**UNITED STATES**

**SECURITIES AND EXCHANGECOMMISSION**

**WASHINGTON,D.C. 20549**

 

**FORM 10-QSB**

 

**QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For Quarter Ended March 31, 2005**

 

**Commission File Number 1-8635**

 

**AMERICAN MEDICAL ALERT CORP.**

(Exact Name of Registrant asSpecified in its Charter)

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

 

**3265Lawson Boulevard, Oceanside, New York 11572**

(Address of principal executiveoffices)

(Zip Code)

 

**(516) 536-5850**

(Registrant’s telephone number,including area code)

 

Indicate by check mark whether the registrant (1) has filed allreports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.  Yes ý  No o

 

Indicate the number of shares outstanding of each of the issuer’sclasses of common stock, as of the latest practicable date: 8,356,098 shares of$.01 par value common stock as of May 6, 2005.

 

 

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AMERICAN MEDICAL ALERT CORP.AND SUBSIDIARIES

 

INDEX

 
| Part I   Financial  Information |                                                                                                     |
|-----------------------------------------------------|----------------------------------------------------------------------------------------------------------|
|                                                |                                                                                                     |   |
|                                                | Report of Independent Registered Public  Accounting Firm                                                 |   |
|                                                |                                                                                                     |   |
|                                                | Condensed Consolidated Balance Sheets for March 31,  2005 and December 31, 2004                |   |
|                                                |                                                                                                     |   |
|                                                | Condensed Consolidated Statements of Income  for the Three Months Ended March 31, 2005 and 2004     |   |
|                                                |                                                                                                     |   |
|                                                | Condensed Consolidated Statements of Cash  Flows for the Three Months Ended March 31, 2005 and 2004 |   |
|                                                |                                                                                                     |   |
|                                                | Notes to Condensed Consolidated Financial  Statements                                                    |   |
|                                                |                                                                                                     |   |
|                                                | Management’s Discussion and Analysis of  Financial Condition and Results of Operations              |   |
|                                                |                                                                                                     |   |
|                                                | Controls and Procedures                                                                                  |   |
|                                                |                                                                                                     |   |
| Part II   Other  Information    |                                                                                                     |

 

----

 

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 sheetof American Medical Alert Corp. and Subsidiaries (the “Company”) as of March 31,2005 and the related condensed consolidated statements of income and cash flowsfor the three-months ended March 31, 2005 and 2004. These interimfinancial statements are the responsibility of the Company’s management.

 

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

 

Based on our reviews, we are not aware of any materialmodifications that should be made to the condensed consolidated interimfinancial statements referred to above for them to be in conformity withaccounting principles generally accepted in the United States of America.

 

We have previously audited, in accordance with thestandards of the Public Company Accounting Oversight Board (United States), theconsolidated balance sheet of American Medical Alert Corp. and Subsidiaries asof December 31, 2004, and the related consolidated statements of income,shareholders’ equity and cash flows for the year then ended (not presentedherein), and in our report dated March 25, 2005, except for Notes 3 and 5,as to which the date is March 30, 2005, we expressed an unqualifiedopinion on those consolidated financial statements. In our opinion, theinformation set forth in the accompanying condensed consolidated balance sheetas of December 31, 2004 is fairly stated, in all material respects, in relationto the consolidated balance sheet from which it has been derived.

 

 
| /s/ Margolin, Winer & Evens LLP |   |
|------------------------------------------|--------|
|                                     |
| Margolin, Winer & Evens LLP     |
| Garden City, New York                    |
|                                     |
| May 6, 2005                         |

 

1

----

 

**PART I- FINANCIAL INFORMATION**

 

**Item 1. Financial Statements.**

 

AMERICANMEDICAL ALERT CORP. AND SUBSIDIARIESCONDENSED CONSOLIDATEDBALANCE SHEETS

 
| ** **                                                                                                                | ** ** | **March 31, 2005** | ** ** | **Dec. 31, 2004** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------|------------|-------------------------|------------|------------------------|------------|
| ** **                                                                                                                | ** ** | **(Unaudited)**         | ** ** | ** **             | ** ** |
| ASSETS                                                                                                                    | ** ** | ** **              | ** ** | ** **             | ** ** |
| **CURRENT ASSETS**                                                                                                        | ** ** | ** **              | ** ** | ** **             | ** ** |
| Cash                                                                                                                      |       | $                       | 3,869,521  |                   | $          | 3,186,852 |   |
| Accounts  receivable (net of allowance for doubtful accounts of $749,000 and $728,000)                                    |       | 3,898,091               |       | 3,389,076              |       |
| Note  receivable                                                                                                          |       | 23,498                  |       | 23,207                 |       |
| Inventory                                                                                                                 |       | 679,475                 |       | 696,736                |       |
| Prepaid  expenses and other current assets                                                                                |       | 546,092                 |       | 434,057                |       |
| Deferred  income taxes                                                                                                    |       | 469,000                 |       | 448,000                |       |
|                                                                                                                      |       |                    |       |                   |       |
| Total  Current Assets                                                                                                     |       | 9,485,677               |       | 8,177,928              |       |
|                                                                                                                      |       |                    |       |                   |       |
| FIXED ASSETS                                                                                                              |       |                    |       |                   |       |
| (Net of  accumulated depreciation and amortization)                                                                       |       | 6,631,218               |       | 7,046,925              |       |
|                                                                                                                      |       |                    |       |                   |       |
| OTHER ASSETS                                                                                                              |       |                    |       |                   |       |
| Long-term  portion of note receivable                                                                                     |       | 92,122                  |       | 98,107                 |       |
| Intangible  assets  (net of accumulated amortization of $1,853,815 and $1,685,646)                                        |       | 1,324,220               |       | 1,492,389              |       |
| Goodwill  (net of accumulated amortization of $58,868)                                                                    |       | 2,563,864               |       | 2,563,864              |       |
| Other assets                                                                                                              |       | 257,541                 |       | 121,803                |       |
| Deferred  income taxes                                                                                                    |       | 130,000                 |       | 138,000                |       |
|                                                                                                                      |       | 4,367,747               |       | 4,414,163              |       |
|                                                                                                                      |       |                    |       |                   |       |
| TOTAL ASSETS                                                                                                              |       | $                       | 20,484,642 |                   | $          | 19,639,016 |   |
|                                                                                                                      |       |                    |       |                   |       |
| LIABILITIES  AND SHAREHOLDERS’ EQUITY                                                                                |       |                    |       |                   |       |
|                                                                                                                      |       |                    |       |                   |       |
| CURRENT  LIABILITIES:                                                                                                     |       |                    |       |                   |       |
| Current  portion of notes payable                                                                                         |       | $                       | 323,252    |                   | $          | 300,814 |   |
| Accounts  payable                                                                                                         |       | 791,593                 |       | 559,453                |       |
| Accrued  expenses and taxes payable                                                                                       |       | 1,057,210               |       | 1,354,857              |       |
| Current  portion of capital lease obligations                                                                             |       | 95,945                  |       | 94,743                 |       |
| Current  portion of put warrant obligation                                                                                |       | —                  |       | 10,000                 |       |
| Deferred  revenue                                                                                                         |       | 62,256                  |       | 15,834                 |       |
| Total  Current Liabilities                                                                                                |       | 2,330,256               |       | 2,335,701              |       |
|                                                                                                                      |       |                    |       |                   |       |
| DEFERRED  INCOME TAX LIABILITY                                                                                            |       | 1,122,000               |       | 1,099,000              |       |
| LONG-TERM  PORTION OF NOTES PAYABLE                                                                                       |       | 416,789                 |       | 496,444                |       |
| LONG-TERM  PORTION OF CAPITAL LEASE OBLIGATIONS                                                                           |       | —                  |       | 24,458                 |       |
| ACCRUED  RENTAL OBLIGATION                                                                                                |       | 156,130                 |       | 143,630                |       |
| OTHER  LIABILITIES                                                                                                        |       | 231,884                 |       | 261,884                |       |
| TOTAL  LIABILITIES                                                                                                        |       | 4,257,059               |       | 4,361,117              |       |
|                                                                                                                      |       |                    |       |                   |       |
| 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 8,321,195 in  2005 and 8,078,043 shares in 2004 |       | 83,212                  |       | 80,780                 |       |
| Additional  paid-in capital                                                                                               |       | 11,451,187              |       | 10,730,434             |       |
| Retained  earnings                                                                                                        |       | 4,799,216               |       | 4,572,717              |       |
|                                                                                                                      |       | 16,333,615              |       | 15,383,931             |       |
| Less  treasury stock, at cost (43,910 shares)                                                                             |       | (106,032                | )          | (106,032               | )          |
| Total  Shareholders’ Equity                                                                                          |       | 16,227,583              |       | 15,277,899             |       |
| TOTAL  LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                          |       | $                       | 20,484,642 |                   | $          | 19,639,016 |   |

 

Seeaccompanying notes to condensed financial statements.

 

2

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AMERICANMEDICAL ALERT CORP. AND SUBSIDIARIESCONDENSED CONSOLIDATEDSTATEMENTS OF INCOME(Unaudited)

 
| ** **                                                          | ** ** | **Three Months Ended March 31,** | ** ** |
|---------------------------------------------------------------------|------------|---------------------------------------|------------|
| ** **                                                          | ** ** | **2005**                              | ** ** | **2004** | ** ** |
| Revenues:                                                           |       |                                  |       |   |   |
| Services                                                            |       | $                                     | 5,151,712  |   | $ | 4,486,747 |   |
| Product  sales                                                      |       | 86,858                                |       | 66,731 |   |
|                                                                |       | 5,238,570                             |       | 4,553,478 |   |
| Costs and  Expenses (Income):                                       |       |                                  |       |   |   |
| Costs  related to services                                          |       | 2,466,741                             |       | 2,059,638 |   |
| Costs of  products sold                                             |       | 29,656                                |       | 36,190 |   |
| Selling,  general and administrative expenses                       |       | 2,376,038                             |       | 2,161,188 |   |
| Interest  expense                                                   |       | 12,404                                |       | 15,917 |   |
| Other income                                                        |       | (82,768                               | )          | (74,257 | ) |
|                                                                |       |                                  |       |   |   |
| Income  before Provision for Income Taxes                           |       | 436,499                               |       | 354,802 |   |
|                                                                |       |                                  |       |   |   |
| Provision  for Income Taxes                                         |       | 210,000                               |       | 175,000 |   |
|                                                                |       |                                  |       |   |   |
| NET INCOME                                                          |       | $                                     | 226,499    |   | $ | 179,802 |   |
|                                                                |       |                                  |       |   |   |
| Net income  per share:                                              |       |                                  |       |   |   |
| Basic                                                               |       | $                                     | .03        |   | $ | .02 |   |
| Diluted                                                             |       | $                                     | .03        |   | $ | .02 |   |
|                                                                |       |                                  |       |   |   |
| Weighted  average number of common shares outstanding (Note 6) |       |                                  |       |   |   |
| Basic                                                               |       | 8,096,557                             |       | 7,717,805 |   |
|                                                                |       |                                  |       |   |   |
| Diluted                                                             |       | 8,879,144                             |       | 8,196,113 |   |

 

Seeaccompanying notes to condensed financial statements.

 

3

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AMERICAN MEDICAL ALERT CORP.AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 
| ** **                                                                         | ** ** | **Three Months Ended March 31** | ** ** |
|------------------------------------------------------------------------------------|------------|--------------------------------------|------------|
| ** **                                                                         | ** ** | **2005**                             | ** ** | **2004** | ** ** |
| Cash Flows  From Operating Activities:                                             |       |                                 |       |   |   |
|                                                                               |       |                                 |       |   |   |
| Net income                                                                         |       | $                                    | 226,499    |   | $ | 179,802 |   |
|                                                                               |       |                                 |       |   |   |
| Adjustments  to reconcile net income to net cash provided by operating activities: |       |                                 |       |   |   |
| Provision  for deferred income taxes                                               |       | 10,000                               |       | 7,000 |   |
| Depreciation  and amortization                                                     |       | 714,336                              |       | 713,776 |   |
| Provision  (credit) for valuation of put warrant                                   |       | (10,000                              | )          | 20,000 |   |
| Decrease  (increase) in:                                                           |       |                                 |       |   |   |
| Accounts  receivables                                                              |       | (509,015                             | )          | 18,907 |   |
| Inventory                                                                          |       | 17,261                               |       | (23,939 | ) |
| Prepaid and  refundable taxes                                                      |       | —                               |       | 154,442 |   |
| Prepaid  expenses and other current assets                                         |       | (112,035                             | )          | (29,483 | ) |
| Other assets                                                                       |       | 3,887                                |       | 2,004 |   |
| Increase  (decrease) in:                                                           |       |                                 |       |   |   |
| Accounts  payable, accrued expenses and other                                      |       | (83,007                              | )          | 13,566 |   |
| Deferred  revenue                                                                  |       | 46,422                               |       | (35,266 | ) |
|                                                                               |       |                                 |       |   |   |
| Net Cash  Provided by Operating Activities                                         |       | 304,348                              |       | 1,020,809 |   |
|                                                                               |       |                                 |       |   |   |
| Cash Flows  From Investing Activities:                                             |       |                                 |       |   |   |
| Expenditures  for fixed assets                                                     |       | (130,460                             | )          | (618,387 | ) |
| Repayment of  notes receivable                                                     |       | 5,694                                |       | 5,417 |   |
| Deposit on  equipment and software                                                 |       | (139,625                             | )          | (132,824 | ) |
| Increase in  goodwill                                                              |       | —                               |       | (66,842 | ) |
| Payment for  account acquisitions and licensing agreement                          |       | —                               |       | (14,710 | ) |
|                                                                               |       |                                 |       |   |   |
| Net Cash  (Used In) Investing Activities                                           |       | (264,391                             | )          | (827,346 | ) |
|                                                                               |       |                                 |       |   |   |
| Cash Flows  From Financing Activities:                                             |       |                                 |       |   |   |
| Principal  payments under capital lease obligation                                 |       | (23,256                              | )          | (21,919 | ) |
| Proceeds  from notes payable                                                       |       | —                               |       | 62,065 |   |
| Repayment of  notes payable                                                        |       | (57,217                              | )          | (81,433 | ) |
| Proceeds  upon exercise of stock options                                           |       | 723,185                              |       | 151,208 |   |
|                                                                               |       |                                 |       |   |   |
| Net Cash  Provided by Financing Activities                                         |       | 642,712                              |       | 109,921 |   |
|                                                                                    |            |                                      |            |  |  |  |  |

 

Seeaccompanying notes to condensed financial statements.

 

4

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AMERICAN MEDICAL ALERT CORP.AND SUBSIDIARIES

 

CONDENSED CONSOLIDATEDSTATEMENTS OF CASH FLOWS (Continued)

(Unaudited)

 
| ** **                                                               | ** ** | **Three Months Ended March 31,** | ** ** |
|--------------------------------------------------------------------------|------------|---------------------------------------|------------|
| ** **                                                               | ** ** | **2005**                              | ** ** | **2004** | ** ** |
|                                                                     |       |                                  |       |   |   |
| Net Increase  in Cash                                                    |       | $                                     | 682,669    |   | $ | 303,384 |   |
|                                                                     |       |                                  |       |   |   |
| Cash,  Beginning of Period                                               |       | 3,186,852                             |       | 2,192,113 |   |
|                                                                     |       |                                  |       |   |   |
| Cash, End of  Period                                                     |       | $                                     | 3,869,521  |   | $ | 2,495,497 |   |
|                                                                     |       |                                  |       |   |   |
| SUPPLEMENTAL  DISCLOSURE OF CASH FLOW INFORMATION:                       |       |                                  |       |   |   |
|                                                                     |       |                                  |       |   |   |
| CASH PAID  DURING THE PERIOD FOR INTEREST                                |       | $                                     | 9,404      |   | $ | 12,117 |   |
|                                                                     |       |                                  |       |   |   |
| CASH PAID  DURING THE PERIOD FOR INCOME TAXES                            |       | $                                     | 96,400     |   | $ | 13,558 |   |
|                                                                     |       |                                  |       |   |   |
| SUPPLEMENTAL  SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITY: |       |                                  |       |   |   |

 

 

 

See accompanying notes to condensed financial statements.

 

5

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AMERICAN MEDICAL ALERT CORP.AND SUBSIDIARIES

 

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

1.                                       General:

 

Thesefinancial statements should be read in conjunction with the financialstatements and notes thereto for the year ended December 31, 2004 includedin the Company’s Annual Report on Form 10-KSB.

 

2.                                       Results ofOperations:

 

In theopinion of management, the accompanying unaudited condensed financialstatements contain all adjustments (consisting only of normal recurringaccruals) necessary to present fairly the financial position as of March 31,2005 and the results of operations and cash flows for the three months ended March 31,2005 and 2004.

 

Theaccounting policies used in preparing these financial statements are the sameas those described in the December 31, 2004 financial statements.

 

Theresults of operations for the three months ended March 31, 2005 are notnecessarily indicative of the results to be expected for any other interimperiod or for the full year.

 

3.                                       NewPronouncements:

 

In December 2004,the FASB issued SFAS No. 123 (revised 2004), Share-Based Payment which isa revision of SFAS No. 123, Accounting for Stock-Based Compensation. Thestatement supercedes APB Opinion No. 25, Accounting for Stock Issued toEmployees, and its related implementation guidance. SFAS No. 123R requiresall entities to recognize compensation expense in an amount equal to thefair-value of share-based payments. Upon adoption, the fair value of allemployee stock option awards will be expensed in the Company’s statement ofincome, typically, over the related vesting period of the options. SFAS No. 123Rrequires the use of fair value to measure share-based awards issued toemployees, computed at the date of grant. Additionally, SFAS No. 123Rrequires companies to record compensation expense for the unvested portion ofpreviously granted awards as they continue to vest, as calculated previouslyand included in the companies prior period pro forma disclosures under SFAS No. 123.SFAS No. 123R also requires the tax benefit of tax deductions in excess ofrecognized compensation costs to be reported as a financing cash flow, ratherthan as an operating cash flow as required under current literature. TheCompany will adopt SFAS No. 123R beginning with the fiscal 2006 firstquarter, as required. The impact of adoption of SFAS 123R cannot be determinedat this time because it will partially depend on levels of share based paymentgranted in the future.  However, had theCompany adopted SFAS 123R in prior periods, the impact of that standard wouldhave approximated the impact of SFAS 123 as shown in the table below (seediscussion on Accounting for Stock Based Compensation).

 

6

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In November 2004,the FASB issued FASB Statement No. 151, Inventory Costs – An Amendment ofARB No. 43, Chapter 4 (“SFAS 151”), which is the result of its effort toconverge U.S. accounting standards for inventories with InternationalAccounting Standards. SFAS 151 requires idle facility expenses, freight,handling costs, and wasted material (spoilage) costs to be recognized ascurrent-period charges and not included in overhead. It also requires thatallocation of fixed production overhead cost to inventory be based on normalcapacity of the production facilities. SFAS 151 will be effective for inventorycosts incurred during fiscal years beginning after June 15, 2005. TheCompany has not determined the effect of adopting SFAS 151.

 

4.                                       FixedAssets:

 

TheCompany’s PERS equipment is subject to approval from the Federal CommunicationCommission (“FCC”). In November 2004, the Company received an inquiry fromthe Federal Communications Commission. In response to that inquiry the Companyhas determined that certain versions of its PERS equipment emit levels of radiofrequency energy that exceed applicable standards designed to reduce thepossibility of interference with radio communications.  Although this issue poses no safety orfunctionality risk to subscribers, the Company is in the process ofestablishing a corrective action plan with the FCC to satisfy this matter.

 

TheCompany is currently working with the FCC to determine an action plan toestablish a timeframe to complete an upgrade program for the affected PERSequipment and the amount of a potential payment to the FCC.  At this time the Company is unable todetermine whether it is probable that a liability has been incurred;accordingly, no estimate of the potential payment to the FCC has beenrecorded.  However, the Company believesthe payment could range between $50,000 and $160,000, although substantiallyhigher amounts are possible based on the discretion of the FCC.  The Company believes the FCC will allow theupgrade program to run substantially parallel with the normal recycling of theCompany’s PERS equipment. Under this assumption, the only additional cost to beincurred will be the incremental cost to bring the units into compliance withthe FCC regulations.

 

Through March 31,2005, the Company has recorded expenses of approximately $570,000 in connectionwith this matter, of which approximately $90,000, primarily relating to legaland other professional fees, was recorded in the first quarter of 2005.  The remaining $480,000 was charged to expensein the fourth quarter of 2004, which primarily related to costs to be incurredin excess of normal repair and refurbishment costs.

 

If theCompany is required to complete the PERS equipment and related equipmentmodifications in a shorter period of time than is anticipated, significantadditional costs will be incurred inasmuch as unscheduled service calls will berequired.

 

7

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5.                                       Accountingfor Stock-Based Compensation:

 

TheCompany has two stock-based employee compensation plans and additionaloutstanding options under a third plan which has expired.  The Company accounts for those plans underthe recognition and measurement principles of APB Opinion No. 25, “Accountingfor Stock Issued to Employees,” and related interpretations.  No stock-based employee compensation cost isreflected in net income, as all options granted under those plans had anexercise price equal to the market value of the underlying common stock on thedate of grant.  The following tableillustrates the effect on net income and earnings per share if the Company hadapplied the fair value recognition provisions of FASB Statement No. 123, “Accountingfor Stock-Based Compensation,” to stock-based compensation.

 
| ** **                                                                                                     | ** ** | **Three Months Ended March 31,** | ** ** |
|----------------------------------------------------------------------------------------------------------------|------------|---------------------------------------|------------|
| ** **                                                                                                     | ** ** | **2005**                              | ** ** | **2004** | ** ** |
| Net income,  as reported                                                                                       |       | $                                     | 226,499    |   | $ | 179,802 |   |
| Deduct:  Total stock-based employee compensation expense determined under fair value  based method, net of tax |       | (11,652                               | )          | (40,277 | ) |
| Pro forma  net income                                                                                          |       | $                                     | 214,847    |   | $ | 139,525 |   |
|                                                                                                           |       |                                  |       |   |   |
| Earnings per  share:                                                                                           |       |                                  |       |   |   |
| Basic - as  reported                                                                                           |       | $                                     | 0.03       |   | $ | 0.02 |   |
| Basic - pro  forma                                                                                             |       | $                                     | 0.03       |   | $ | 0.02 |   |
| Diluted - as  reported                                                                                         |       | $                                     | 0.03       |   | $ | 0.02 |   |
| Diluted -  pro forma                                                                                           |       | $                                     | 0.02       |   | $ | 0.02 |   |

 

No options were granted during the three months ended March 31,2005.  The weighted average grant datefair value of options granted during the three months ended March 31, 2004was $8,898.

 

The fair value of options at date of grant was estimated using theBlack-Scholes model with the following weighted average assumptions:

 
| ** **               | ** ** | **Three Months Ended March 31,** | ** ** |
|--------------------------|------------|---------------------------------------|------------|
| ** **               | ** ** | **2005**                              | ** ** | **2004** | ** ** |
|                     |       |                                  |       |   |   |
| Expected  life (years)   |       | —                                |       | 2 |   |
| Risk free  interest rate |       | —                                |       | 1.59 | % |
| Expected  volatility     |       | —                                |       | 40.04 | % |
| Expected  dividend yield |       | —                                |       | — |   |

 

6.                                       EarningsPer Share:

 

Earnings per share data for the three months ended March 31,2005 and 2004 is presented in conformity with SFAS No. 128, “Earnings PerShare”.

 

8

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

 
| ** **                                                                     | ** ** | **Income  (Numerator)** | ** ** | **Shares  (Denominator)** | ** ** | **Per-Share  Amounts** | ** ** |
|--------------------------------------------------------------------------------|------------|-------------------------|------------|---------------------------|------------|------------------------|------------|
| March 31, 2005                                                            | ** ** | ** **              | ** ** | ** **                | ** ** | ** **             | ** ** |
|                                                                           | ** ** | ** **              | ** ** | ** **                | ** ** | ** **             | ** ** |
| Basic EPS -  Income available to common stockholders                           |       | $                       | 226,499    |                      | 8,096,557  |                   | $          | .03 |   |
| Effect of  dilutive securities - Options and warrants                          |       | —                  |       | 782,587                   |       |                   |       |
| Diluted EPS  - Income available to common stockholders and assumed conversions |       | $                       | 226,499    |                      | 8,879,144  |                   | $          | .03 |   |
|                                                                           |       |                    |       |                      |       |                   |       |
| March 31, 2004                                                            |       |                    |       |                      |       |                   |       |
|                                                                           |       |                    |       |                      |       |                   |       |
| Basic EPS  -Income available to common stockholders                            |       | $                       | 179,802    |                      | 7,717,805  |                   | $          | .02 |   |
| Effect of  dilutive securities - Options and warrants                          |       | —                  |       | 478,308                   |       |                   |       |
| Diluted EPS  - Income available to common stockholders and assumed conversions |       | $                       | 179,802    |                      | 8,196,113  |                   | $          | .02 |   |

 

7.                                       Acquisitions:

 

On April 12, 2004, the Company acquiredsubstantially all of the assets of alphaCONNECT, Inc., a New Jersey basedprovider of telephone after-hour answering services and stand-alone voice mailservices.  The purchase price was$691,956 and consisted of an initial cash payment of $563,816 and future cashpayments of $51,256 and $76,884 to be paid to the Seller after the first andsecond year anniversaries from the date of the executed agreement,respectively.  The Company also paidprofessional fees of $76,000.  Apotential exists for the payment of additional purchase price consideration ifcertain thresholds concerning revenue are met by the acquired business.  The first measurement date for this potentialadditional purchase price consideration was April 1, 2005 and noadditional purchase price consideration was required.  The second measurement date is April 1,2006.  The purchase price exceeded thefair value of the net assets acquired as the Company acquired this entity withthe intention of consolidating this entity with Live Message America, Inc.,its previously acquired New Jersey based provider of telephone answeringservices, and expanding its presence in this geographical area.  The results of

 

9

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operations of alphaCONNECT, Inc. are included inthe TAS segment as of the date of acquisition.

 

The following tablesummarizes the fair values of the assets acquired at the date ofacquisition.  The Company received athird party valuation of certain intangible assets in determining theallocation of the purchase price.

 
| Accounts  receivable                     |   | $       | 19,762  |   |
|------------------------------------------|--------|---------|---------|--------|
| Fixed assets                             |   | 25,000  |    |
| Non-compete  agreement                   |   | 25,000  |    |
| Customer  list                           |   | 325,000 |    |
| Goodwill                                 |   | 373,194 |    |
|                                     |   |    |    |
| Cost to  acquire alphaCONNECT, Inc. |   | $       | 767,956 |   |

 

Unaudited pro forma results of operations for thethree months ended March 31, 2005 and 2004 as if alphaCONNECT, Inc.had been consolidated as of the beginning of the earliest period presentedfollow.  The pro forma results for thethree months ended March 31, 2005 and 2004, which include estimates whichmanagement believes are reasonable, are as follows:

 
| ** **            | ** ** | **Three Months Ended March 31,** | ** ** |
|-----------------------|------------|---------------------------------------|------------|
| ** **            | ** ** | **2005**                              | ** ** | **2004** | ** ** |
| Revenue               |       | $                                     | 5,239,000  |   | 4,688,000 |   |
| Net income            |       | 226,000                               |       | 192,000 |   |
| Net income  per share |       |                                  |       |   |   |
| Basic                 |       | $                                     | .03        |   | $ | .02 |   |
| Diluted               |       | $                                     | .03        |   | $ | .02 |   |

 

The unaudited pro forma results of operations for the three monthsended March 31, 2005 and 2004 do not purport to represent what the Company’sresults of operations would actually have been had the acquisition beeneffected for the period presented, or to predict the Company’s results ofoperations for any future period.

 

8.                                       MajorCustomers:

 

Since1983, the Company has provided Personal Emergency Response Systems (“PERS”)services to the City of New York’s Human Resources Administration Home CareService Program (“HCSP”).  The Companyhas been operating since 1993 with a contract to provide HCSP with theseservices, which has been extended for 1-2 year periods since 1993, the lastsuch extension through June 30, 2004. During the three months ended March 31, 2005 and 2004, the Company’srevenue from this contract represented 14% and 16%, respectively, of its totalrevenue.

 

10

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In November 2002,a new Request for Proposals (“RFP”) was issued by HRA to provide emergencyresponse services to HCSP from April 1, 2004 through March 31,2007.  After receiving notification fromthe City of New York’s Human Resources Administration (“HRA”) that the Companywas selected as the approved vendor under the RFP to provide PERS services tothe Home Care Services Program to Medicaid Eligible individuals, the Company subsequentlyreceived notification from HRA that it canceled the RFP “in the best interestof the City of New York.”  Concurrently,the Company was advised of HRA’s decision to issue a new contract extension tothe Company through June 2005 under the terms of the contract that theCompany has been operating under since 1993. HRA has also advised the Company that they plan to issue a new RFP withrespect to PERS services in the future. As of May 6, 2005, a new RFP has not been issued. The Company wasadvised that the cancellation of the RFP is not related to any performanceissue or negative reflection upon the Company.

 

TheCompany cannot determine (i) when the terms of the new RFP will bepublished, (ii) what the terms of the new RFP will be, (iii) how longthe current contract terms will remain in effect or (iv) whether AMAC willbe the successful bidder on the new RFP (and if so, under what terms andconditions).  While the Company hasreduced its dependence on revenue from HCSP, if subsequent to June 2005,the Company does not maintain this contract, a significant amount of theCompany’s revenue could be lost, albeit over a protracted period, which couldhave a material adverse effect on operating results and cash flows. The Companycontinues to implement a variety of operational efficiencies, as well ascontinuing to enhance and diversify its other revenue streams, to offset theimpact, if any, in the event of this occurrence.

 

As of March 31, 2005 and December 2004, accounts receivablefrom the contract represented 16% and 18%, respectively, of accounts receivableand medical devices in service under the contract represented approximately 17%and 18%, respectively, of medical devices.

 

9.                                       Segment  Reporting:

 

The Company has three reportable segments, (i) Health and SafetyMonitoring Systems (“HSMS”), (ii) Telephone Answering Services andSolutions for the Healthcare Community (“TAS”), and (iii) Safe Com.

 

The table below provides a reconciliation of segment information tototal consolidated information for the three months ended March 31, 2005and 2004:

 

2005

 
| ** **                                | ** ** | **HSMS**   | ** ** | **TAS**   | ** ** | **Safe Com** | ** ** | **Consolidated** | ** ** |
|-------------------------------------------|------------|------------|------------|-----------|------------|--------------|------------|------------------|------------|
|                                      |       |       |       |      |       |         |       |             |       |
| Revenue                                   |       | $          | 3,538,729  |      | $          | 1,578,561    |       | $                | 121,280    |   | $ | 5,238,570 |   |
| Income  before provision for income taxes |       | 145,324    |       | 275,544   |       | 15,631       |       | 436,499          |       |
| Total assets                              |       | 12,394,244 |       | 7,310,611 |       | 770,787      |       | 20,475,642       |       |
|                                           |            |            |            |           |            |              |            |                  |            |  |  |  |  |

 

11

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2004

 
| ** **                                | ** ** | **HSMS**   | ** ** | **TAS**   | ** ** | **Safe Com** | ** ** | **Consolidated** | ** ** |
|-------------------------------------------|------------|------------|------------|-----------|------------|--------------|------------|------------------|------------|
|                                      |       |       |       |      |       |         |       |             |       |
| Revenue                                   |       | $          | 3,270,218  |      | $          | 1,191,636    |       | $                | 91,624     |   | $ | 4,553,478 |   |
| Income  before provision for income taxes |       | 125,168    |       | 202,914   |       | 26,720       |       | 354,802          |       |
| Total assets                              |       | 11,941,076 |       | 5,769,836 |       | 523,982      |       | 18,234,894       |       |
|                                           |            |            |            |           |            |              |            |                  |            |  |  |  |  |

 

10.                                 Commitmentsand Contingencies:

 

In addition to the FCC inquiry in Note 4, the Companyis aware of various threatened or pending litigation claims against the Companyrelating to its products and services and other claims arising in the ordinarycourse of its business.  The Company hasgiven its insurance carrier notice of such claims and it believes there issufficient insurance coverage to cover any such claims.   Currently, there are no litigation claimsfor which an estimate of loss, if any, can be reasonably made as they are inthe preliminary stages and therefore, no liability or corresponding insurancereceivable has been recorded.

 

**Item 2.****           Management’sDiscussion and Analysis of Financial Condition and Results of Operations**.

 

The following discussion and analysis providesinformation which management believes is relevant to an assessment andunderstanding of the Company’s results of operations and financialcondition.  This discussion and analysisshould be read in conjunction with the consolidated financial statementscontained in the latest Annual Report on Form 10-KSB dated December 31,2004.

 

*Statements contained in this Quarterly Reporton Form 10-QSB include “forward-looking statements” within the meaning of Section 27Aof the Securities Act and Section 21E of the Exchange Act, including, inparticular and without limitation, statements contained herein under the heading“Management’s Discussion and Analysis of Financial Condition and Results ofOperations.”  Forward-looking statementsinvolve known and unknown risks, uncertainties and other factors which couldcause the Company’s actual results, performance and achievements, whetherexpressed or implied by such forward-looking statements, not to occur or berealized. These include uncertainties relating to government regulation,technological changes, our expansion plans, our contract with the City of NewYork and product liability risks.  Suchforward-looking statements generally are based upon the Company’s bestestimates of future results, performance or achievement, based upon currentconditions and the most recent results of operations.  Forward-looking statements may be identifiedby the use of forward-looking*

 

12

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* terminology such as “may,” “will,” “expect,” “believe,”“estimate,” “project,” “anticipate,” “continue” or similar terms, variations ofthose terms or the negative of those terms.*

 

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

* *

**Overview:**

 

The Company’sprimary business is the provision of call center monitoring services andsolutions through (1) the development and marketing of healthcaresolutions and  monitoring systems (“HSMS”)that include personal emergency response systems, telehealth/disease managementmonitoring systems and medication management systems; (2) telephoneanswering services and solutions for the healthcare  community; (3) pharmacy securitymonitoring systems.  The Company’sproducts and services are primarily marketed to the healthcare community,including home care, durable medical equipment, medical facility, hospice,pharmacy, managed care and other healthcare oriented organizations.  The Company also offers certain products andservices directly to consumers.  Until2000, the Company’s principal business was the marketing of personal emergencyresponse systems (“PERS”), a device that allows a patient to signal anemergency response center for help in the event of a debilitating illness oraccident.  Beginning in 2000, the Companybegan a program of product diversification and customer base expansion todecrease its reliance on a single product line by marketing complementary callcenter and monitoring services to the healthcare community.

 

In November 2000,the Company diversified its products/service mix to include telephone answeringservices (“TAS”) for professionals in the healthcare community when the Company’sHCI Acquisition Corp. subsidiary acquired the assets of a telephone answeringservice.  The rationale to enter thissegment had several components, including targeting the market functioning asthe intermediary for the PERS customer base, leveraging existing infrastructurecapability, and establishing an additional significant revenue source.  Growth in the TAS market has beenaccomplished through internally generated sales coupled with two additionalacquisitions.  The TAS segment nowaccounts for 30% of the Company’s revenues. The Company believes that TAS will continue to be a significant businesssegment going forward and intends to pursue further acquisitions in this area.The TAS business currently provides revenue of approximately $5.8 million peryear, based on trailing twelve months revenue, and is currently the Company’smost profitable segment.

 

During 2004, theCompany has broadened its capabilities to service specialized allied healthcareproviders including home care, hospice and other healthcare subspecialties. TheCompany believes it has identified other communication needs as expressed bythe expanded TAS client base. In response to these expressed needs, the Companyhas developed specialized healthcare communication solutions. These solutionsare creating additional opportunities for long-term

 

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revenueenhancement.  The Company intends toincrease its service offerings to significantly expand the TAS reportingsegment.

 

In April 2003,the Company opened a one hundred seat communications center in Long IslandCity, NY. The center is equipped with state-of-the-art telephony and computerequipment and is driven by proprietary software platforms designed specificallyfor AMAC’s 24 hour emergency monitoring and customer service activities (PERS)and its TAS business.  The center iscapable of accommodating significant future growth.

 

In 2001, theCompany identified a new market opportunity approaching based on emergingdemographic trends.  The aging andsignificant baby boomer population as well as increased life expectancies willmanifest a large, fragile and chronically ill older population with anexpressed preference for accessing healthcare services from home.  New technologies available and undercontinuous refinement permit the reporting of certain vital signs and indicesof a patient’s well-being without the presence and cost of a visiting nurse orother home healthcare personnel.  With anestablished presence in the home from our PERS product, the Company enteredinto a marketing and technology agreement with certain exclusive rights withHealth Hero Network, Inc. in 2001 to embark on a research and developmentproject.  The result of the project wasthe Company’s entrance into the telehealth/disease management monitoring marketand the commercial introduction in the fourth quarter of 2003 of a device knownas the PERS Buddy®.  This appliancecombines the Company’s traditional PERS device with Health Hero’s interactivedialogues which allows patients to self-report on various conditions to enabledaily monitoring and proactive intervention by the healthcare community.  The PERS Buddy® is designed for patients withchronic conditions such as congestive heart failure, diabetes, asthma andcoronary artery disease. The Company believes that the new field of reportingand monitoring, which is becoming widely known as “telehealth”, will continueto expand based on increasing acceptance by the medical profession and governmentreimbursement policies, as well as further clinical and econometric studiesconcluding that telehealth is both clinically effective and reduces cost.

 

To round out theCompany’s portfolio of home monitoring offerings, the Company secured certain exclusiverights to a medication reminder appliance in 1999, which is marketed under thename Med-Time®. The Company sells its device to the same customer baseutilizing PERS services as well as through web retailers and directly toconsumers.  The Company is planning toredesign and upgrade the appliance in 2005 based on customer feedback.

 

The Companycontinues to view its two core business segments, HSMS and TAS, as the maincontributors to the Company’s cash flow from operations.

 

The Company’s thirdreporting segment, Safe Com pharmacy security monitoring systems, offersequipment and security monitoring to pharmacies and other 24/7 retailorganizations.  Currently, 567 stores aremonitored with this technology.  Safe Com’smonitoring services are provided at the Company’s communication center in LongIsland City, New York.  The Safe Complatform utilizes the basic PERS technology with a modified application.  Although currently providing a small annualrevenue contribution, the Company believes a significant opportunity exists andwill continue to test the market potential into 2005.

 

The Companybelieves that the overall mix of cash flow generating from PERS and TAS

 

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services, combinedwith its emphasis on developing products and services in the telehealth field,provides the correct blend of stability and growth opportunity.  The Company believes this strategy willenable it to maintain and increase its role in the healthcare communicationsfield.

 

**Components of Statementsof Income by Operating Segment**

 

The following table shows the components of theStatement of Income for the three months ended March 31, 2005 and 2004.

 
| ** **                                  | ** ** | **Three Months Ended March 31,** | ** ** |
|---------------------------------------------|------------|---------------------------------------|------------|
| **In thousands (000’s)**               | ** ** | **2005**                              | ** ** | **%** | ** ** | **2004** | ** ** | **%** | ** ** |
| Revenues                                    |       |                                  |       |   |   |   |   |   |   |
| HSMS                                        |       | 3,539                                 | ** ** | **68** | **%** | 3,270 | ** ** | **72** | **%** |
| TAS                                         |       | 1,579                                 | ** ** | **30** | **%** | 1,191 | ** ** | **26** | **%** |
| Safe Com                                    |       | 121                                   | ** ** | **2** | **%** | 92 | ** ** | **2** | **%** |
| ** **                                  | ** ** | ** **                            | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Total  Revenues                             |       | 5,239                                 | ** ** | **100** | **%** | 4,553 | ** ** | **100** | **%** |
|                                        |       |                                  |       |   | ** ** |   |   |   |   |
| Cost of  Services and Goods Sold            |       |                                  |       |   | ** ** |   |   |   |   |
| HSMS                                        |       | 1,650                                 | ** ** | **47** | **%** | 1,449 | ** ** | **44** | **%** |
| TAS                                         |       | 776                                   | ** ** | **49** | **%** | 604 | ** ** | **51** | **%** |
| Safe Com                                    |       | 71                                    | ** ** | **59** | **%** | 42 | ** ** | **46** | **%** |
| ** **                                  | ** ** | ** **                            | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Total Cost  of Services and Goods Sold      |       | 2,497                                 | ** ** | **48** | **%** | 2,095 | ** ** | **46** | **%** |
| ** **                                  | ** ** | ** **                            | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Gross Profit                                | ** ** | ** **                            | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| HSMS                                        |       | 1,889                                 | ** ** | **53** | **%** | 1,821 | ** ** | **56** | **%** |
| TAS                                         |       | 803                                   | ** ** | **51** | **%** | 587 | ** ** | **49** | **%** |
| Safe Com                                    |       | 50                                    | ** ** | **41** | **%** | 50 | ** ** | **54** | **%** |
| ** **                                  | ** ** | ** **                            | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Total Gross  Profit                         |       | 2,742                                 | ** ** | **52** | **%** | 2,458 | ** ** | **54** | **%** |
| ** **                                  | ** ** | ** **                            | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Selling,  General & Administrative |       | 2,376                                 | ** ** | **45** | **%** | 2,161 | ** ** | **47** | **%** |
| Interest  Expense                           |       | 12                                    | ** ** | **0** | **%** | 16 | ** ** | **0** | **%** |
| Other Income                                |       | (82                                   | )          | **(2** | **)%** | (74 | ) | **(2** | **)%** |
| ** **                                  | ** ** | ** **                            | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Income  before Income Taxes                 |       | 436                                   | ** ** | **8** | **%** | 355 | ** ** | **8** | **%** |
| ** **                                  | ** ** | ** **                            | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Provision  for Income Taxes                 |       | 210                                   |       |   | ** ** | 175 | ** ** | ** ** | ** ** |
| ** **                                  | ** ** | ** **                            | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net Income                                  |       | 226                                   |       |   |   | 180 | ** ** | ** ** | ** ** |

 

**Note:**The percentages for Costof Services and Goods Sold and Gross Profit are calculated based on apercentage of revenue.

 

15

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**Results of Operations:**

 

The Company has three distinct operating businesssegments, which are HSMS, TAS and Safe Com. The HSMS and TAS are the two significant segments which generate andproduce approximately 98% of the Company’s revenue and net income, while SafeCom has a minimal impact on these areas; therefore, the operations of Safe Comare not further analyzed below.

 

**Three Months Ended March 31,2005 Compared to Three Months Ended March 31, 2004**

 

**Revenues:**

 

**    HSMS**

 

Revenues, which consist primarily of monthly rentalrevenues, increased approximately $269,000, or 8%, for the three months ended March 31,2005 as compared to the same period in 2004. Monthly rental revenues represent revenues that are generated from theleasing and monitoring of the medical device placed in subscriber’s residences.The increase is primarily attributed to the following factor:

•                  TheCompany continues to experience growth in its customer base. This has largelybeen accomplished through subscriber growth within its existing customer base.The largest growth continues to be from an Agreement, which was executed in November 2003,whereby over 3,000 Personal Emergency Response Systems (PERS) were placedonline from December 2003 through the first quarter of 2004.  The Company continues to service this accountwhich now has grown to approximately 4,300 PERS online.  This resulted in approximately $100,000increase in revenue as compared to the same period last year.  The remaining increase in revenue is from theexecution of new agreements as well as monthly fee increases to certainsubscribers. The Company anticipates that it will continue to grow its subscriberbase and corresponding revenue through its continued sales and marketingefforts.

 

**    TAS**

 

The increase in revenues of approximately $388,000, or33%, for the three months ended March 31, 2005 as compared to the sameperiod in 2004 was primarily due to the following:

•                  TheCompany experienced revenue growth within its existing telephone answeringservice businesses of approximately $280,000, as compared to the same period in2004.  This growth is due to theexecution of new agreements with healthcare and hospital organizations inconjunction with new daytime communication service offerings, as well asincreases in its physician base. The Company has experienced strong growth andanticipates that it will continue to grow this business segment with furtherexpansion into healthcare and hospital organizations and to physicians throughits marketing strategies.

•                  OnApril 12, 2004, the Company purchased the assets of a telephone answeringservice business, alphaCONNECT, Inc., located in Voorhees, NewJersey.  For the three months

 

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ended March 31,2005, the accounts obtained in this acquisition generated approximately$105,000 of revenues.  In the thirdquarter of 2004, the Company consolidated this operation into the Audubon, NewJersey facility.  During the transition,some customer attrition was experienced, however, now that the transition iscompleted; the Company is now focusing on future growth opportunities for thisbusiness.

 

**Costs Related to Services and Goods Sold:**

 

  **HSMS**

 

Costs related to services and goods increased byapproximately $201,000 for the three months ended March 31, 2005 ascompared to the same period in 2004, an increase of 14%, primarily due to thefollowing:

•                  TheCompany incurred approximately $50,000 of costs relating to repairs andupgrades associated with its PERS and related equipment, as compared to thesame period in 2004, when only minimal charges for repairs and upgrades wereincurred.  During the first quarter of2005, the Company purchased a minimal number of PERS devices primarily as aresult of determining that certain versions of its PERS equipment emittedlevels of radio frequency energy that exceed applicable FCC standards designedto reduce the possibility of interference with radio communications.  While the Company was designing an upgradedPERS device which meets applicable FCC standards, the Company placed a greateremphasis on repairing and upgrading existing units to assure they had enoughPERS devices available to be placed in the field for service.  In the first quarter of 2004, the Company hada significant number of units, including the PERS Buddy, manufactured, and,therefore, only minimal repairs and upgrades were performed.

•                  Withthe purchase of a minimal number of PERS devices in the first quarter of 2005,the Company capitalized minimal overhead costs. In comparison, the Company purchased a significant number of PERSdevices in the first quarter of 2004, including the PERS Buddy device, and,therefore, capitalized a greater amount of overhead costs.  As a result, the Company had approximately$90,000 more of unabsorbed overhead in 2005 as compared to the same period in2004.

•                  InOctober 2004, the Company engaged a consultant to assist in theengineering and inventory fulfillment aspects of the business.  In addition, this consultant has also beenengaged to assist in performing tasks relating to an inquiry received from theFederal Communications Commission (“FCC”). During the first quarter of 2005 the Company incurred expenses ofapproximately $80,000 for these services.

 

This increase waspartially offset by a reduction of personnel and overtime in both the ERC andcustomer service departments.  Additionalpersonnel and overtime was required in 2004, as a result of the Company executingan agreement whereby over 3,000 PERS were placed online from December 2003through the first quarter of 2004.  Thisreduction amounted to approximately $65,000.

 

17

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**  TAS:**

 

Costs related to services and goods increased byapproximately $172,000 for the three months ended March 31, 2005 ascompared to the same period in 2004, an increase of 28%, primarily due to thefollowing:

•                  Withthe increase in business in its existing telephone answering services,including its new daytime answering service offerings, the Company hiredadditional telephone answering service supervisors and operators in its LongIsland City location.  These personneladditions along with general pay rate increases and associated payroll taxes hasaccounted for approximately $115,000 of increased costs as compared to the sameperiod in 2004.  As the Company continuesto grow its customer base and revenues, it will continue to evaluate personnellevels and determine if additional personnel are necessary.

•                  TheCompany’s costs related to services and goods for the first quarter of 2005increased by approximately $40,000 as a result of the acquisition ofalphaCONNECT, Inc. in April 2004. In the third quarter of 2004, the Company consolidated its operationsinto its Audubon, New Jersey facility. This consolidation has resulted in theCompany being able to realize cost efficiencies, without negatively impactingservice.

 

**Selling, General and Administrative Expenses:**

 

Selling, general and administrative expenses increasedby approximately $215,000 for the three months ended March 31, 2005 ascompared to the same period in 2004, an increase of 10%.  The increase is primarily attributable to thefollowing:

•                  Theacquisition of alphaCONNECT, Inc. in 2004, resulted in the Companyincurring approximately $40,000 of administrative costs for the three monthsended March 31, 2005.  Theseexpenses consist primarily of payroll and amortization expense.  Amortization relates to a non-competeagreement and customer list, which are being amortized over a five year period.

•                  TheCompany has incurred legal expenses of approximately $55,000 with respect toworking with the FCC to determine an action plan to establish a timeframe tocomplete an upgrade program for certain PERS units which did not meetapplicable FCC standards.  In response toan FCC inquiry, the Company determined that certain versions of its PERSequipment emitted levels of radio frequency energy that exceeded applicablestandards designed to reduce the possibility of interference with radiocommunications. In addition, the Company has incurred approximately $25,000 oflegal expenses related to negotiations of a possible amendment to a supplieragreement.

•                  Inthe second half 2004, the Company hired additional sales personnel to assist inthe marketing of its PERS and disease management offerings.  In addition, increased commissions were paidto in-house sales personnel, which are directly related to increased revenues in2005.  As a result of these items, theCompany incurred approximately $37,000 of increased expenses in the firstquarter of 2005.

 

There were other smaller increases in selling, generaland administrative expenses which arose out of the normal course of businesssuch as administrative salaries and accounting fees, which were offset by areduction in rent and warrant expense.

 

18

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**Interest Expense:**

 

Interest expense decreased by approximately $4,000 forthe three months ended March 31, 2005, as compared to the same period in2004, a decrease of 25%. The decrease was primarily due to the Companycontinuing to pay down its term loan and its capital lease obligations.

 

**Other Income:**

 

Other income for the three months ended March 31, 2005 and 2004was approximately $83,000 and $74,000, respectively. Other Income for the threemonths ended March 31, 2005 and 2004 includes a Relocation and EmploymentAssistance Program (“REAP”) credit in the approximate amounts of $75,000 and$57,000, respectively.  In connectionwith the relocation of certain operations to Long Island City, New York, theCompany became eligible for the REAP credit which is based upon the number ofemployees relocated to this designated REAP area. The REAP is in effect for atwelve year period; during the first five years the Company will be refundedthe full amount of the eligible credit and, thereafter, the benefit will beavailable only as a credit against New York City income taxes.

 

**Income Before Provision for Income Taxes:**

 

The Company’s income before provision for income taxesfor the three months ended March 31, 2005 was approximately $436,000 ascompared to $355,000 for the same period in 2004. The increase of $81,000 forthe three months ended March 31, 2005 primarily resulted from an increasein the Company’s service revenues offset by an increase in the Company’s costsrelated to services and selling, general and administrative costs.

 

**Liquidity and Capital Resources**

 

The Company has acredit facility of $3,000,000, which includes a term loan of $1,500,000 and arevolving credit line that permits maximum borrowings of $1,500,000 (based oneligible receivables, as defined).  Priorto an amendment of the credit facility agreement in March 2005, borrowingsunder the term loan bore interest at either (a) LIBOR plus 3.5% or (b) theprime rate or the federal funds effective rate plus .5%, whichever is greater,plus 1.0% and the revolving credit line will bear interest at either (a) LIBORplus 3.0% or (b) the prime rate or the federal funds effective rate plus..5%, whichever is greater, plus .5%.  TheCompany has the option to choose between the two interest rate options underthe term loan and revolving credit line. The term loan is payable in equal monthly principal payments of $25,000over five years while the revolving credit line, as amended, is now availablethrough May 2008.  The outstandingbalance on the term loan at March 31, 2005 was $675,000.  There were no amounts outstanding on therevolving credit line at March 31, 2005.

 

On March 28,2005, the Company amended its loan documents whereby the borrowings under theterm loan will bear interest at either (a) LIBOR plus 2.25% or (b) theprime rate or the federal funds effective rate plus .5%, whichever is greater,and the revolving credit line will bear interest at either (a) LIBOR plus2.0% or (b) the prime rate or the federal funds effective rate plus .5%,

 

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whichever isgreater.  The revolving credit line hasalso been extended for an additional three (3) years and is now availablethrough May 2008.  Additionally,certain of the covenants were amended.

 

At December 31,2004, the Company was in compliance with its loan covenants under the agreementdated May 20, 2002 and as amended on August 11, 2003 and March 28,2005.

 

The following table is a summary of contractual obligations as of March 31,2005:

 
| ** **                    | ** ** | **Payments Due by Period** | ** ** |
|-------------------------------|------------|----------------------------|------------|
| **Contractual Obligations**   | ** ** | **Total**                  | ** ** | **Less than 1  year** | ** ** | **1-3 years** | ** ** | **4-5 years** | ** ** | **After 5 years** | ** ** |
| Revolving  Credit Line        |       | $                          | - 0 -      |   |   |   |   |   |   |   |   |   |
| Debt (a)                      |       | $                          | 740,041    |   | $ | 323,252 |   | $ | 416,789 |   |   |   |   |   |
| Capital  Leases (b)           |       | $                          | 95,945     |   | $ | 95,945 |   |   |   |   |   |   |   |
| Operating  Leases (c)         |       | $                          | 4,862,929  |   | $ | 462,698 |   | $ | 1,131,060 |   | $ | 653,248 |   | $ | 2,615,923 |   |
| Total Contractual Obligations |       | $                          | 5,698,915  |   | $ | 881,895 |   | $ | 1,547,849 |   | $ | 653,248 |   | $ | 2,615,923 |   |

 

(a)          – Debt includes theCompany’s term loan of $675,000 which matures in June 2007, as well asloans associated with the purchase of automobiles.

 

(b)         – Capital leaseobligations relate to the purchase of the Company’s new CustomerService/Emergency Response software and the purchase of telephone answeringservice equipment.  Both of these capitalleases mature in January 2006.

 

(c)          – Operating leasesinclude rental of facilities at various locations within the UnitedStates.  These operating leases includethe rental of the Company’s call center, warehouse and the officefacilities.  These operating leases havevarious maturity dates.  The Companycurrently leases office space from the Chief Executive Officer and principalshareholder pursuant to a lease which expires in September 2007.  The Company leased a second building from theChief Executive Officer and principal shareholder until October 2004, atwhich time the Company was released from its obligation.

 

Net cash provided by operating activities was approximately $0.3million for the three months ended March 31, 2005, as compared toapproximately $1.0 million for the same period in 2004. During 2005, increasesin cash provided by operating activities from depreciation and amortization ofapproximately $0.7 million and net earnings of approximately $0.2 million wereoffset by an increase in trade receivables of approximately $0.5 million. Theincrease in trade receivables is primarily due to a slow down of collections asresult of a select number of customers processing payments in a slower mannerin both the HSMS and TAS segment, which represents approximately $0.3 and $0.2million, respectively, of the increase. A portion of the

 

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slow down in payment of HSMS is directly related to certain customersrevising the method in which claims are submitted and paid.  The Company has updated its systemsaccordingly and is now collecting these amounts on a more timely basis.  In addition, the Company has expanded itscustomer base, as it relates to the TAS segment, which has impacted theincrease in receivables.

 

Net cash used in investing activities for the three months ended March 31,2005 was approximately $0.3 million as compared to $0.8 million in the sameperiod in 2004.  The primary componentsof net cash used in investing activities in 2005 and 2004 were capitalexpenditures and deposits on equipment and software.  Net cash used in investing activities forcapital expenditures for 2005 and 2004 were approximately $0.1 and $0.6million, respectively and for deposits on equipment and software wasapproximately $0.1 for $0.1 million, respectively.  Capital expenditures for 2004 primarilyrelate to the production and purchase of the enhanced PERS and traditional PERSsystems and the continued enhancement of its telephony equipment.

 

Cash flows for the three months ended March 31, 2005 provided byfinancing activities were approximately $0.6 million compared to cash providedby financing activities of $.1 million for the same period in 2004.  The primary components of cash flow provided by financingactivities in 2005 and 2004 were proceeds received from the exercise of stockoptions and warrants.  The proceeds fromthe exercise of both stock options and warrants were approximately $0.7 and $0.2million in 2005 and 2004, respectively. The primary components of cash used in financing activities during 2005and 2004 were the repayment of debt of approximately $0.1 and $0.1,respectively.

 

During the next twelve months, the Company anticipates it will makecapital expenditures of approximately $2.8 – $3.2 million for the productionand purchase of the enhanced PERS and traditional PERS systems and enhancementsto its computer operating systems.  Thisamount is subject to fluctuations based on customer demand. The Company alsoanticipates incurring approximately $0.5 - $0.7 million of costs relating toresearch and development of its enhanced PERS and Med-Time dispenser.  In addition, assuming the upgrade programwhich the Company is working with the FCC to finalize is to run substantiallyparallel with the normal recycling of the Company’s PERS equipment, the Companyanticipates paying approximately $0.3 million relating to the FCC matter overthe next twelve months.

 

As of March 31, 2005, the Company had approximately $3.9 millionin cash and the Company’s working capital was approximately $7.2 million.  The Company believes that with its presentcash balance and with operations of the business generating positive cash flow,it will be able to meet its cash, working capital and capital expenditure needsfor at least the next twelve months. The Company also has a revolving creditline, which expires in May 2008 that permits borrowings up to $1.5 millionof which no amounts were outstanding at March 31, 2005.

 

Off-Balance Sheet Arrangements:

 

As of March 31, 2005, the Company has not entered into anyoff-balance sheet arrangements that are reasonably likely to have an impact onthe Company’s current and future financial condition.

 

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Other Factors:

 

On April 12, 2004, the Company acquiredsubstantially all of the assets of alphaCONNECT, Inc., a New Jersey basedprovider of telephone after-hour answering services and stand-alone voice mailservices.  The purchase price was$691,956 and consisted of an initial cash payment of $563,816 and future cashpayments of $51,256 and $76,884 to be paid to the Seller after the first andsecond year anniversaries from the date of the executed agreement,respectively.  The Company also paidprofessional fees of $76,000.  Apotential exists for the payment of additional purchase price consideration ifcertain thresholds concerning revenue are met by the acquired business.  The first measurement date for this potentialadditional purchase price consideration was April 1, 2005 and noadditional purchase price consideration was required. The second measurementdate is April 1, 2006.

 

On January 14, 2002, the Company entered into anoperating lease agreement for space in Long Island City, New York in an effortto consolidate its HCI and Oceanside ERC and Customer Service facilities.  The Company believes that centralization ofthe ERC, Customer Service and H-LINK® OnCall operations will provide additionalefficiencies and facilitate the continued projected growth of the H-LINK andPERS divisions.  The fifteen (15) yearlease term commenced in April 2003 when the property was first occupied bythe Company.  The lease calls for minimumannual rentals of $269,500, subject to a 3% annual increase plus reimbursementfor real estate taxes.

 

On November 1, 2001, the Company entered into aCooperative Licensing, Development, Services and Marketing Agreement with HHN(the “HHN Agreement”) pursuant to which the Company developed, with theassistance of HHN, a new integrated appliance combining the features of theCompany’s PERS product with HHN’s technology. Pursuant to the HHN Agreement, the Company is the exclusive manufacturerand distributor in the United States, of an enhanced PERS system that combinesthe Company’s traditional safety monitoring features with HHN’s internet baseddisease management monitoring technology. The Company’s right to maintain such exclusivity is based on achievementof certain thresholds, all of which have been met to date, and the nextthreshold to be met is in October 2005. The HHN Agreement has a minimum five-year term, and also provides forthe payment by the Company of certain fees based on the service revenue derivedfrom the enhanced PERS product.  The costof the licensing component of $1,115,000, including $115,000 of professionalfees, is being amortized over a 40-month period which commenced in July 2003upon the Company meeting certain milestones under the agreement and concludesat the end of the initial term of the Agreement.  As of December 31, 2004, the license feehas been paid in full.

 

Since 1983, the Company has provided PersonalEmergency Response Systems (“PERS”) services to the City of New York’s HumanResources Administration Home Care Service Program (“HCSP”).  The Company has been operating since 1993with a contract to provide HCSP with these services, which has been extendedfor 1-2 year periods since 1993, the last such extension through June 30,2004.  During the three months ended March 31,2005 and 2004, the Company’s revenues from this contract represented 14% and16%, respectively, of its total revenue.

 

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In November 2002,a new Request for Proposals (“RFP”) was issued by HRA to provide emergencyresponse services to HCSP from April 1, 2004 through March 31,2007.  After receiving notification fromthe City of New York’s Human Resources Administration (“HRA”) that the Companywas selected as the approved vendor under the RFP to provide PERS services tothe Home Care Services Program to Medicaid Eligible individuals, the Companysubsequently received notification from HRA that it canceled the RFP “in thebest interests of the City of New York.” Concurrently, the Company was advised of HRA’s decision to issue a newcontract extension to the Company through June 2005 under the terms of thecontract that the Company has been operating under since 1993.  HRA has also advised the Company that theyplan to issue a new RFP with respect to PERS services in the future.  As of May 6, 2005, a new RFP has notbeen issued. The Company was advised that the cancellation of the RFP is notrelated to any performance issue or negative reflection upon the Company.

 

TheCompany cannot determine (i) when the terms of the new RFP will bepublished, (ii) what the terms of the new RFP will be, (iii) how longthe current contract terms will remain in effect or (iv) whether AMAC willbe the successful bidder on the new RFP (and if so, under what terms andconditions).  While the Company hasreduced its dependence on revenue from HCSP, if subsequent to June 2005,the Company does not maintain this contract, a significant amount of theCompany’s revenue could be lost, albeit over a protracted period, which couldhave a material adverse effect on operating results and cash flows. The Companycontinues to implement a variety of operational efficiencies, as well ascontinuing to enhance and diversify its other revenue streams, to offset theimpact, if any, in the event of this occurrence.

 

As of March 31, 2005 and December 2004, accounts receivablefrom the contract represented 16% and 18%, respectively, of accounts receivableand medical devices in service under the contract represented approximately 17%and 18%, respectively, of medical devices.

 

No other single contractor customer represents more than 6% of the Company’s revenue.

 

The Company’s PERS andrelated equipment is subject to approvals under the rules of the FederalCommunication Commission (“FCC”). In November 2004, the Company receivedan inquiry from the Federal Communications Commission. In response to thatinquiry the Company has determined that certain versions of its PERS andrelated equipment emit  levels of radiofrequency energy that exceed applicable standards designed to reduce thepossibility of interference with radio communications.  Although this issue poses no safety orfunctionality risk to subscribers, the Company is in the process ofestablishing a corrective action plan with the FCC to satisfy this matter.

 

The Company iscurrently working with the FCC to determine an action plan to establish atimeframe to complete an upgrade program for the affected PERS and relatedequipment and the amount of a payment to the FCC. At this timethe Company is unable to determine whether it is probable that a liability hasbeen incurred; accordingly, no estimate of the potential payment to the FCC hasbeen recorded.  However, the Companybelieves the payment could range between $50,000 and $160,000, althoughsubstantially higher amounts are possible based on the

 

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discretion of the FCC.  TheCompany believes the FCC will allow the upgrade program to run substantiallyparallel with the normal recycling of the Company’s PERS equipment. Under thisassumption, the only additional cost to be incurred will be the incrementalcost to bring the units into compliance with the FCC regulations.

 

As of March 31,2005, the Company has recorded an expense of approximately $570,000 inconnection with this matter.  The Companyanticipates the total charge to complete this upgrade program to range from$800,000 to $1,200,000.  If the Companyis required to complete the PERS equipment and related equipment upgrades in ashorter period of time than is anticipated, significant additional costs willbe incurred inasmuch as unscheduled service calls will be required.

 

**Recent Accounting Pronouncements:**

 

In December 2004,the FASB issued SFAS No. 123 (revised 2004), Share-Based Payment which isa revision of SFAS No. 123, Accounting for Stock-Based Compensation. Thestatement supercedes APB Opinion No. 25, Accounting for Stock Issued toEmployees, and its related implementation guidance. SFAS No. 123R requiresall entities to recognize compensation expense in an amount equal to thefair-value of share-based payments. Upon adoption, the fair value of allemployee stock option awards will be expensed in the Company’s statement ofincome, typically, over the related vesting period of the options. SFAS No. 123Rrequires the use of fair value to measure share-based awards issued toemployees, computed at the date of grant. Additionally, SFAS No. 123Rrequires companies to record compensation expense for the unvested portion ofpreviously granted awards as they continue to vest, as calculated previouslyand included in the companies prior period pro forma disclosures under SFAS No. 123.SFAS No. 123R also requires the tax benefit of tax deductions in excess ofrecognized compensation costs to be reported as a financing cash flow, ratherthan as an operating cash flow as required under current literature. TheCompany will adopt SFAS No. 123R beginning with the fiscal 2006 firstquarter, as required. The impact of adoption of SFAS 123R cannot be determinedat this time because it will partially depend on levels of share based paymentgranted in the future.  However, had theCompany adopted SFAS 123R in prior periods, the impact of that standard wouldhave approximated the impact of SFAS 123 as shown in the table below (seediscussion on Accounting for Stock Based Compensation).

 

In November 2004,the FASB issued FASB Statement No. 151, Inventory Costs – An Amendment ofARB No. 43, Chapter 4 (“SFAS 151”), which is the result of its effort toconverge U.S. accounting standards for inventories with InternationalAccounting Standards. SFAS 151 requires idle facility expenses, freight,handling costs, and wasted material (spoilage) costs to be recognized ascurrent-period charges and not included in overhead. It also requires thatallocation of fixed production overhead cost to inventory be based on normalcapacity of the production facilities. SFAS 151 will be effective for inventorycosts incurred during fiscal years beginning after June 15, 2005. TheCompany has not determined the effect of adopting SFAS 151.

 

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**Critical Accounting Policies:**

 

In preparing the financial statements, the Companymakes estimates, assumptions and judgments that can have a significant impacton our revenue, operating income and net income, as well as on the reportedamounts of certain assets and liabilities on the balance sheet.  The Company believes that the estimates,assumptions and judgments involved in the accounting policies described belowhave the greatest potential impact on its financial statements due to themateriality of the accounts involved, and therefore, considers these to be itscritical accounting policies.  Estimatesin each of these areas are based on historical experience and a variety ofassumptions that the Company believes are appropriate. Actual results maydiffer from these estimates.

 

**Reserves for UncollectibleAccounts Receivable**

The Company makes ongoingassumptions relating to the collectibility of its accounts receivable.  The accounts receivable amount on the balancesheet includes a reserve for accounts that might not be paid.  In determining the amount of the reserve, theCompany considers its historical level of credit losses.  The Company also makes judgments about thecreditworthiness of significant customers based on ongoing credit evaluations,and it assesses current economic trends that might impact the level of creditlosses in the future. The Company recorded reserves for uncollectible accountsreceivable of $749,000 as of March 31, 2005, which is equal to 16.12% oftotal accounts receivable.  While theCompany believes that the current reserves are adequate to cover potentialcredit losses, it cannot predict future changes in the financial stability ofits customers and the Company cannot guarantee that its reserves will continueto be adequate.  For each 1% that actualcredit losses exceed the reserves established, there would be an increase ingeneral and administrative expenses and a reduction in reported net income ofapproximately $46,000. Conversely, for each 1% that actual credit losses areless than the reserve, this would decrease the Company’s general andadministrative expenses and increase the reported net income by approximately$46,000.

 

**Fixed Assets**

Fixed assets are statedat cost.  Depreciation for financialreporting purposes is being provided by the straight-line method over the estimateduseful lives of the related assets.  Thevaluation and classification of these assets and the assignment of usefuldepreciable lives involves significant judgments and the use of estimates.  Fixed assets are reviewed for impairmentwhenever events or changes in circumstances indicate that the carrying amountof an asset may not be recoverable. Historically, impairment losses have not been required.  Any change in the assumption of estimateduseful lives could either result in a decrease or increase the Company’sfinancial results.  A decrease inestimated useful life would reduce the Company’s net income and an increase inestimated useful life would increase the Company’s net income.  If the estimated useful lives of the PERSmedical device were decreased by one year, the cost of goods related toservices would increase and net income would decrease by approximately $165,000per annum.  Conversely, if the estimateduseful lives of the PERS medical device were increased by

 

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one year, the cost ofgoods related to services would decrease and net income would increase byapproximately $135,000 per annum.

 

**Valuation of Goodwill**

Pursuant to Statement ofFinancial Accounting Standards No. 142, “Goodwill and Other IntangibleAssets,” goodwill and indefinite life intangible assets are no longeramortized, but are subject to annual impairment tests.  To date, the Company has not been required torecognize an impairment of goodwill. The Company tests goodwill for impairmentannually or more frequently when events or circumstances occur indicatinggoodwill might be impaired. This process involves estimating fair value usingdiscounted cash flow analyses. Considerable management judgment is necessary toestimate discounted future cash flows. Assumptions used for these estimatedcash flows were based on a combination of historical results and currentinternal forecasts.  The Company cannotpredict certain events that could adversely affect the reported value of goodwill,which totaled $2,563,864 at March 31, 2005 and December 31,2004.  If the Company were to experiencea significant adverse impact on goodwill, it would negatively impact theCompany’s net income.

 

**Item 3.  Controls andProcedures.**

 

As of the end of the periodcovered by this report, the Company carried out an evaluation, under thesupervision and with the participation of its Chief Executive Officer,President and the Chief Financial Officer, of the effectiveness of the designand operation of our disclosure controls and procedures. Based on thisevaluation, the Chief Executive Officer, President and the Chief FinancialOfficer concluded that the Company’s controls and procedures are effective toensure that information required to be disclosed by the Company in the reportsfiled by it under the Securities and Exchange Act of 1934, as amended, isrecorded, processed, summarized and reported within the time periods specifiedin the SEC’s rules and forms, and include controls and procedures designedto ensure that information required to be disclosed by the Company in suchreports is accumulated and communicated to the Company’s management, includingthe Chief Executive Officer, President and Chief Financial Officer of theCompany, as appropriate to allow timely decisions regarding requireddisclosure.

 

There were no changes in the Company’s internalcontrol over financial reporting that occurred during the quarter ended March 31,2005 that has materially affected, or is reasonably likely to affect, the Company’sinternal control over financial reporting.

 

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**PART II - OTHER INFORMATION**

 

**Item 1.****           LegalProceedings.**

 

The Company is aware of various threatened or pendinglitigation claims against the Company relating to its products and services andother claims arising in the ordinary course of its business.  The Company has given its insurance carriernotice of such claims and it believes there is sufficient insurance coverage tocover any such claims.   Currently, thereare no litigation claims for which an estimate of loss, if any, can bereasonably made as they are in the preliminary stages and therefore, noliability or corresponding insurance receivable has been recorded.

 

**Item 2.  UnregisteredSales of Equity Securities and Use of Proceeds.**

 

On April 7, 2005, the Company issued 55,000shares of Common Stock to a company which had previously sold its assets to theCompany, pursuant to an exercise of a warrant, for a total purchase price of$110,000.  The shares were issued withoutregistration in reliance on Section 4(2) of the Securities Act of1933, as amended, and Rule 506 promulgated thereunder, and in reliance onthe purchaser’s representation as to its status as an accredited investor, andthat it was acquiring the shares for investment purposes and not with a view toany sale or distribution.  In addition,the shares bore a 1933 Act restrictive legend.

 

**Item 6.  Exhibits.**

 
| **No.** | ** ** | **Description**                                                                            |
|---------|------------|--------------------------------------------------------------------------------------------|
|    |       |                                                                                       |
| 31.1    |       | Certification of CEO Pursuant to Section 302 of  the Sarbanes Oxley Act of 2002       |
| 31.2    |       | Certification of President Pursuant to Section 302  of the Sarbanes Oxley Act of 2002 |
| 31.3    |       | 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 President Pursuant to Section 906  of the Sarbanes Oxley Act of 2002 |
| 32.3    |       | Certification of CFO Pursuant to Section 906 of  the Sarbanes Oxley Act of 2002       |

 

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**SIGNATURES**

 

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the Company has duly caused this report to be signed onits behalf by the undersigned thereunto duly authorized.

 

 
|                     | **AMERICAN MEDICAL ALERT CORP.** |
|--------------------------|----------------------------------|
|                     |                             |   |   |
|                     |                             |   |   |
| Dated: May 12, 2005 | By:                              | /s/     Howard M.  Siegel |   |
|                     |                             | Name: Howard M. Siegel |   |
|                     |                             | Title: | Chairman of the Board, |   |
|                     |                             |   | Chief  Executive Officer |   |
|                     |                             |   |   |
|                     |                             |   |   |
|                     | By:                              | /s/     Richard  Rallo |   |
|                     |                             | Name: Richard Rallo |   |
|                     |                             | Title: Chief Financial Officer |   |

 

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