Unassociated Document

0001144204-09-043466.txt : 20090814 0001144204-09-043466.hdr.sgml : 20090814 20090814141746 ACCESSION NUMBER: 0001144204-09-043466 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20090630 FILED AS OF DATE: 20090814 DATE AS OF CHANGE: 20090814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN MEDICAL ALERT CORP CENTRAL INDEX KEY: 0000700721 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS BUSINESS SERVICES [7380] IRS NUMBER: 112571221 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08635 FILM NUMBER: 091014614 BUSINESS ADDRESS: STREET 1: 3265 LAWSON BLVD CITY: OCEANSIDE STATE: NY ZIP: 11572 BUSINESS PHONE: 5165365850 MAIL ADDRESS: STREET 1: 3265 LAWSON BLVD CITY: OCEANSIDE STATE: NY ZIP: 11572 10-Q 1 v157920_10q.htm Unassociated Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended June 30, 2009.

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number 1-8635

AMERICAN MEDICAL ALERT CORP.

(Exact Name of Registrant as Specified in its Charter)

New York		11-2571221
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

3265 Lawson Boulevard, Oceanside, New York 11572

(Address of principal executive offices)

(Zip Code)

(516) 536-5850

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ¨ No ¨

Indicate by check mark whether registrant is a large accelerated filer, accelerated filer, non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 on the Exchange Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 9,531,471 shares of $.01 par value common stock as of August 14, 2009.

AMERICAN MEDICAL ALERT CORP. AND SUBSIDIARIES

INDEX

	PAGE

Part I Financial Information

Report of Independent Registered Public Accounting Firm	1

Condensed Consolidated Balance Sheets for June 30, 2009 and December 31, 2008	2

Condensed Consolidated Statements of Income for the Six Months Ended June 30, 2009 and 2008	3

Condensed Consolidated Statements of Income for the Three Months Ended June 30, 2009 and 2008	4

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2009 and 2008	5

Notes to Condensed Consolidated Financial Statements	7

Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Quantitative and Qualitative Disclosures About Market Risk	32

Controls and Procedures	32

Part II Other Information	33

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

American Medical Alert Corp. and Subsidiaries

Oceanside, New York

We have reviewed the accompanying condensed consolidated balance sheet of American Medical Alert Corp. and Subsidiaries (the “Company”) as of June 30, 2009 and the related condensed consolidated statements of income for the six-month and three-month periods ended June 30, 2009 and 2008 and cash flows for the six-months ended June 30, 2009 and 2008. These interim financial statements are the responsibility of the Company's management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated interim financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of American Medical Alert Corp. and Subsidiaries as of December 31, 2008, and the related consolidated statements of income, shareholders’ equity and cash flows for the year then ended (not presented herein), and in our report dated March 30, 2009 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2008 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Margolin, Winer & Evens LLP

Margolin, Winer & Evens LLP

Garden City, New York

August 14, 2009

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

AMERICAN MEDICAL ALERT CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2009 (Unaudited)			Dec. 31, 2008

ASSETS

CURRENT ASSETS
Cash	$	5,047,160		$	2,473,733
Accounts receivable
(net of allowance for doubtful accounts of $668,000 and $646,000)		5,568,528			6,001,952
Note receivable		7,127			21,117
Inventory		543,245			547,596
Prepaid income taxes		189,255			215,427
Prepaid expenses and other current assets		309,115			436,554
Deferred income taxes		412,000			358,000

Total Current Assets		12,076,430			10,054,379

FIXED ASSETS
(net of accumulated depreciation and amortization)		9,603,473			10,169,907

OTHER ASSETS
Intangible assets
(net of accumulated amortization of $5,953,751 and $5,386,262)		2,533,542			3,085,931
Goodwill (net of accumulated amortization of $58,868)		10,199,300			9,996,152
Other assets		828,338			1,059,895
		13,561,180			14,141,978

TOTAL ASSETS	$	35,241,083		$	34,366,264

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:
Current portion of long-term debt	$	1,301,667		$	1,754,949
Accounts payable		1,003,833			749,335
Accounts payable – acquisitions		71,939			20,390
Accrued expenses		1,469,169			1,348,823
Deferred revenue		272,568			294,882
Total Current Liabilities		4,119,176			4,168,379

DEFERRED INCOME TAX LIABILITY		1,262,000			1,208,000
LONG-TERM DEBT, Net of Current Portion		2,105,000			2,815,000
CUSTOMER DEPOSITS		112,449			106,196
ACCRUED RENTAL OBLIGATION		527,389			507,512
OTHER LIABILITIES		10,000			10,000
TOTAL LIABILITIES		8,136,014			8,815,087

COMMITMENTS AND CONTINGENT LIABILITIES		-			-

SHAREHOLDERS’ EQUITY
Preferred stock, $.01 par value – authorized, 1,000,000 shares; none issued and outstanding
Common stock, $.01 par value – authorized 20,000,000 shares; issued 9,525,528 shares in 2009 and 9,493,402 shares in 2008		95,255			94,934
Additional paid-in capital		16,043,241			15,871,305
Retained earnings		11,103,150			9,721,515
		27,241,646			25,687,754
Less treasury stock, at cost (48,573 shares in 2009 and 2008)		(136,577	)		(136,577	)
Total Shareholders’ Equity		27,105,069			25,551,177
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	35,241,083		$	34,366,264

See accompanying notes to condensed financial statements.

AMERICAN MEDICAL ALERT CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Six Months Ended June 30,
	2009			2008
Revenues:
Services	$	18,982,998		$	18,558,490
Product sales		431,541			616,576
		19,414,539			19,175,066
Costs and Expenses (Income):
Costs related to services		8,985,373			9,012,256
Costs of products sold		199,134			310,708
Selling, general and administrative expenses		7,993,190			8,311,407
Interest expense		44,302			166,868
Other income		(150,095	)		(169,556	)

Income before Provision for Income Taxes		2,342,635			1,543,383

Provision for Income Taxes		961,000			633,000

NET INCOME	$	1,381,635		$	910,383

Net income per share:
Basic	$	.15		$	.10
Diluted	$	.14		$	.09

Weighted average number of common shares outstanding:
Basic		9,461,888			9,411,886

Diluted		9,651,024			9,708,325

See accompanying notes to condensed financial statements.

AMERICAN MEDICAL ALERT CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended June 30,
	2009			2008
Revenues:
Services	$	9,342,354		$	9,219,378
Product sales		159,958			319,943
		9,502,312			9,539,321
Costs and Expenses (Income):
Costs related to services		4,469,407			4,431,056
Costs of products sold		78,132			159,953
Selling, general and administrative expenses		3,940,743			4,156,366
Interest expense		20,620			64,813
Other income		(37,975	)		(48,893	)

Income before Provision for Income Taxes		1,031,385			776,026

Provision for Income Taxes		423,000			318,000

NET INCOME	$	608,385		$	458,026

Net income per share:
Basic	$	.06		$	.05
Diluted	$	.06		$	.05

Weighted average number of common shares outstanding
Basic		9,469,908			9,417,701

Diluted		9,720,829			9,717,985

See accompanying notes to condensed financial statements.

AMERICAN MEDICAL ALERT CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
	2009			2008
Cash Flows From Operating Activities:

Net income	$	1,381,635		$	910,383

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,041,165			2,137,026
Loss on write off of fixed assets		391			-
Stock compensation charge		178,507			206,535
Decrease (increase) in:
Accounts receivable		433,424			48,575
Inventory		4,351			(87,387	)
Prepaid income taxes		26,172			143,183
Prepaid expenses and other current assets		127,439			(19,492	)
Increase (decrease) in:
Accounts payable, accrued expenses and other		394,722			(127,099	)
Deferred revenue		(22,314	)		107,841

Net Cash Provided by Operating Activities		4,565,492			3,319,565

Cash Flows From Investing Activities:
Expenditures for fixed assets		(707,475	)		(1,976,988	)
Repayment of notes receivable		13,990			13,309
Decrease (increase) in deposit on equipment		29,162			(257,916	)
Purchase – other		(15,099	)		(45,663	)
Decrease in other assets		2,239			1,683

Net Cash Used In Investing Activities		(677,183	)		(2,265,575	)

Cash Flows From Financing Activities:
Proceeds from long-term debt		-			100,000
Principal payments under capital lease obligation		-			(20,641	)
Purchase of Treasury Stock		-			(10,242	)
Repayment of long-term debt		(1,163,282	)		(922,297	)
Payment of accounts payable - acquisitions		(151,600	)		(153,999	)
Proceeds upon exercise of stock options and warrants		-			120,000

Net Cash Used In Financing Activities		(1,314,882	)		(887,179	)

See accompanying notes to condensed financial statements.

AMERICAN MEDICAL ALERT CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Unaudited)

	Six Months Ended June 30,
	2009		2008

Net Increase in Cash	$	2,573,427	$	166,811

Cash, Beginning of Period		2,473,733		911,525

Cash, End of Period	$	5,047,160	$	1,078,336

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

CASH PAID DURING THE PERIOD FOR INTEREST	$	44,693	$	165,068

CASH PAID DURING THE PERIOD FOR INCOME TAXES	$	819,830	$	400,312

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

Accounts Payable - acquisitions/additional goodwill - American Mediconnect Inc.	$	203,148	$	130,244

Other assets, deposits on equipment transferred to fixed assets		195,103		-

See accompanying notes to condensed financial statements.

AMERICAN MEDICAL ALERT CORP. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

General:

These financial statements should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2008 included in the Company’s Annual Report on Form 10-K.

2.	Results of Operations:

The accompanying condensed consolidated financial statements include the accounts of American Medical Alert Corp. and its wholly-owned subsidiaries; together the “Company.” All material inter-company balances and transactions have been eliminated.

In the opinion of management, the accompanying unaudited condensed financial statements contain all adjustments (consisting only of normal recurring accruals, except for a partial reduction of the Relocation and Employment Assistance Program (REAP) benefit accrual recorded in December 31, 2007. The net effect of this adjustment, which was included in other income, resulted in a reduction in net income of approximately $40,000 for the six and three months ended June 30, 2008) necessary to present fairly the financial position as of June 30, 2009 and the results of operations for the six and three months ended June 30, 2009 and 2008, and cash flows for the six months ended June 30, 2009 and 2008.

The accounting policies used in preparing these financial statements are the same as those described in the December 31, 2008 financial statements.

Certain amounts in the 2008 condensed consolidated financial statements have been reclassified to conform to the 2009 presentation.

The results of operations for the six and three months ended June 30, 2009 are not necessarily indicative of the results to be expected for any other interim period or for the full year.

3.	Recent Accounting Pronouncements:

In December 2007, the FASB issued SFAS No. 141(R) (revised 2007), “Business Combinations,” (“SFAS 141(R)”), which replaces SFAS 141. The statement provides a broader definition of the “Acquirer” and establishes principles and requirements of how the Acquirer recognizes and measures in its financial statements the identifiable assets acquired and liabilities assumed as well as how the Acquirer recognizes and measures the goodwill acquired in the business combination. SFAS 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Statement No. 141R became effective as of January 1, 2009 for the Company. Accordingly, any business combination completed prior to January 1, 2009 was accounted for pursuant to SFAS No. 141, “Business Combinations.” Business combinations completed subsequent to January 1, 2009, will be accounted for pursuant to Statement No. 141R. The impact that Statement No. 141R will have on the Company’s consolidated financial statements will depend upon the nature, terms and size of such business combinations, if any.

In April 2008, the FASB issued FSP FAS 142-3, “Determination of the Useful Life of Intangible Assets.” FSP FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets.” The intent of FSP FAS 142-3 is to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS No. 141(R) and other generally accepted accounting principles. FSP FAS 142-3 is effective on January 1, 2009. Early adoption is prohibited. The provisions of FSP FAS 142-3 are to be applied prospectively to intangible assets acquired after the effective date, except for the disclosure requirements which must be applied prospectively to all intangible assets recognized as of, and subsequent to, the effective date. Since this standard is applied prospectively, adoption did not have a significant impact on our consolidated results of operations, financial position or cash flows.

In May 2009, the FASB issued SFAS No. 165, "Subsequent Events," which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. SFAS No. 165 provides guidance on the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. The Company adopted SFAS No. 165 during the second quarter of 2009.

In July 2009, the FASB issued SFAS No. 168, "Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles." The FASB Accounting Standards Codification ("Codification") will become the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission ("SEC") under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The Codification will supersede all then-existing non-SEC accounting and reporting standards. SFAS 168 is effective for interim and annual periods ending after September 15, 2009. In the FASB's view, the issuance of SFAS 168 and the Codification will not change GAAP, and therefore we do not expect the adoption of SFAS 168 to have an effect on our consolidated financial statements or disclosures.

4.	Accounting for Stock-Based Compensation:

Stock based compensation is recorded in accordance with SFAS Statement No. 123 (revised 2004), “Share-Based Payment” (“Statement No. 123(R)”), which requires the measurement and recognition of compensation expense for all share-based payments to employees, including grants of stock and employee stock options, based on estimated fair values.

The Company granted 15,000 and 25,000 stock options during the six month period ended June 30, 2009 and 2008, respectively.

The following tables summarize stock option activity for the six months ended June 30, 2009 and 2008.

2009

						Weighted
						Average
				Weighted		Remaining		Aggregate
	Number of			Average		Contractual		Intrinsic
	Options			Option Price		Term (years)		Value
Balance at January 1		877,235		$	4.25
Granted		15,000			5.72
Exercised		-			-
Expired/Forfeited		(6,650	)		5.35

Balance at June 30		885,585		$	4.27		2.98	$	1,387,149

Vested and exercisable		870,585		$	4.24		2.95	$	1,387,149

2008

						Weighted
						Average
				Weighted		Remaining		Aggregate
	Number of			Average		Contractual		Intrinsic
	Options			Option Price		Term (years)		Value
Balance at January 1		922,273		$	4.01
Granted		25,000			6.91
Exercised		(60,000	)		2.00
Expired/Forfeited		(15,001	)		3.35

Balance at June 30		872,272		$	4.24		3.93	$	1,482,974

Vested and exercisable		869,772		$	4.24		3.93	$	1,482,974

The aggregate intrinsic value of options exercised during the six months ended June 30, 2008 was $288,000. No options were exercised during the six months ended June 30, 2009. There were 15,000 and 2,500 nonvested stock options outstanding as of June 30, 2009 and 2008, respectively.

The following table summarizes stock-based compensation expense related to all share-based payments recognized in the condensed consolidated statements of income.

	Three Months Ended June 30,			Three Months Ended June 30,
	2009			2008
Stock options	$	6,250		$	32,500
Stock grants – other		22,880			22,878
Service based awards		33,845			31,068
Performance based awards		29,400			31,196
Tax benefit		(37,850	)		(48,250	)
Stock-based compensation expense, net of tax	$	54,525		$	69,392

	Six Months Ended June 30,			Six Months Ended June 30,
	2009			2008
Stock options	$	6,250		$	36,250
Stock grants – other		45,767			45,756
Service based awards		67,690			62,137
Performance based awards		58,800			62,392
Tax benefit		(73,224	)		(84,700	)
Stock-based compensation expense, net of tax	$	105,283		$	121,835

Stock Grants - Other

The outside Board of Directors are granted shares of common stock at the end of each quarter as compensation for services provided as members of the Board of Directors and other committees. These share grants vest immediately. In addition, stock grants may be issued to employees at the Board of Directors’ discretion.

Service Based Awards

In January 2006, May 2007 and January 2009 the Company granted 60,000, 22,000 and 21,500 restricted shares, respectively, to certain executives in respect of services rendered but at no monetary cost. These shares vest over periods ranging from 3 to 5 years, on December 31 of each year. The Company records the compensation expense on a straight-line basis over the vesting period. Fair value for restricted stock awards is based on the Company's closing common stock price on the date of grant. As of June 30, 2009 and 2008 there were 41,000 and 31,500 shares vested, respectively. The aggregate grant date fair value of restricted stock grants was $570,410. As of June 30, 2009 and 2008, the Company had $234,171 and $270,688, respectively, of total unrecognized compensation costs related to nonvested restricted stock units expected to be recognized over a weighted average period of 1.94 years.

Performance Based Awards

In January 2006 and May 2007, respectively, the Company granted share awards for 90,000 shares (up to 18,000 shares per year through December 31, 2010) and 46,000 shares (up to 11,500 shares per year through December 31, 2010) to certain executives. Vesting of such shares is contingent upon the Company achieving certain specified consolidated gross revenue and Earnings before Interest and Taxes (“EBIT”) objectives in each of the next four fiscal years ending December 31. The fair value of the performance shares (aggregate value of $909,400) is based on the closing trading value of the Company’s stock on the date of grant and assumes that performance goals will be achieved. The fair value of the shares is expensed over the performance period for those shares that are expected to ultimately vest. If such objectives are not met, no compensation cost is recognized and any recognized compensation cost is reversed. As of June 30, 2009 and 2008, 29,750 shares were vested. As of June 30, 2009 and 2008, there was $300,593 and $538,743, respectively, of total unrecognized compensation costs related to nonvested share awards; that cost is expected to be recognized over a period of 1.50 years.

5.	Earnings Per Share:

Earnings per share data for the six and three months ended June 30, 2009 and 2008 is presented in conformity with SFAS No. 128, “Earnings Per Share.”

The following table is a reconciliation of the numerators and denominators in computing earnings per share:

	Income		Shares		Per-Share
	(Numerator)		(Denominator)		Amounts
Six Months Ended June 30, 2009

Basic EPS - Income available to common stockholders	$	1,381,635		9,461,888	$	.15
Effect of dilutive securities - Options		-		189,136
Diluted EPS - Income available to common stockholders and assumed conversions	$	1,381,635		9,651,024	$	.14

Three Months Ended June 30, 2009

Basic EPS -Income available to common stockholders	$	603,385		9,469,908	$	.06
Effect of dilutive securities - Options		-		250,921
Diluted EPS - Income available to common stockholders and assumed conversions	$	603,385		9,720,829	$	.06

Six Months Ended June 30, 2008

Basic EPS - Income available to common stockholders	$	910,383		9,411,886	$	.10
Effect of dilutive securities - Options		-		296,439
Diluted EPS - Income available to common stockholders and assumed conversions	$	910,383		9,708,325	$	.09

Three Months Ended June 30, 2008

Basic EPS -Income available to common stockholders	$	458,026		9,417,701	$	.05
Effect of dilutive securities - Options		-		300,284
Diluted EPS - Income available to common stockholders and assumed conversions	$	458,026		9,717,985	$	.05

Goodwill

Changes in the carrying amount of goodwill, all of which relates to the Company’s TBCS segment, for the six months ended June 30, 2009 and 2008 are as follows:

Six Months Ended June 30, 2009

Balance as of January 1, 2009	$	9,996,152
Additional Goodwill		203,148

Balance as of June 30, 2009	$	10,199,300

Six Months Ended June 30, 2008

Balance as of January 1, 2008	$	9,766,194
Additional Goodwill		130,244

Balance as of June 30, 2008	$	9,896,438

The addition to goodwill during the six months ended June 30, 2009 and 2008 relates to the additional purchase price of American Mediconnect, Inc. based on the cash receipts from the clinical trials portion of the business.

7.	Long-term Debt:

As of January 1, 2006 the Company had a credit facility arrangement for $4,500,000 which included a revolving credit line which permitted borrowings of $1,500,000 (based on eligible receivables as defined) and a $3,000,000 term loan payable. The term loan is payable in equal monthly principal installments of $50,000 over five years commencing January 2006. The revolving credit line was set to mature in May 2008.

In March 2006 and December 2006, the credit facility was amended whereby the Company obtained an additional $2,500,000 and $1,600,000 of term loans, the proceeds of which were utilized to finance certain acquisitions. These term loans are payable over five years in equal monthly principal installments of $41,666.67 and $26,666.67, respectively. Additionally, certain of the covenants were amended.

In December 2006, the credit facility was amended to reduce the interest rates charged by the bank such that borrowings under the term loan will bear interest at either (a) LIBOR plus 2.00% or (b) the prime rate or the federal funds effective rate plus .5%, whichever is greater, and the revolving credit line will bear interest at either (a) LIBOR plus 1.75% or (b) the prime rate or the federal funds effective rate plus .5%, whichever is greater. The LIBOR interest rate charge shall be adjusted in .25% intervals based on the Company’s ratio of Consolidated Funded Debt to Consolidated EBITDA. In the third quarter of 2007, the interest rate was reduced by .25% based on this ratio. The Company has the option to choose between the two interest rate options under the amended term loan and revolving credit line. Borrowings under the credit facility are collateralized by substantially all of the assets of the Company.

On August 13, 2009 the Company amended its credit facility whereby the term of the revolving credit line was extended through June 2011. On April 30, 2007, the Company had amended its credit facility whereby the term of the revolving credit line was extended through June 2010 and the amount of credit available under the revolving credit line was increased to $2,500,000.

As of June 30, 2009 and March 31, 2009, the Company was in compliance with its financial covenants in its loan agreement. As of June 30, 2008 and March 31, 2008, the Company was in compliance with its financial covenants in its loan agreement.

8.	Major Customers:

Since 1983, the Company has provided Personal Emergency Response Systems (“PERS”) services to the City of New York’s Human Resources Administration Home Care Service Program ("HCSP"). The contract term with the HCSP is for two years, commencing September 21, 2007, with two options to renew in favor of HRA for two additional two year terms. During the six months ended June 30, 2009 and 2008, the Company’s revenue from this contract represented 6% of its total revenue. As of June 30, 2009 and December 31, 2008, accounts receivable from the contract represented 8% of accounts receivable.

9.	Segment Reporting:

The Company has two reportable segments, (i) Health and Safety Monitoring Systems (“HSMS”) and (ii) Telephone Based Communication Services (“TBCS”).

The table below provides a reconciliation of segment information to total consolidated information for the six and three months ended June 30, 2009 and 2008:

2009

	HSMS		TBCS		Consolidated
Six Months Ended June 30, 2009
Revenue	$	10,135,352	$	9,279,187	$	19,414,539
Income before provision for income taxes		1,645,177		697,458		2,342,635
Total assets		14,870,915		20,370,168		35,241,083

	HSMS		TBCS		Consolidated
Three Months Ended June 30, 2009
Revenue	$	5,045,867	$	4,456,445	$	9,502,312
Income before provision for income taxes		873,147		158,238		1,031,385

2008

	HSMS		TBCS		Consolidated
Six Months Ended June 30, 2008
Revenue	$	9,778,598	$	9,396,468	$	19,175,066
Income before provision for income taxes		932,511		610,872		1,543,383
Total assets		16,385,446		18,898,499		35,283,945

	HSMS		TBCS		Consolidated
Three Months Ended June 30, 2008
Revenue	$	4,941,643	$	4,597,678	$	9,539,321
Income before provision for income taxes		412,250		363,776		776,026

10.	Commitments and Contingencies:

The Company is aware of various threatened or pending litigation claims against the Company relating to its products and services and other claims arising in the ordinary course of its business. The Company has given its insurance carrier notice of such claims and it believes there is sufficient insurance coverage to cover any such claims. Currently, there are no litigation claims for which an estimate of loss, if any, can be reasonably made as they are in the preliminary stages and therefore, no liability or corresponding insurance receivable has been recorded.

11.	Subsequent Event:

On August 12, 2009, the Company entered into an agreement with an independent third party to sublet a portion of the space occupied in its Long Island City, New York location. The sublease, which commences on August 17, 2009 and expires in March 2018, calls for minimum annual rentals of $125,000 subject to a 3% annual increase. The sublease agreement also calls for a rent abatement through October 31, 2009.

The Company has performed an evaluation of subsequent events through August 14, 2009, which is the date the financial statements were filed.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of the Company’s results of operations and financial condition. This discussion and analysis should be read in conjunction with the consolidated financial statements contained in the latest Annual Report on Form 10-K for the year ended December 31, 2008.

Statements contained in this Quarterly Report on Form 10-Q include “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, including, in particular and without limitation, statements contained herein under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements involve known and unknown risks, uncertainties and other factors which could cause the Company’s actual results, performance and achievements, whether expressed or implied by such forward-looking statements, not to occur or be realized. These include uncertainties relating to government regulation, technological changes, our expansion plans and product liability risks. Such forward-looking statements generally are based upon the Company’s best estimates of future results, performance or achievement, based upon current conditions and the most recent results of operations. Forward-looking statements may be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “believe,” “estimate,” “project,” “anticipate,” “continue” or similar terms, variations of those terms or the negative of those terms.

You should carefully consider such risks, uncertainties and other information, disclosures and discussions which contain cautionary statements identifying important factors that could cause actual results to differ materially from those provided in the forward-looking statements. Readers should carefully review the risk factors and any other cautionary statements contained in the Company’s Annual Report on Form 10-K and other public filings. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Overview:

American Medical Alert Corp. (“AMAC” or the “Company”) was formed in 1981 as a New York corporation. The Company’s principal business is the provision of healthcare communication and monitoring services. These services are reported through two operating segments. The first segment, Health Safety and Monitoring Services (“HSMS”), is comprised of the development and marketing of remote patient monitoring technologies that include personal emergency response systems, medication reminder and dispensing systems, telehealth/disease management technologies and safety monitoring systems to pharmacies. The second segment, Telephony Based Communication Services (“TBCS”), includes the provision of centralized call center solutions primarily to the healthcare community including traditional after hours services, “Daytime Services” applications, and clinical trial recruitment call center services and administration. The Company’s products and services are primarily marketed to the healthcare community, including hospitals, home care, durable medical equipment, medical facility, hospice, pharmacy, managed care and other healthcare oriented organizations. The Company also offers certain products and services directly to consumers.

HSMS

Until 2000, the Company’s principal business was the marketing of personal emergency response systems (“PERS”), a device that allows a patient to signal an emergency response center for help in the event of a debilitating illness or accident. The PERS business was the entry point for the Company into the healthcare field, permitting the Company to establish a network of customers and strategic alliances which served as the foundation for the Company's expansion remote patient monitoring.

As part of its expansion strategy, in 1999, the Company secured certain exclusive rights to a medication reminder appliance which is marketed by the Company under the name Med-Time®. This natural adjunct to PERS proved to be strategically advantageous. Medication non-adherence currently costs an estimated $100 billion annually in the United States and accounts for 10 percent of hospital admissions. The Company marketed an early version of Med-Time for several years. Realizing the greater opportunity to expand upon our monitoring capabilities, the Company embarked upon the development of a new system that would allow for greater medication adherence oversight. In 2009, the Company launched MedSmart™ its next generation solution. MedSmart improves adherence to medication regimens and reduces the risk of dosing errors improving clinical outcomes and quality of life.

Rounding out AMAC’s remote patient monitoring portfolio, in 2001, the Company entered the telehealth market, a market in its embryonic stage, after consideration of the opportunity to provide new technologies to assist healthcare professionals in home-based, health management activities. As a distributor of the Health Buddy® System, many of the Company’s customers have successfully demonstrated the value proposition associated with incorporating disease management technologies into a patient’s plan of care. The Company believes the telehealth market will continue to provide opportunities for AMAC’s expansion as a full source provider of remote patient monitoring technologies and first line support services.

TBCS

Beginning in 2000, the Company began a program of product diversification and customer base expansion to decrease its reliance on a single product line by marketing complementary call center and monitoring services to the healthcare community. This diversification program began with the acquisition of the Company's first telephone answering service business, known as HCI in 2000. Since that time the Company has expanded its telephone answering service business through nine (9) acquisitions and internally generated growth.

In order to accommodate the planned growth of this business, the Company has built or acquired nine communication centers. The Company has since consolidated its TBCS operation on to three equipment hubs and six satellite offices. The purpose of this effort is to link each of the locations in order to leverage the Company’s overall scope, scale and capability. The Company’s acquisition strategy has allowed it to become a national provider of healthcare communication services.

In 2006, the Company broadened its capabilities to service specialized allied healthcare providers including hospitals, home care, hospice and other healthcare subspecialties. The Company believes it has identified other communication needs as expressed by its TBCS client base. In response to these expressed needs, the Company developed and implemented various specialized healthcare communication solutions that have resulted in the execution of numerous multi-year service contracts for the provision of these services. These solutions continue to create significant opportunities for long-term revenue growth.

In 2008, the Company focused special attention to revamp its PhoneScreen operation and business development efforts. This effort resulted in embedding this operation into the Company’s consolidated call center and IT infrastructure. This service specialty is now poised to accept greater volumes of work and is being well received by large pharmaceutical companies and clinical trial recruitment organizations.

The Company believes that the overall mix of cash flow generating businesses from HSMS and TBCS, combined with its emphasis on developing products and services to support demand from customers and the emerging, home-based monitoring market, provides the correct blend of stability and growth opportunity.

The Company believes this strategy will enable it to maintain and increase its role in the healthcare communications field. Moreover, based on the Company’s aggressive growth strategy, management believes its TBCS business will allow the Company to become the largest provider of these specialized healthcare communication services in the United States.

Components of Statements of Income by Operating Segment

The following table shows the components of the Statement of Income for the six and three months ended June 30, 2009 and 2008.

In thousands (000’s)	Three Months Ended June 30,												Six Months Ended June 30,
	2009			%			2008			%			2009			%			2008			%
Revenues
HSMS		5,046			53	%		4,942			52	%		10,135			52	%		9,779			51	%
TBCS		4,456			47	%		4,597			48	%		9,280			48	%		9,396			49	%

Total Revenues		9,502			100	%		9,539			100	%		19,415			100	%		19,175			100	%

Cost of Services and Goods Sold
HSMS		2,083			41	%		2,183			44	%		4,286			42	%		4,299			44	%
TBCS		2,464			55	%		2,408			52	%		4,899			53	%		5,024			53	%

Total Cost of Services and Goods Sold		4,547			48	%		4,591			48	%		9,185			47	%		9,323			49	%

Gross Profit
HSMS		2,963			59	%		2,759			56	%		5,849			58	%		5,480			56	%
TBCS		1,992			45	%		2,189			48	%		4,381			47	%		4,372			47	%

Total Gross Profit		4,955			52	%		4,948			52	%		10,230			53	%		9,852			51	%

Selling, General & Administrative		3,941			41	%		4,156			44	%		7,993			41	%		8,311			43	%
Interest Expense		21			-	%		65			1	%		44			-	%		167			1	%
Other Income		(38	)		-	%		(49	)		(1	)%		(150	)		(1	)%		(169	)		(1	)%

Income before Income Taxes		1,031			11	%		776			8	%		2,343			12	%		1,543			8	%

Provision for Income Taxes		423						318						961						633

Net Income		608						458						1,382						910

Results of Operations:

The Company has two distinct operating business segments, which are HSMS and TBCS.

Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008

Revenues:

HSMS

Revenues, which consist primarily of monthly rental revenues, increased approximately $104,000, or 2%, for the three months ended June 30, 2009 as compared to the same period in 2008. The increase is primarily attributed to the following factors:

The Company experienced revenue growth under its exclusive arrangement with Walgreen whereby the Company markets the PERS product directly to the consumer. In the three months ended June 30, 2009, the Company recognized increased revenues of approximately $73,000, as compared to the same period in 2008, from this arrangement.

The Company has increased its subscriber base with respect to its teleheath offering which has resulted in increased revenues. In the three months ended June 30, 2009, the Company recognized increased revenues of approximately $47,000, as compared to the same period in 2008.

Through the execution of other new agreements as well as growth within its existing PERS subscriber base, the Company’s service revenue increased approximately $143,000 as compared to the same period in 2008. The Company anticipates that it will continue to grow its subscriber base and corresponding revenue through its continued sales and marketing efforts.

These increases were partially offset by a decrease in product sales of approximately $160,000 mostly due to a decrease in the sales of its enhanced senior living product portfolio to retirement facilities.

TBCS

The decrease in revenues of approximately $141,000, or 3%, for the three months ended June 30, 2009 as compared to the same period in 2008 was primarily due to:

The Company experienced customer attrition at one of the call center locations as a result of certain account realignments, which took place as part of Company’s overall consolidation process. This resulted in approximately a $102,000 decrease in revenue for the three months ended June 30, 2009 as compared to the same period in 2008. The Company has since modified its action plan and has stabilized the client base at this location.

The Company recorded a reduction in its project based revenues of approximately $162,000 primarily relating to a decrease in its clinical trial project based work. The Company continues to aggressively pursue this revenue stream of business and believes it will generate increased clinical trial revenues in the second half year of 2009.

These decreases in revenues were partially offset by an increase in revenue from our non-traditional business of approximately $79,000 for the three months ended June 30, 2009 as compared to the same period in 2008. This was primarily facilitated through one of the hospital organizations expanding their services with the Company. Additionally, aside from the call center noted above, the Company continues to experience revenue growth within its traditional telephone answering service business due to addition of new customers as well as increased business from its existing customer base.

Costs Related to Services and Goods Sold:

HSMS

Costs related to services and goods sold decreased by approximately $100,000 for the three months ended June 30, 2009 as compared to the same period in 2008, a decrease of 5%, primarily due to the following:

As a result of a decrease in the Company’s product sales and the Company’s overall effort to improve efficiencies within the fulfillment and engineering department, the Company incurred less expense of approximately $82,000 through the three months ended June 30, 2009 as compared to the same period in 2008.

The Company’s depreciation expense decreased by approximately $46,000 primarily as a result of the Company obtaining an alternative supplier to purchase its PERS equipment at reduced prices, purchasing fewer devices in 2008 and 2009, as compared with prior years and improved tracking systems relating to the PERS equipment.

This decrease was partially offset by an increase of approximately $30,000 resulting from the Company capitalizing less labor and overhead costs in the three months ended June 30, 2009 as compared to the same period in 2008. The Company reduced its purchases of traditional PERS equipment and associated components therefore requiring less capitalized labor and overhead to prepare these products for shipment. This has been facilitated primarily through more efficient tracking of equipment levels and reorder points.

TBCS

Costs related to services and goods sold increased by approximately $56,000 for the three months ended June 30, 2009 as compared to the same period in 2008, an increase of 2%, primarily due to the following:

During the second quarter of 2009 the Company hired additional personnel for its non-traditional answering services which resulted in an increase of approximately $85,000. This was based on increased business in this area and the execution of a new customer contract. The Company was required to hire additional personnel prior to the contract taking effect so they could properly train and prepare for the required work. The contract is now underway and the Company is generating revenue.

The increase was offset by a reduction in outside labor of approximately $37,000 as a result of the reduced project based work as described above.

Selling, General and Administrative Expenses:

Selling, general and administrative expenses decreased by approximately $215,000 for the three months ended June 30, 2009 as compared to the same period in 2008, a decrease of 5%. The decrease is primarily attributable to the following:

During the second quarter of 2009, the Company incurred approximately $203,000 less advertising expense as compared to the same period in 2008 due to management’s determination relating to the efficiency of the advertising program. The Company continues to evaluate the cost benefit of such advertising.

The Company recorded less amortization expense in the amount of $63,000. This was primarily the result of certain intangible assets associated with previous telephone answering service acquisitions being fully amortized as of June 30, 2008 and March 31, 2009.

These decreases were partially offset by an increase in consulting expenses of approximately $84,000. The Company incurred increased consulting expenses relating to expanding its sales efforts and promoting its new MedSmart medication management system.

There were other decreases in selling, general and administrative expenses which arose out of the normal course of business such as commission and legal expense which were partially offset by an increase in research and development expense.

Interest Expense:

Interest expense for the three months ended June 30, 2009 and 2008 was approximately $21,000 and $65,000, respectively. The decrease of $44,000 was primarily due to the Company continuing to pay down its term loan as well as a reduction in the interest rate.

Other Income:

Other income for the three months ended June 30, 2009 and 2008 was approximately $38,000 and $49,000, respectively. Other income for the three months ended June 30, 2009 primarily includes late fees charged to customers. Other income for the three months ended June 30, 2008 primarily includes an economic development incentive through the City of Clovis in the amount of $100,000 which was partially offset by an adjustment to the Relocation and Employment Assistance Program credit due from New York City.

Income Before Provision for Income Taxes:

The Company’s income before provision for income taxes for the three months ended June 30, 2009 was approximately $1,031,000 as compared to $776,000 for the same period in 2008. The increase of $255,000 for the three months ended June 30, 2009 primarily resulted from a decrease in the Company's costs related to services and product sales; selling, general and administrative costs and interest expense partially offset by a decrease in the Company’s service and product revenues.

Six Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2008

Revenues:

HSMS

Revenues, which consist primarily of monthly rental revenues, increased approximately $356,000, or 4%, for the six months ended June 30, 2009 as compared to the same period in 2008. The increase is primarily attributed to the following factors:

The Company experienced revenue growth under its exclusive arrangement with Walgreen whereby the Company markets the PERS product directly to the consumer. In the six months ended June 30, 2009, the Company recognized increased revenues of approximately $190,000, as compared to the same period in 2008, from this arrangement.

The Company has increased its subscriber base with respect to its teleheath offering which has resulted in increased revenues. In the six months ended June 30, 2009, the Company recognized increased revenues of approximately $74,000, as compared to the same period in 2008.

The Company increased revenues from the agreement with a third party agency whereby PERS are placed online. The subscriber base associated with this agreement has grown and accounted for an approximate $65,000 increase in revenue during the six months ended June 30, 2009 as compared to the same period in the prior year.

Through the execution of other new agreements as well as growth within its existing PERS subscriber base, the Company’s service revenue increased approximately $220,000 as compared to the same period in 2008. The Company anticipates that it will continue to grow its subscriber base and corresponding revenue through its continued sales and marketing efforts.

These increases were partially offset by a decrease in product sales of approximately $185,000 mostly due to a decrease in the sales of its enhanced senior living product portfolio to retirement facilities.

TBCS

The decrease in revenues of approximately $116,000, or 1%, for the six months ended June 30, 2009 as compared to the same period in 2008 was primarily due to:

The Company experienced customer attrition at one of the call center locations as a result of certain account realignments, which took place as part of Company’s overall consolidation process. This resulted in approximately an $180,000 decrease in revenue for the six months ended June 30, 2009 as compared to the same period in 2008. The Company has since modified its action plan and has stabilized the client base at this location.

The Company recorded a reduction in its project based revenues of approximately $127,000 primarily relating to a decrease in clinical trial project based work. The Company’s continues to aggressively pursue this revenue stream of business and believes it will generate increased clinical trial revenues in the second half year of 2009.

These decreases in revenues were partially offset by an increase in revenue from our non-traditional business of approximately $113,000 as compared to the six months ended June 30, 2008. Additionally, aside from the call center noted above, the Company continues to experience revenue growth within its traditional telephone answering service business due to addition of new customers as well as increased business from its existing customer base.

Costs Related to Services and Goods Sold:

HSMS

Costs related to services and goods sold decreased by approximately $13,000 for the six months ended June 30, 2009 as compared to the same period in 2008, a decrease of less than 1%, primarily due to the following:

	§	As a result of a decrease in the Company’s product sales and the Company’s overall effort to improve efficiencies within the fulfillment and engineering department, the Company incurred less expense of approximately $110,000 through the six months ended June 30, 2009 as compared to the same period in 2008.

	§	The Company’s depreciation expense decreased by approximately $55,000 primarily as a result of the Company obtaining an alternative supplier to purchase its PERS equipment at reduced prices, purchasing fewer devices in 2008 and 2009, as compared with prior years and improved tracking systems relating to the PERS equipment.

This decrease was partially offset by an increase of approximately $105,000 resulting from the Company capitalizing less labor and overhead costs in the six months ended June 30, 2009 as compared to the same period in 2008. The Company reduced its purchases of traditional PERS equipment and associated components therefore requiring less capitalized labor and overhead to prepare these products for shipment. This has been facilitated primarily through more efficient tracking of equipment levels and reorder points. In addition, there were certain other expenses which slightly increased, as compared to the same period in the prior year in the ordinary course of business.

TBCS:

Costs related to services and goods sold decreased by approximately $125,000 for the six months ended June 30, 2009 as compared to the same period in 2008, a decrease of 2%, primarily due to the following:

In 2008, the Company incurred additional labor and telephone service costs with the majority of these costs relating to the consolidation of its call center infrastructure in order to maximize operational efficiencies. With this consolidation effort being substantially completed during 2008, the Company has started to realize the operational and financial benefits of this effort. During the first six months of 2009, the Company, through this consolidation effort, has realigned its personnel and structured its telephone system more efficiently whereby the Company was able to reduce its labor and telephone costs by approximately $235,000. The Company anticipates it will continue to realize these benefits throughout 2009.

This decrease was partially offset by the Company hiring additional personnel for its non-traditional answering services which resulted in an increase of approximately $151,000. This was based on increased business in this area and the execution of a new customer contract. With respect to the new contract, the Company was required to hire additional personnel prior to the contract taking effect so they could properly train and prepare for the required work. The contract is now underway and the Company is generating revenue.

Selling, General and Administrative Expenses:

Selling, general and administrative expenses decreased by approximately $318,000 for the six months ended June 30, 2009 as compared to the same period in 2008, a decrease of 4%. The decrease is primarily attributable to the following:

During the first six months of 2009, the Company incurred approximately $332,000 less advertising expense as compared to the same period in 2008 due to management’s determination relating to the efficiency of the advertising program. The Company continues to evaluate the cost benefit of such advertising.

As a result of the Company’s effort in consolidating its call center infrastructure, the Company has benefited from a reduction of approximately $110,000 in administrative payroll and related payroll taxes in the first six months of 2009 as compared to the same period in 2008.

The Company recorded less amortization expense in the amount of $74,000. This was primarily the result of certain intangible assets associated with previous telephone answering service acquisitions being fully amortized as of June 30, 2008 and March 31, 2009.

These decreases were partially offset by an increase in consulting expenses of approximately $189,000. The Company incurred increased consulting expenses relating to expanding its sales efforts, promoting its new MedSmart medication management system as well as incurring fees for the upgrade of existing websites and accounting systems.

Interest Expense:

Interest expense for the six months ended June 30, 2009 and 2008 was approximately $44,000 and $167,000, respectively. The decrease of $123,000 was primarily due to the Company continuing to pay down its term loan as well as a reduction in the interest rate.

Other Income:

Other income for the six months ended June 30, 2009 and 2008 was approximately $150,000 and $169,000, respectively. Other income for the six months ended June 30, 2009 and 2008 includes primarily a training incentive received from the State of New Mexico for hiring and training employees within the State and an economic development incentive through the City of Clovis. These incentives accounted for approximately $128,000 and $228,000, respectively. In 2007, the Company opened a network operating call center in New Mexico and hired employees to serve as operators for the telephone answering service. In 2008, the Company continued its further expansion into this facility by also hiring employees to serve as emergency response operators for the HSMS segment. The economic development incentive through the City of Clovis in 2008 was partially offset by an adjustment to the Relocation and Employment Assistance Program credit due from New York City in the amount of $73,000.

Income Before Provision for Income Taxes:

The Company’s income before provision for income taxes for the six months ended June 30, 2009 was approximately $2,343,000 as compared to $1,543,000 for the same period in 2008. The increase of $800,000 for the six months ended June 30, 2009 primarily resulted from an increase in the Company's service and product revenues as well as a decrease in the Company’s costs related to services and product sales, selling, general and administrative costs and interest expense.

Liquidity and Capital Resources

As of January 1, 2006 the Company had a credit facility arrangement for $4,500,000 which included a revolving credit line which permitted borrowings of $1,500,000 (based on eligible receivables as defined) and a $3,000,000 term loan payable in equal monthly principal installments of $50,000 over five years commencing January 2006.

In March 2006 and December 2006, the Company’s credit facility was amended whereby the Company obtained an additional $2,500,000 and $1,600,000 of term loans, the proceeds of which were utilized to finance certain acquisitions. These term loans are payable over five years in equal monthly principal installments of $41,666.67 and $26,666.67, respectively. Additionally, certain of the covenants were amended.

As of June 30, 2009 and 2008, the Company was in compliance with its financial covenants in its loan agreement.

The following table is a summary of contractual obligations as of June 30, 2009:

	Payments Due by Period
Contractual Obligations	Total		Less than 1 year		1-3 years		4-5 years		After 5 years
Revolving Credit Line	$	950,000			$	950,000
Debt (a)	$	3,406,667	$	1,301,667	$	2,105,000
Operating Leases (b)	$	7,333,177	$	1,012,503	$	2,423,380	$	1,575,188	$	2,322,106
Purchase Commitments (c)	$	807,133	$	807,133
Interest Expense (d)	$	86,981	$	67,791	$	19,190
Acquisition related Commitment (e)	$	71,939	$	71,939
Total Contractual Obligations	$	12,655,897	$	3,261,033	$	5,497,570	$	1,575,188	$	2,322,106

(a)

– Debt includes the Company’s aggregate outstanding term loans which mature in 2010 and 2011.

(b)

– Operating leases include rental of facilities at various locations within the United States. These operating leases include the rental of the Company’s call center, warehouse and office facilities. These operating leases have various maturity dates. The Company currently leases office space from the Chairman and principal shareholder pursuant to a lease. This lease expires in September 2009. The Company also leases office space from certain telephone answering service managers. The leases with these managers expire in December 2009 and December 2012, respectively.

(c)

– Purchase commitments relate to orders for the Company’s traditional PERS system and its MedSmart pill dispenser.

(d)

– Interest expense relates to interest on the Company’s revolving credit line and debt at the Company’s current rate of interest.

(e)

– Acquisition related commitment represents payments due based on collections of the clinical trial business relating to the American Mediconnect, Inc acquisition in December 2006.

The primary sources of liquidity are cash flows from operating activities. Net cash provided by operating activities was approximately $4.6 million for the six months ended June 30, 2009, as compared to approximately $3.3 million for the same period in 2008. During 2009, the cash provided by operating activities was primarily from depreciation and amortization of approximately $2.0 million, net earnings of approximately $1.4 million, an increase in accounts payable and accrued expenses of approximately $0.4 million and a decrease in accounts receivable of approximately $0.4 million. The components of depreciation and amortization primarily relate to the purchases of the Company’s traditional PERS equipment and the customer lists associated with the acquisition of telephone answering service businesses. The increase in accounts payable and accrued expenses is primarily due to the timing of payments of expenses in the ordinary course of business. During 2008, the cash provided by operating activities was primarily from depreciation and amortization of approximately $2.1 million and net earnings of approximately $0.9 million. The components of depreciation and amortization primarily relate to the purchases of the Company’s traditional PERS equipment and the customer lists associated with the acquisition of telephone answering service businesses.

Net cash used in investing activities for the six months ended June 30, 2009 and 2008 were approximately $0.7 million and $2.3 million, respectively. The primary component of net cash used in investing activities in 2009 was capital expenditures of approximately $0.7 million. Capital expenditures for 2009 primarily related to the continued production and purchase of the traditional PERS equipment. The primary component of net cash used in investing activities in 2008 was capital expenditures of approximately $2.0 million. Capital expenditures for 2008 primarily related to the continued production and purchase of the traditional PERS equipment and the build-out of the Company’s new call center in New Mexico.

Cash flows for the six months ended June 30, 2009 used in financing activities were approximately $1.3 million compared to $0.9 million for the same period in 2008. The primary component of cash flow used in financing activities in the first six months of 2009 was the payment of long-term debt of approximately $1.2 million. The primary component of cash flow used in financing activities in 2008 was the payment of long-term debt of approximately $0.9 million. This was partially offset by the proceeds received from long-term debt of $0.1 million and the exercise of stock options of approximately $0.1 million.

During the next twelve months, the Company anticipates it will make capital expenditures and purchase of inventory items of approximately $1.75 – $2.0 million for the production and purchase of the traditional PERS equipment, MedSmart pill dispensers and telehealth systems as well as enhancements to its computer operating systems (this includes outstanding purchase orders issued to purchase approximately $0.9 million of the traditional PERS equipment and the MedSmart pill dispenser). This amount is subject to fluctuations based on customer demand. The Company also anticipates incurring approximately $0.3 - $0.5 million of costs relating to research and development of its telehealth product and enhanced pill dispenser.

As of June 30, 2009, the Company had approximately $5.0 million in cash and the Company’s working capital was approximately $8.0 million. The Company believes that with its present cash balance and with operations of the business generating positive cash flow, it will be able to meet its cash, working capital and capital expenditure needs for at least the next twelve months. The Company also has a revolving credit line, which expires in June 2011 that permits borrowings up to $2.5 million, of which $950,000 was outstanding at June 30, 2009.

Off-Balance Sheet Arrangements:

As of June 30, 2009, the Company has not entered into any off-balance sheet arrangements that are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Other Factors:

During 2008, the Company recorded a loss on abandonment of $886,504, which represents the write-off of assets encompassing prepaid licensing fees and associated products paid or acquired in connection with a technology provider obtaining and completing certain new remote telehealth monitoring products and services. The technology provider on this initiative experienced a funding shortfall and has filed for bankruptcy protection and will not be able to complete the project. Although the Company has abandoned this particular project, the Company plans to continue its efforts within the telehealth sector. In 2008 the Company added to its telehealth offering by becoming the first US channel market distributor of the Intel® Health Guide. The Company believes the telehealth market will continue to provide opportunities for AMAC’s expansion as a full source provider of remote patient monitoring technologies and first line support services.

During 2005, the Company entered into two operating lease agreements for additional space at its Long Island City, New York location in order to consolidate its warehouse and distribution center and accounting department into this location. The leases, which commenced in January 2006 and expire in March 2018, call for minimum annual rentals of $220,000 and $122,000, respectively, and are subject to increases in accordance with the term of the agreements. The Company is also responsible for the reimbursement of real estate taxes. On August 12, 2009, the Company entered into an agreement with an independent third party to sublet a portion of the additional space occupied in its Long Island City, New York location. The sublease, which commences on August 17, 2009 and expires in March 2018, calls for minimum annual rentals of $125,000 subject to a 3% annual increase. The sublease agreement also calls for a rent abatement through October 31, 2009.

On January 14, 2002, the Company entered into an operating lease agreement for space in Long Island City, New York in order to consolidate its HCI TBCS and PERS ERC/ Customer Service facilities. The centralization of the ERC, Customer Service and H-LINK® OnCall operations has provided certain operating efficiencies and allowed for continued growth of the H-LINK and PERS divisions. The fifteen (15) year lease term commenced in April 2003. The lease calls for minimum annual rentals of $307,900, subject to a 3% annual increase plus reimbursement for real estate taxes.

Recent Accounting Pronouncements:

In December 2007, the FASB issued SFAS No. 141(R) (revised 2007), “Business Combinations,” (“SFAS 141(R),”) which replaces SFAS 141. The statement provides a broader definition of the “Acquirer” and establishes principles and requirements of how the Acquirer recognizes and measures in its financial statements the identifiable assets acquired and liabilities assumed as well as how the Acquirer recognizes and measures the goodwill acquired in the business combination. SFAS 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Statement No. 141R became effective as of January 1, 2009 for the Company. Accordingly, any business combination completed prior to January 1, 2009 was accounted for pursuant to SFAS No. 141, “Business Combinations”. Business combinations completed subsequent to January 1, 2009, will be accounted for pursuant to Statement No. 141R. The impact that Statement No. 141R will have on the Company’s consolidated financial statements will depend upon the nature, terms and size of such business combinations, if any.

In April 2008, the FASB issued FSP FAS 142-3, “Determination of the Useful Life of Intangible Assets.” FSP SFAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets.” The intent of FSP FAS 142-3 is to improve the consistency between the useful life of a recognized intangible asset under FAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS No. 141(R) and other generally accepted accounting principles. FSP FAS 142-3 is effective on January 1, 2009. Early adoption is prohibited. The provisions of FSP FAS 142-3 are to be applied prospectively to intangible assets acquired after the effective date, except for the disclosure requirements which must be applied prospectively to all intangible assets recognized as of, and subsequent to, the effective date. Since this standard is applied prospectively, adoption did not have a significant impact on our consolidated results of operations, financial position or cash flows.

In July 2009, the FASB issued SFAS No. 168, "Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles". The FASB Accounting Standards Codification ("Codification") will become the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission ("SEC") under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The Codification will supersede all then-existing non-SEC accounting and reporting standards. SFAS 168 is effective for interim and annual periods ending after September 15, 2009. In the FASB's view, the issuance of SFAS 168 and the Codification will not change GAAP, and therefore we do not expect the adoption of SFAS 168 to have an effect on our consolidated financial statements or disclosures.

Critical Accounting Policies:

In preparing the financial statements, the Company makes estimates, assumptions and judgments that can have a significant impact on our revenue, operating income and net income, as well as on the reported amounts of certain assets and liabilities on the balance sheet. The Company believes that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on its financial statements due to the materiality of the accounts involved, and therefore, considers these to be its critical accounting policies. Estimates in each of these areas are based on historical experience and a variety of assumptions that the Company believes are appropriate. Actual results may differ from these estimates.

Reserves for Uncollectible Accounts Receivable

The Company makes ongoing assumptions relating to the collectability of its accounts receivable. The accounts receivable amount on the balance sheet includes a reserve for accounts that might not be paid. In determining the amount of the reserve, the Company considers its historical level of credit losses. The Company also makes judgments about the creditworthiness of significant customers based on ongoing credit evaluations, and it assesses current economic trends that might impact the level of credit losses in the future. The Company recorded reserves for uncollectible accounts receivable of $668,000 as of June 30, 2009, which is equal to 10.7% of total accounts receivable. While the Company believes that the current reserves are adequate to cover potential credit losses, it cannot predict future changes in the financial stability of its customers and the Company cannot guarantee that its reserves will continue to be adequate. For each 1% that actual credit losses exceed the reserves established, there would be an increase in general and administrative expenses and a reduction in reported net income of approximately $62,000. Conversely, for each 1% that actual credit losses are less than the reserve, this would decrease the Company’s general and administrative expenses and increase the reported net income by approximately $62,000.

Fixed Assets

Fixed assets are stated at cost. Depreciation for financial reporting purposes is being provided by the straight-line method over the estimated useful lives of the related assets. The valuation and classification of these assets and the assignment of useful depreciable lives involves significant judgments and the use of estimates. Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Historically, impairment losses have not been required. Any change in the assumption of estimated useful lives could either result in a decrease or increase to the Company’s financial results. A decrease in estimated useful life would reduce the Company’s net income and an increase in estimated useful life would increase the Company’s net income. If the estimated useful lives of the PERS medical device were decreased by one year, the cost of goods related to services would increase and net income would decrease by approximately $185,000 per annum. Conversely, if the estimated useful lives of the PERS medical device were increased by one year, the cost of goods related to services would decrease and net income would increase by approximately $145,000 per annum.

Valuation of Goodwill

Pursuant to Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” goodwill and indefinite life intangible assets are no longer amortized, but are subject to annual impairment tests. To date, the Company has not been required to recognize an impairment of goodwill. The Company tests goodwill for impairment annually or more frequently when events or circumstances occur indicating goodwill might be impaired. This process involves estimating fair value using discounted cash flow analyses. Considerable management judgment is necessary to estimate discounted future cash flows. Assumptions used for these estimated cash flows were based on a combination of historical results and current internal forecasts. The Company cannot predict certain events that could adversely affect the reported value of goodwill, which totaled $10,199,300 and $9,996,152 at June 30, 2009 and December 31, 2008, respectively. If the Company were to experience a significant adverse impact on goodwill, it would negatively impact the Company’s net income.

Accounting for Stock-Based Awards

On January 1, 2006, the Company adopted SFAS Statement No. 123 (revised 2004), “Share-Based Payment” (“Statement No. 123(R)”), which requires the measurement and recognition of compensation expense for all share-based payments to employees, including grants of stock and employee stock options, based on estimated fair values. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. As a result of adopting SFAS No. 123R, the Company recorded a pre-tax expense of approximately $179,000 and $207,000 for stock-based compensation for the six months ended June 30, 2009 and 2008, respectively.

The determination of fair value of share-based payment awards to employees and directors on the date of grant using the Black-Scholes model is affected by the Company's stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market Risk Disclosure

The Company does not hold market risk-sensitive instruments entered into for trading purposes, nor does it hold market risk sensitive instruments entered into for other than trading purposes. All sales, operating items and balance sheet data are denominated in U.S. dollars; therefore, the Company has no significant foreign currency exchange rate risk.

In the ordinary course of its business the Company enters into commitments to purchase raw materials and finished goods over a period of time, generally six months to one year, at contracted prices. At June 30, 2009 these future commitments were not at prices in excess of current market, or in quantities in excess of normal requirements. The Company does not utilize derivative contracts either to hedge existing risks or for speculative purposes.

Interest Rate Risk

We are exposed to market risk from changes in interest rates primarily through our financing activities. Interest on our outstanding balances on our term loan and revolving credit line under our credit facility accrues at a rate of LIBOR plus 1.75% and LIBOR plus 1.50%, respectively. Our ability to carry out our business plan to finance future working capital requirements and acquisitions of TBCS businesses may be impacted if the cost of carrying debt fluctuates to the point where it becomes a burden on our resources.

Item 4T. Controls and Procedures.

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of its Chief Executive Officer and President and its Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer and President and the Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports filed by it under the Securities and Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company's management, including the Chief Executive Officer and President and Chief Financial Officer of the Company, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended June 30, 2009 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Item 4. Submission of Matters to a Vote of Security Holders.

On July 30, 2009, the Company held its 2009 Annual Meeting of Shareholders (the “2009 Meeting”).

At the 2009 Meeting, the Company’s shareholders (i) elected seven (7) directors to serve until the 2010 Annual Meeting of Shareholders and until their successors shall be elected and qualified and (ii) ratified the selection of Margolin, Winer & Evens LLP as the Company’s independent auditors for the fiscal year ending December 31, 2009.

1.	The vote with respect to the election of seven (7) directors was as follows:

Name	For		Authority Withheld
(a) Howard M. Siegel		8,360,023	178,662
(b) Jack Rhian		8,449,559	89,126
(c) Frederick S. Siegel		8,390,201	148,484
(d) Ronald Levin		8,189,344	349,341
(e) Yacov Shamash		8,436,986	101,699
(f) John S.T. Gallagher		8,437,550	101,135
(g) Gregory Fortunoff		8,448,906	89,779

2.	The proposal to ratify the selection of Margolin, Winer & Evens LLP as the Company’s independent auditors for the fiscal year ending December 31, 2009, was approved by the following vote:

For		Against		Abstain
8,451,634		67,133		19,918

Item 5. Other Information

On August 13, 2009, the Company entered into an amendment and waiver to its credit agreement with JPMorgan Chase Bank, as successor in the interest to the Bank of New York (the “Lender”). Pursuant to the amendment, the Company’s revolving credit line was extended until June 30, 2011. In addition, certain financial reporting requirements were modified, and the Lender waived the Company’s obligation to include NM Call Center, Inc. (“NMCC”) as a guarantor under the Credit Agreement until such time that NMCC generates earnings or revenues and/or has assets in excess of $750,000.

Item 6. Exhibits .

No. Description

10.1	Amendment No. 12 and Waiver, dated August 13, 2009, to that certain Credit Agreement dated as of May 20, 2002, as thereafter amended from time to time, between JPMorgan Chase Bank as successor-in-interest to The Bank of New York, a national banking association and American Medical Alert Corp.

15.1	Letter from Margolin, Winer & Evens LLP, the independent accountant of the Company, acknowledging awareness of the use in a registration statement of a report on the unaudited interim financial information in this quarterly report.

31.1	Certification of CEO Pursuant to Section 302 of the Sarbanes Oxley Act of 2002

31.2	Certification of CFO Pursuant to Section 302 of the Sarbanes Oxley Act of 2002

32.1	Certification of CEO Pursuant to Section 906 of the Sarbanes Oxley Act of 2002

32.2	Certification of CFO Pursuant to Section 906 of the Sarbanes Oxley Act of 2002

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	AMERICAN MEDICAL ALERT CORP.

Dated: August 14, 2009	By:	/s/ Jack Rhian
		Name: Jack Rhian
		Title: Chief Executive Officer and President

	By:	/s/ Richard Rallo
		Name: Richard Rallo
		Title: Chief Financial Officer

EX-10.1 2 v157920_ex10-1.htm Unassociated Document

Exhibit 10.1

AMENDMENT NO. 12 AND WAIVER TO CREDIT AGREEMENT

AMENDMENT NO. 12 AND WAIVER, dated as of August 13, 2009 (this “Amendment and Waiver”), with respect to the Credit Agreement, dated as of May 20, 2002 (as same has been and may be further amended, restated, supplemented or modified, from time to time, the “Credit Agreement”), by and between AMERICAN MEDICAL ALERT CORP., a New York corporation (the “Company”) and JPMORGAN CHASE BANK, N.A., as successor-in-interest to The Bank of New York, a national banking association (the “Lender”).

RECITALS

The Company has requested, and the Lender has agreed subject to the terms and conditions of this Amendment and Waiver, to amend and waive certain provisions of the Credit Agreement, all as herein set forth.

Accordingly, in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows:

Amendments.

(a) The following definition in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to provide as follows:

“Revolving Credit Commitment Termination Date” shall mean June 30, 2011.

(b) Section 6.03(a) of the Credit Agreement is hereby amended and restated in its entirety to provide as follows:

“(a) (i) as soon as available, but in any event within ninety (90) days after the end of each fiscal year of the Company, a copy of the audited consolidated balance sheet of the Company and the Corporate Guarantors as of the end of such year and the related audited consolidated statements of income, retained earnings and cash flow for such year, setting forth in comparative form the respective figures as of the end of and for the previous fiscal year, and accompanied by a report thereon of Margolin, Winer & Evens, LLP or other independent certified public accountants of recognized standing selected by the Company and satisfactory to the Lender (the “Auditor”), which report shall be unqualified; and (ii) as soon as available, but in any event within one hundred five (105) days after the end of each fiscal year of the Company, a copy of the management prepared consolidating financial statements of the Company and the Corporate Guarantors setting forth the respective figures as of the end of such fiscal year which support the financial statements delivered pursuant to clause (i), in each case of (i) and (ii), prepared in accordance with Generally Accepted Accounting Principles, applied on a consistent basis, and with respect to the statements referred to in clause (ii), accompanied by a certificate to that effect executed by the Chief Financial Officer;”

“(b) (i) as soon as available, but in any event not later than forty-five (45) days after the end of each quarterly period of each fiscal year of the Company, a copy of the management prepared consolidated interim balance sheet of the Company and the Corporate Guarantors as of the end of each such fiscal quarter and the related management prepared interim consolidated statements of income, retained earnings and cash flow for such quarter and the portion of the fiscal year through such date, setting forth in comparative form the respective figures as of the end of and for the corresponding date and period in the previous fiscal year, and (ii) as soon as available, but in any event within sixty (60) days after the end of each quarterly period of each fiscal year of the Company, a copy of the management prepared consolidating interim balance sheet of the Company and the Corporate Guarantors as of the end of each such fiscal quarter and the related management prepared interim consolidating statement of income for the portion of the fiscal year through such date, in each case prepared in accordance with Generally Accepted Accounting Principles, applied on a consistent basis, and, simultaneously with delivery of the financial statements described in clause (ii) herein, a certificate to that effect executed by the Chief Financial Officer;”

(d) Section 6.03(d) of the Credit Agreement is hereby amended and restated in its entirety to provide as follows:

“(d) at all times indicated in clause (a)(ii) above a copy of the management letter, if any, prepared by the Auditor;”

(e) Section 6.03(g) of the Credit Agreement is hereby amended and restated in its entirety to provide as follows:

“(g) upon request by the Lender, (i) a summary of accounts receivable, accounts payable and inventory, with respect to the Company, on a consolidated and consolidating basis, prepared in accordance with Generally Accepted Accounting Principles applied on a consistent basis and (ii) a report, in form and substance satisfactory to the Lender, of recurring revenue of the Company and the Corporate Guarantors;”

(f) Section 6.03(h) of the Credit Agreement is hereby amended and restated in its entirety to provide as follows:

“(h) within thirty (30) days after the end of each month, (i) a Borrowing Base Certificate and (ii) accounts receivable aging report; and”

2. Waiver. The Lender hereby waives compliance by the Company with Section 6.13 solely with respect to the delivery of a Guaranty, Security Documents and all other documents described therein which are required to be delivered by an Affiliate of the Company, all with respect to NM Call Center, Inc., a New York corporation (“NMCC”) and wholly-owned Subsidiary of the Company, provided that if NMCC shall at any time after the date hereof generate earnings or revenues and/or have assets in excess of $750,000, NMCC shall deliver to the Bank a Guaranty, such Security Documents and such other documents referred to in Section 6.13, in order for NMCC to become a Guarantor and grant to the Lender a security interest in its assets.

3. Conditions of Effectiveness. This Amendment and Waiver shall become effective upon receipt by (1) the Lender of (a) this Amendment and Waiver, duly executed by the Company and each Guarantor, (b) a certificate of the Secretary or Assistant Secretary of the Company, dated as of the date hereof, in the form of Exhibit 1 hereto, and (c) such other documents, instruments and agreements that the Lender shall reasonably require with respect thereto and (2) Farrell Fritz, P.C., of its reasonable attorneys’ fees and expenses incurred in connection with the preparation, execution and delivery of this Amendment and Waiver, plus all outstanding amounts owed to Farrell Fritz, P.C. for unpaid attorney’s fees and expenses.

4. Miscellaneous.

(a) This Amendment and Waiver shall be governed by and construed in accordance with the laws of the State of New York.

(b) All terms used herein shall have the same meaning as in the Credit Agreement, as amended hereby, unless specifically defined herein.

(d) Except as expressly amended and waived hereby, the Credit Agreement remains in full force and effect in accordance with the terms thereof. The Credit Agreement and the Loan Documents are each ratified and confirmed in all respects by the Company. The amendments and waiver herein are limited specifically to the matters set forth above and for the specific instance and purpose for which given and do not constitute directly or by implication an amendment or waiver of any other provisions of the Credit Agreement or a waiver of any Default or Event of Default which may occur or may have occurred under the Credit Agreement or any other Loan Document.

(e) Upon the effectiveness of this Amendment and Waiver, each reference in the Credit Agreement and the other Loan Documents to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import shall mean and be a reference to the Credit Agreement, as amended hereby.

(f) The Company hereby represents and warrants that, (i) the representations and warranties by the Company pursuant to the Credit Agreement and each other Loan Document are true and correct, in all material respects, on the date hereof, and (ii) no Default or Event of Default exists under the Credit Agreement or any other Loan Document.

(g) The Company hereby: (a) acknowledges and confirms that, notwithstanding the consummation of the transactions contemplated by this Amendment and Waiver, (i) all terms and provisions contained in the Security Documents are, and shall remain, in full force and effect in accordance with their respective terms and (ii) the liens heretofore granted, pledged and/or assigned to the Lender as security for the Company’s obligations under the Notes, the Credit Agreement and the other Loan Documents shall not be impaired, limited or affected in any manner whatsoever by reason of this Amendment and Waiver and that all such liens shall be deemed granted, pledged and/or assigned to the Lender as security for the Company’s obligations to the Lender; and (b) represents, warrants and confirms the non-existence of any offsets, defenses, or counterclaims to its obligations under the Credit Agreement or any Loan Document.

(h) This Amendment and Waiver may be executed in one or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one agreement.

IN WITNESS WHEREOF, the Company and the Lender have caused this Amendment and Waiver to be duly executed by their duly authorized officers as of the day and year first above written.


	AMERICAN MEDICAL ALERT CORP.

	By:	/s/ Jack Rhian
		Name: Jack Rhian
		Title: President and CEO


	JPMORGAN CHASE BANK, N.A.

	By:	/s/ Carolyn B. Lattanzi
		Name: Carolyn B. Lattanzi
		Title: Vice President

The undersigned, not parties to the Credit Agreement but as Guarantors under their respective Guaranties executed in favor of the Lender, dated as of May 20, 2002, and as Grantors under the Security Agreement, dated as of May 20, 2002, each hereby (a) accept and agree to the terms of the foregoing Amendment and Waiver, (b) acknowledge and confirm that all terms and provisions contained in their respective Guaranty are, and shall remain, in full force and effect in accordance with their respective terms and that its obligations thereunder include obligations of the Company owing to the Lender in connection with the increase in the Revolving Credit Commitment, and (c) (i) all terms and provisions contained in the Security Agreement are and shall remain, in full force and effect in accordance with their respective terms and (ii) the liens heretofore granted, pledged and/or assigned to the Lender as security for the Guaranteed Obligations (as defined in the Guaranty) shall not be impaired, limited or affected in any manner whatsoever by reason of this Amendment and Waiver.


	HCI ACQUISITION CORP. SAFE COM INC. LIVE MESSAGE AMERICA ACQUISITION CORP. NORTH SHORE ANSWERING SERVICE, INC. ANSWER CONNECTICUT ACQUSITION CORP. MD ONCALL ACQUISITION CORP. AMERICAN MEDICONNECT ACQUISITION CORP.

	By:	/s/ Jack Rhian
		Jack Rhian, the President of each
		of the foregoing corporations

EX-15.1 3 v157920_ex15-1.htm

Exhibit 15.1

August 14, 2009

American Medical Alert Corp.

Oceanside, New York

We have reviewed, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the unaudited interim financial information of American Medical Alert Corp. and Subsidiaries for the fiscal periods ended June 30, 2009 and June 30, 2008, as indicated in our report dated August 14, 2009. Because we did not perform an audit, we expressed no opinion on that information.

We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, is incorporated by reference in the following Registration Statements:

Registration Statement No. 33-48385 on Form S-8;

Registration Statement No. 33-91806 on Form S-8;

Registration Statement No. 333-53029 on Form S-8;

Registration Statement No. 333-70626 on Form S-8;

Registration Statement No. 333-130811 on Form S-8; and

Registration Statement No. 333-88192 on Form S-3.

We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, as amended, is not considered a part of the Registration Statements prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of the Securities Act of 1933, as amended.

/s/ Margolin, Winer & Evens LLP

Margolin, Winer & Evens LLP

Garden City, New York

EX-31.1 4 v157920_ex31-1.htm

Exhibit 31.1

Certification

I, Jack Rhian, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of American Medical Alert Corp.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2009	/s/ Jack Rhian
	Jack Rhian
	President and
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2 5 v157920_ex31-2.htm

Exhibit 31.2

Certification

I, Richard Rallo, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of American Medical Alert Corp.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2009	/s/ Richard Rallo
	Richard Rallo
	Chief Financial Officer
	(Principal Financial Officer)

EX-32.1 6 v157920_ex32-1.htm

Exhibit 32.1

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the filing of the Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2009 (the "Report") by American Medical Alert Corp. ("Registrant"), the undersigned hereby certifies that:

1.	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Registrant.

Date: August 14, 2009

	/s/ Jack Rhian
	Jack Rhian
	Chief Executive Officer and
	President

A signed original of this written statement required by Section 906 has been provided to American Medical Alert Corp. and will be retained by American Medical Alert Corp. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2 7 v157920_ex32-2.htm

Exhibit 32.2

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

1.	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Registrant.

Date: August 14, 2009


	/s/ Richard Rallo
	Richard Rallo
	Chief Financial Officer