,” “plan,” “will,” “the Company
believes,” “management believes” and similar words or phrases. The
forward-looking statements are based on the Company’s current expectations and
are subject to certain risks, uncertainties and assumptions. The Company’s
actual results could differ materially from results anticipated in these
forward-looking statements. All forward-looking statements included in this
document are based on information available to the Company on the date hereof,
and the Company assumes no obligation to update any such forward-looking
statements.
Overview
We were
originally incorporated under the name of Hawksdale Financial Visions, Inc. on
December 6, 1996 under the laws of the State of Nevada. We were involved in the
business of timeshares, but became dormant on March 31, 1997, and until January
28, 2005, we were a “blank check” company with nominal assets. On October 15,
2004, we changed our name to “Advanced Medical Institute Inc.” On March 21,
2005, we completed a Share Exchange Agreement with Advanced Medical Institute
Pty Limited, a privately owned Australian company (“AMI Australia”), whereby AMI
Australia became our wholly-owned subsidiary. On November 17, 2005, we entered
into a Share Exchange Agreement with PE Patent Holdco Pty Limited, a privately
owned Australian company (“PE Patent Holdco”), whereby PE Patent Holdco became
our wholly-owned subsidiary. On September 8, 2006, we entered into a Share
Exchange Agreement with Worldwide PE Patent Holdco Pty Limited (ACN 117 157
727), a privately owned Australian company (“Worldwide PE”), whereby Worldwide
PE became our wholly-owned subsidiary.
Business
Overview
AMI is a
service provider company, which arranges for patients with sexual dysfunction
and prostate problems in Australia, New Zealand, China and the United Kingdom to
be provided with medical services, pharmaceuticals and associated clinical
support services.
On
September 15, 2008, we announced expansion of our operations to the United
Kingdom where we opened up our treatment centers, contracts with independent
doctors and pharmacies and began airing infomercials throughout the
country.
CRITICAL
ACCOUNTING POLICIES AND ESTIMATES
Our
discussion and analysis of financial condition and results is based upon our
consolidated financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. The preparation
of these financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenue and expenses, and
related disclosure of contingent assets and liabilities. On an on-going basis,
we evaluate our estimates, including those related to accounts receivable
reserves, provisions for impairment losses of affiliated companies and other
intangible assets, income taxes and contingencies. We base our estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
We
believe the following critical accounting policies reflect our more significant
estimates and assumptions used in the preparation of our consolidated financial
statements:
REVENUE
RECOGNITION Sales are reported as deferred income when the
sales contracts are executed and the term of the contract exceeds three months.
Up to three months medication is delivered to the patient upon the signing of a
contract. Generally the terms of the sales contracts are up to one year, but
they can be for longer periods of time. The deferred income arising from the
contracts that exceed three months is then amortized, on a straight-line basis,
into income during the approximated composite remaining medication delivery
period. This approximated composite is an estimate that may vary from period to
period.
3
ALLOWANCE
FOR DOUBTFUL ACCOUNTS We evaluate the collectibility of our
trade receivables based on a combination of factors. We regularly analyze our
significant customer accounts, and, when we become aware of a specific
customer’s inability to meet its financial obligations to us, such as in the
case of bankruptcy filings or deterioration in the customer’s ability to pay for
our services, we record a specific reserve for bad debt to reduce the related
receivable to the amount we reasonably believe is collectible. The allowances
are calculated based on detailed review of certain individual customer accounts,
historical rates and an estimation of the overall economic conditions affecting
our customer base. We review a customer’s credit history with the Company before
extending credit. If the financial condition of our customers were to
deteriorate, resulting in an impairment of their ability to make payments,
additional allowances may be required.
INCOME
TAXES We record a valuation allowance to reduce our deferred
tax assets to the amount that is more likely than not to be realized. We have
considered future market growth, forecasted earnings, future taxable income, and
prudent and feasible tax planning strategies in determining the need for a
valuation allowance.
CONTINGENCIES We
may be subject to certain asserted and unasserted claims encountered in the
normal course of business. It is our belief that the resolution of these matters
will not have a material adverse effect on our financial position or results of
operations; however, we cannot provide assurance that damages that result in a
material adverse effect on our financial position or results of operations will
not be imposed in these matters. We account for contingent liabilities when it
is probable that future expenditures will be made, and such expenditures can be
reasonably estimated.
LONG-LIVED
ASSETS We periodically assesses the need to record impairment
losses on long-lived assets, such as property, plant and equipment, goodwill and
purchased intangible assets, used in operations and its investments, when
indicators of impairment are present indicating the carrying value may not be
recoverable. An impairment loss is recognized when estimated undiscounted future
cash flows expected to result from the use of the asset plus net proceeds
expected from disposition of the asset (if any) are less than the carrying value
of the asset. When impairment is identified, the carrying amount of the asset is
reduced to its estimated fair value. Goodwill is no longer amortized, and
potential impairment of goodwill and purchased intangible assets with indefinite
useful lives are evaluated using the specific guidance provided by SFAS No. 142
and SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived
Assets.” This impairment analysis is performed at least annually. For
investments in affiliated companies that are not majority-owned or controlled,
indicators of value generally include revenue growth, operating results, cash
flows and other measures. Management then determines whether there has been a
permanent impairment of value based upon events and circumstances that have
occurred since acquisition. It is reasonably possible that the impairment
factors evaluated by management will change in subsequent periods, given that
the Company operates in a volatile environment. This could result in material
impairment charges in future periods.
CURRENCY
CONVERSION As of December 31, 2008 and 2007, the accounts of
AMI Australia were maintained, and its financial statements were expressed, in
Australian Dollars (A$). Such financial statements were translated into US
Dollars (US$) in accordance with Statement of Financial Accounts Standards
(“SFAS”) No. 52, “Foreign Currency Translation”, with the Australian
Dollar as the functional currency. In accordance with the Statement, all
assets and liabilities were translated at the exchange rate (A$1 = US$0.69070)
as of December 31, 2008, stockholder’s equity are translated at the historical
rates and income statement items are translated at the weighted-average exchange
rate for the period. The resulting translation adjustments are reported under
other comprehensive income in accordance with SFAS No. 130, “Reporting
Comprehensive Income”.
The
following table sets forth, for the periods indicated, certain operating
information expressed as a percentage of revenue:
Results of
operations:
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Three
Months
ended
December
31,
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Three
Months
ended
December
31,
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Six
Months
ended
December
31,
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Six
Months
ended
December
31,
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2008
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2007
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2008
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2007
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Revenue
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100%
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100%
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100%
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100%
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Cost
of revenue
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21.1%
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22.8%
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21.9%
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23.0%
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Gross
profit
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78.9%
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77.2%
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78.1%
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77.0%
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Selling,
general and administrative expenses
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74.7%
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63.6%
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74.3%
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69.0%
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Other
income and expenses
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0.4%
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0.4%
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(0.2)%
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(0.2)%
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Discontinued
operation
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0.4%
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(3.0)%
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0.01%
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1.5%
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Income
before income tax
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4.2%
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10.5%
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3.6%
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6.1%
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Income
tax expenses
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1.3%
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4.4%
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2.0%
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3.2%
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Net
income
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2.9%
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6.1%
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1.7%
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2.9%
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4
LIQUIDITY
AND CAPITAL RESOURCES
We manage
our cash so we are able to meet the obligations of our business, while
maintaining financial liquidity and flexibility. We forecast, monitor and
analyze our cash flows to enable prudent investment management and financing
within the confines of our financial strategy.
As of
December 31, 2008, we had total liabilities of $20,734,103, including unearned
revenue of $5,503,498, and we had a positive net worth of $24, 460,262 . As of
June 30, 2008, we had total liabilities of $22,027,966, including unearned
revenue of $6,922,800, and we had a positive net worth of $33,474,159.
The predominant reason for the significant reduction in the net worth of the
Company between June 30, 2008 and December 31, 2008 is due to a significant
deterioration in the A$ exchange rate as compared to the US$ exchange rate.
Our
aggregate cash balances as at December 31, 2008 were $1,356,170, our inventory
was $780,912, and our net receivables were approximately $17.8 million. These
receivables are due on average within 90-180 days. Despite the decrease in our
cash and cash equivalents between June 30, 2008 and December 31, 2008 and our
negative cash flows from operating activities during the quarter ended December
31, 2008, we forecast that we will be able to generate sufficient funds from our
business to fund our operations in the ordinary course during the next 12
months. Our forecast is based on our analysis that our net cash outflow in the
six months ended December 31, 2008 is mainly attributable to significant
ineffective advertising expenses incurred in our Australian operations (which
ineffective advertising has since been addressed), as well as cash used in the
establishment of our UK operations. The establishment of our UK
operations has now largely been completed, with the operating performance and
cash flow of our UK operations having improved such that the operations are cash
flow break even or cash flow positive.
If our
actual results over the next 12 months are materially worse than forecast, then
we may need to raise funds through borrowings or capital raisings. In such
event, there could be no assurance as to whether we could obtain any such
financing or, if successful, what the terms might be.
Our
access to additional financing will depend on a variety of factors such as
market conditions, the general availability of credit, the overall availability
of credit to our industry, our credit capacity, as well as the possibility that
lenders could develop a negative perception of our long- or short-term financial
prospects. If a combination of these factors were to occur, our internal sources
of liquidity may prove to be insufficient, and in such case, we may not be able
to successfully obtain additional financing on favorable terms. This could
restrict our ability to: (1) acquire new businesses or enter new markets,
(2) service our existing debt, (3) make necessary capital investments,
and (4) make other expenditures necessary for the ongoing conduct of our
business.
The
Company borrowed A$3 million from ANZ Nominees Limited in its capacity as
custodian of the Professional Pensions PST in September 2006. The
outstanding balance of this loan was fully repaid in December 2008 using funds
from the St George facility discussed below.
The
Company borrowed A$2.4 million from St George Bank Limited in December 2008
comprising a A$1.9 million term facility and a A$500,000 overdraft facility. The
loan is secured by a first ranking security interest in all of AMI Australia’s
assets and undertakings (including its existing equity interests in PE Patent
Holdco Pty Limited, Intelligent Medical Technologies Pty Limited and Advanced
Medical Institute (NZ) Limited). The term facility is a commercial bill
acceptance/discount facility whereby the Company regularly discounts bills with
the bank at the prevailing interest rate plus a margin of 1.65%. The average
all-up cost of this facility during the period was 6.58%. On each rollover the
interest rate is reset and it is likely that the current annual interest rate
will fall on the next rollover due to the Australian Reserve Bank cutting the
Australian cash rate in February 2009 by 100 basis points from 4.25% to
3.25% No repayment of this loan has been made up to December
31, 2008. The loan is due for repayment in December 2011, however the
Company is required to make principal repayments of A$50,000 per month during
each month of the term. The A$500,000 overdraft facility was undrawn
as at December 31, 2008.
The
Company borrowed a further A$1 million from Secare Health Centre Pty Limited
(“Secare”) in December 2008. Secare is controlled by the company’s
chief executive officer and founder, Jack Vaisman. The loan is secured by a
second ranking security interest in all of AMI Australia’s assets and
undertakings (including its existing equity interests in PE Patent Holdco Pty
Limited, Intelligent Medical Technologies Pty Limited and Advanced Medical
Institute (NZ) Limited). The loan attracts an interest cost of 10% per
annum. No repayment of this loan has been made up to December 31,
2008. The loan is due for repayment in December 2011.
In the
event that we continue to expand our business, we may need to raise additional
debt or equity funding in order to undertake such expansion. However, there can
be no assurance that we can or will obtain sufficient funds from operations or
from additional financings on terms acceptable to us. If we are unable to obtain
sufficient additional financing, we may not be able to expand our operations as
considered or we could be required to reduce spending and
operations.
5
RESULTS
OF OPERATIONS
SIX
MONTHS ENDED DECEMBER 31, 2008 COMPARED TO SIX MONTHS ENDED DECEMBER 31,
2007
Revenue.
Revenue was $29,160,593 in the six months ended December 31, 2008, compared to
$23,540,490 in the six months ended December 31, 2007, an increase of
$5,620,103, or 23.9%. We attribute this increase primarily to the following
factors: (1) expansion into U.K., (2) increased effectiveness of advertising
campaigns; (3) increased brand name recognition; and (4) effectiveness of our
products.
Our
unearned revenue as at December 31, 2008 was $5,503,498 compared to $5,340,856
as at December 31, 2007. The gross increase in unearned revenue from the six
months ended December 31, 2007 to the six months ended December 31, 2008 was
$162,642, or an increase of 3.0%. The increase in the six-month period ended
December 31, 2008 is primarily attributable to the increase in the number of
patients buying treatment programs from us than in the same period in 2007. We
attribute this increase to the following factors: (1) increased advertising
campaigns with improved target marketing in the premature ejaculation segment;
(2) increased brand name recognition; and (3) effectiveness of our
products.
Revenue
in AMI Australia’s premature ejaculation (PE) treatments has increased by $
4,343,136 or 38.2% to $15,723,133, and revenue in AMI Australia’s erectile
dysfunction (ED) treatments increased by $11,493,363 or 13.5% to
$12,517,390, in the six months ended December 31, 2008, compared to the six
months ended December 31, 2007. The numbers of patients in AMI Australia’s PE
treatments and ED treatments are stable compared to the six months ending
December 31, 2007. We attribute the increase in revenue in our PE treatments and
ED treatments to the increase in the number of sales per patient, along with the
higher sales price of the treatment programs sold. Revenue in AMI Australia’s
prostate treatments has decreased by $428,026 or 35.9%, to $765,690, in the six
months ended December 31, 2008, compared to the six months ended December 31,
2007. We attribute the decrease in revenue in our prostate treatments to
decreases in the number of patients. The number of patients in AMI Australia’s
prostate treatments decreased by 541 compared to the six months ended December
31, 2007.
Revenue
in our Australian operations was $25,142,030 in the six months ended December
31, 2008, compared to $22,944,529 in the six months ended December 31, 2007.
Compared to the same period in the previous year, there is an increase of
$2,197,501, or 9.6%, in the six months ended December 31, 2008. We attribute
this increase to the following factors: (1) increased advertising campaigns with
improved target marketing in the premature ejaculation segment; (2) increased
brand name recognition; and (3) effectiveness of our products.
Revenue
in our UK operations was $3,504,624 in the six months ended December 31, 2008,
compared to $Nil in the six months ended December 31, 2007. UK
operation started its business activities in September 2008.
Revenue
in our Chinese operations was $5,147 in the six months ended December 31, 2008,
compared to $22,589 during the six months ended December 31, 2007. The decrease
of $17,442, or 77.2%, in revenue in the six months ended December 31, 2008 is
primarily attributable to the decrease in the number of patients buying
treatments from us during the 2008 period.
Cost of
Revenue. Cost of revenue was $6,381,207 in the six months ended December
31, 2008, compared to $5,418,456 in the six months ended December 31, 2007. The
increase in cost of revenue was attributable to an increase in the medication
cost incurred by AMI Australia and AMI’s UK operation. As a percentage of
revenue, cost of revenue was 21.9% in the six months ended December 31, 2008,
compared to 23.0% in the six months ended December 31, 2007. The decrease in
cost of revenue percentage in the quarter ended December 31, 2008 is primarily
attributable to a significant decrease in the scale of the Company’s
unprofitable Japanese and Chinese operations.
Gross Profit. Gross profit was
$22,779,386 in the six months ended December 31, 2008, compared to $18,122,034
in the 2007 comparable period. As a percentage of revenue, gross profit
increased to 78.1% in the quarter ended December 31, 2008 from 77.0% in the 2007
quarter. The 1.1% increase in the gross profit percentage in 2008 is primarily
attributable to a significant decrease in the scale of the Company’s
unprofitable Japanese and Chinese operations.
Selling, General
and Administrative Expenses. Selling, general and administrative expenses
were $21,674,564 in the six months ended December 31, 2008, compared to
$16,251,897 in the six months ended December 31, 2007. As a percentage of
revenue, selling, general and administrative expenses increased to 74.3% in the
six months ended December 31, 2008 from 69.0% in the six months ended December
31, 2007. The increase in the six months ended December 31, 2008 is primarily
attributable to the establishment of UK operations. The Company’s UK operations
started its business activities in September 2008. The initial stage
of UK operation led to a high percentage of selling, general and administrative
expenses to revenue due to the operation being a start up
business. Its revenue shows a growing pace following the increase in
its brand name recognition.
Selling,
general and administrative expenses in our Chinese operations were $120,537 in
the six months ended December 31, 2008, compared to $394,623 in the six months
ended December 31, 2007. Major expenses were staff costs.
Other
Income. Other income and expenses were ($68,810) in the six months ended
December 31, 2008, compared to ($76,841) in the six months ended December 31,
2007. As a percentage of revenue, other income and expenses was (0.2%) in the
six months ended December 31, 2008 and (0.33%) in the six months ended December
31, 2007.
6
Net
Income Before Income Tax and Income Tax Expenses.
Income
before income tax was $1,037,866 in the six months ended December 31, 2008,
compared to $1,440,447 in the six months ended December 31, 2007. The decrease
is attributable to the depreciation in Australian dollar against the US dollar
from the average rate of A$:US$ 1:0.86892 for the six-month period ended
December 31, 2007 to A$:US$ 1:0.78240 for the six-month period ended
December 31, 2008.
Income
tax expenses were $536,287 in the six months ended December 31, 2008 compared to
$755,253 in the six months ended December 31, 2007. As a percentage of revenue,
income tax expense decreased to 2.0% in the six months ended December 31, 2008
from 3.2% in the six months ended December 31, 2007. This decrease is
attributable to a significant decrease in the scale of the Company’s
unprofitable Japanese and Chinese operations, losses from which were unable to
be offset against Australian profits for income tax expense
purposes.
Net Income
.Net income was $501,579 in the six months ended December 31, 2008, compared to
$685,194 in the six months ended December 31, 2007. This decrease in the 2008
quarter compared to the 2007 quarter is attributable to the depreciation in
Australian dollar against the US dollar from the average rate of
A$:US$ 1:0.86892 for the six-month period ended December 31, 2007 to
A$:US$ 1:0.78240 for the six-month period ended December 31,
2008.
Net
income in our Australian operations was $1,237,646 in the six months ended
December 31, 2008, compared to $1,768,923 in the six months ended December 31,
2007. The decrease is predominantly attributable to the depreciation in
Australian dollar against the US dollar from the average rate of
A$:US$ 1:0.86892 for the six-month period ended December 31, 2007 to
A$:US$ 1:0.78240 for the six-month period ended December 31,
2008.
Net loss
in our UK operations was ($37,305) in the six months ended December 31, 2008,
compared to $Nil in the six months ended December 31, 2007.
Net loss
in our Chinese operations was ($115,460) in the six months ended December 31,
2008, compared to ($372,788) in the six months ended December 31, 2007. The
decrease is due to the reduction in operations.
Net loss
in our Japanese operations, which were discontinued during the 2008 period, was
($117,823) in the six months ended December 31, 2008, compared to ($386,571) in
the six months ended December 31, 2007. The decrease in the loss resulted from
the reduction of expenditures due to the discontinuation of the Japanese
operations.
The above
discussions of results exclude those entities which have no, or what management
deems insignificant operations.
THREE
MONTHS ENDED DECEMBER 31, 2008 COMPARED TO THREE MONTHS ENDED DECEMBER 31,
2007
Revenue.
Revenue was $13,211,291 in the three months ended December 31, 2008, compared to
$12,331,983 in the three months ended December 31, 2007, an increase of
$879,308, or 7.1%. We attribute this increase primarily to the following
factors: (1) expansion into U.K., (2) increased effectiveness of advertising
campaigns; (3) increased brand name recognition; and (4) effectiveness of our
products.
Our
unearned revenue as at December 31, 2008 was $5,503,498 compared to $5,340,856
as at December 31, 2007. The gross increase in unearned revenue from the three
months ended December 31, 2007 to the three months ended December 31, 2008 was
$162,642, or an increase of 3.0%. The increase in the three-month period ended
December 31, 2008 is primarily attributable to the increase in the number of
patients buying treatment programs from us compared with the same period in
2007. We attribute this increase to the following factors: (1) increased
advertising campaigns with improved target marketing in the premature
ejaculation segment; (2) increased brand name recognition; and (3) effectiveness
of our products.
Revenue
in our PE treatments has increased by $2,473,197 or 43.4% to $8,167,708, and
revenue in our ED treatments decreased by $1,713,472 or 26.6% to $4,738,003, in
the three months ended December 31, 2008, compared to the three months ended
December 31, 2007. The numbers of patients in our PE treatments are stable
compared to the three months ending December 31, 2007. We attribute the increase
in revenue in our PE treatments to the increase in the number of sales per
patient along with the higher sales price of the treatment programs sold.
Revenue in our prostate treatments has decreased by $357,596 or 58.6%, to
$252,934, in the three months ended December 31, 2008, compared to the three
months ended December 31, 2007. We attribute the decrease in revenue in our
prostate treatments to decreases in the number of patients. The number of
patients in our ED prostate treatments decreased by 255 compared to the three
months ended December 31, 2007.
Revenue
in our Australian operations was $9,734,524 in the three months ended December
31, 2008, compared to $12,055,332 in the three months ended December 31, 2007.
Compared to the same period in the previous year, there is a decrease of
$2,320,808, or 19.3%, in the three months ended December 31, 2008. We attribute
this decrease predominantly to the depreciation in Australian dollar against the
US dollar from the average rate of A$:US$ 1:0.86892 for the six-month
period ended December 31, 2007 to A$:US$ 1:0.78240 for the six-month period
ended December 31, 2008. Revenue in our Australian operation was A$14,856,471 in
the three months ended December 31, 2008, compared to A$13,988,367 in the three
months ended December 31, 2007,
7
Revenue
in our UK operations was $3,355,212 in the three months ended December 31, 2008,
compared to $Nil in the three months ended December 31, 2007. The
Company’s UK operation started its business activities in September
2008.
Revenue
in our Chinese operations was $293 in the three months ended December 31, 2008,
compared to $15,382 during the three months ended December 31, 2007. The
decrease of $15,089, or 98.1%, in revenue in the three months ended December 31,
2008 is primarily attributable to the decrease in the number of patients buying
treatments from us during the 2008 period.
Cost of
Revenue. Cost of revenue was $2,790,007 in the three months ended
December 31, 2008, compared to $2,806,273 in the three months ended December 31,
2007. The decrease in cost of revenue was attributable to a decrease in the
medication cost incurred by AMI Australia and the Company’s UK operation. As a
percentage of revenue, cost of revenue was 21.1% in the three months ended
December 31, 2008, compared to 22.8% in the three months ended December 31,
2007. The decrease in cost of revenue percentage in the three months ended
December 31, 2008 is primarily attributable to a significant decrease in the
scale of the Company’s unprofitable Japanese and Chinese
operations.
Gross Profit. Gross profit was
$10,421,284 in the three months ended December 31, 2008, compared to $9,525,710
in the 2007 comparable period. As a percentage of revenue, gross profit
increased to 78.9% in the quarter ended December 31, 2008 from 77.2% in the 2007
quarter. The 1.7% increase in the gross profit percentage in 2008 is primarily
attributable to a significant decrease in the scale of the Company’s
unprofitable Japanese and Chinese operations.
Selling, General
and Administrative Expenses. Selling, general and administrative expenses
were $9,866,877 in the three months ended December 31, 2008, compared to
$7,846,286 in the three months ended December 31, 2007. As a percentage of
revenue, selling, general and administrative expenses increased to 74.7% in the
three months ended December 31, 2008 from 63.6% in the three months ended
December 31, 2007. The increase in the three months ended December 31, 2008 is
primarily attributable to the establishment of UK operations. The Company’s UK
operation started its business activities in September 2008. The
initial stage of UK operation led to a high percentage of selling, general and
administrative expenses to revenue due to the start up nature of the
operation. Its revenue shows a growing pace following the increase in
its brand name recognition.
Selling,
general and administrative expenses in our Chinese operations were $66,114 in
the three months ended December 31, 2008, compared to $222,550 in the three
months ended December 31, 2007. Major expenses were staff costs.
Other
Income. Other income and expenses were ($52,321) in the three months
ended December 31, 2008, compared to ($47,142) in the three months ended
December 31, 2007. As a percentage of revenue, other income and expenses was
(0.4%) in the three months ended December 31, 2008 and in the three months ended
December 31, 2007.
Net
Income Before Income Tax and Income Tax Expenses.
Income
before income tax was $549,373 in the three months ended December 31, 2008,
compared to $1,291,774 in the three months ended December 31, 2007. This
decrease was primarily attributable to the increase in selling, general and
administrative expenses in the three months ended December 31,
2008.
Income
tax expenses were $162,440 in the three months ended December 31, 2008 compared
to $545,043 in the three months ended December 31, 2007. As a percentage of
revenue, income tax expense decreased to 1.3% in the three months ended December
31, 2008 from 4.4% in the three months ended December 31, 2007. This decrease is
attributable to a significant decrease in the scale of the Company’s
unprofitable Japanese and Chinese operations, losses from which were unable to
be offset against Australian profits for income tax expense
purposes.
Net Income
.Net income was $386,933 in the three months ended December 31, 2008, compared
to $746,731 in the three months ended December 31, 2007. This decrease in the
2008 quarter compared to the 2007 quarter is attributable to the depreciation in
Australian dollar against the US dollar from the average rate of
A$:US$ 1:0.86892 for the six-month period ended December 31, 2007 to
A$:US$ 1:0.78240 for the six-month period ended December 31,
2008.
Net
income in our Australian operations was $361,461 in the three months ended
December 31, 2008, compared to $1,336,881 in the three months ended December 31,
2007. The decrease is primarily attributable to the depreciation in Australian
dollar against the US dollar from the average rate of A$:US$ 1:0.86892 for
the six-month period ended December 31, 2007 to A$:US$ 1:0.78240 for the
six-month period ended December 31, 2008.
Net
income in our UK operations was $471,681 in the three months ended December 31,
2008, compared to $Nil in the three months ended December 31, 2007.
Net loss
in our Chinese operations was ($65,891) in the three months ended December 31,
2008, compared to ($207,834) in the three months ended December 31, 2007. The
decrease is due to the reduction in operations.
8
Net loss
in our Japanese operations, which were discontinued during the 2008 period, was
($70,137) in the three months ended December 31, 2008, compared to ($118,415) in
the three months ended December 31, 2007. The decrease in the loss resulted from
the reduction of expenditures due to the discontinuation of the Japanese
operations.
The above
discussions of results exclude those entities which have no or what management
deems insignificant operations.
OFF-BALANCE SHEET
ARRANGEMENTS
We do not
have any off-balance sheet arrangements that have or are reasonably likely to
have a material current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources.
ITEM
4(T). CONTROLS AND PROCEDURES
Disclosure
Controls and Procedures
Our
management, with the participation of our principal executive officer and
principal financial officer has evaluated the effectiveness of our disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) and 15(d) –
15(e) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), as of the end of the period covered by this report. Based
on such evaluation, our principal executive officer and principal financial
officer have concluded that, as of the end of such period, our disclosure
controls and procedures are effective in recording processing, summarizing and
reporting, on a timely basis, information required to be disclosed by us in
reports we file or submit under the Exchange Act and are effective in ensuring
that information required to be disclosed by us in reports that we file or
submit under the Exchange Act is accumulated and communicated to management,
including our principal executive officer and principal financial officer, as
appropriate, to allow timely decisions regarding disclosure.
Changes
in internal controls over financial reporting
There
were no significant changes in our internal controls over financial reporting
(as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) during
the three months ended December 31, 2008 that have materially affected, or are
reasonably likely to materially affect, the Company’s internal control over
financial reporting.
PART II -
OTHER INFORMATION
The
following exhibits are filed as part of this report:
|
Exhibit
Number
|
Description
|
|
|
10.1
|
Facility
Agreement with St. George Bank Limited, dated October 22,
2008*
|
|
|
10.2
|
Amendment
to Facility Agreement with St. George Bank Limited, dated November 21,
2008*
|
|
|
10.3
|
Loan
Agreement with Secare health Centre Pty Limited, dated December 4,
2008*
|
|
|
31.1
|
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
|
|
31.2
|
Certification
of the Chief Financial Officer pursuant Section 302 of the Sarbanes-Oxley
Act of 2002.
|
|
|
32.1
|
Certification
of Chief Executive Officer and the Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002.
|
*
Previously filed
9
In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
Date:
March 25, 2010
|
By:
|
/s/
Jacov (Jack) Vaisman
|
|
Jacov
(Jack) Vaisman
|
||
|
Chief
Executive Officer
|
||
|
Date:
March 25, 2010
|
By:
|
/s/
Dilip Shrestha
|
|
Dilip
Shrestha
|
||
|
Chief
Financial Officer
|
||
10
Exhibit
Index
|
Exhibit
Number
|
Description
|
|
|
10.1
|
Facility
Agreement with St. George Bank Limited, dated October 22,
2008*
|
|
|
10.2
|
Amendment
to Facility Agreement with St. George Bank Limited, dated November 21,
2008*
|
|
|
10.3
|
Loan
Agreement with Secare health Centre Pty Limited, dated December 4,
2008*
|
|
|
31.1
|
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
|
|
31.2
|
Certification
of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
|
32.1
|
Certification
of Chief Executive Officer and the Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
*
Previously filed
11