UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549




FORM
10-Q




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




For the
quarter ended March 31, 2009.




OR




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




For the
transition period from ____________ to ____________




Commission
      File Number 1-8635




AMERICAN
MEDICAL ALERT CORP.


(Exact
Name of Registrant as Specified in its Charter)




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





3265
Lawson Boulevard, Oceanside, New York 11572


(Address
of principal executive offices)


(Zip
Code)




(516)
536-5850


(Registrant’s
telephone number, including area code)




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




o o




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





Large
      accelerated filer o
              Accelerated
      filer oNon-accelerated
      filer o (Do
      not check if a smaller reporting company)
              Smaller
      reporting company ý





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 on the Exchange Act)


Yes  ̈   No
x





Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date: 9,507,183 shares of $.01 par value
common stock as of May 14, 2009.





AMERICAN
MEDICAL ALERT CORP. AND SUBSIDIARIES





INDEX
                PAGEPart
      I Financial InformationReport
      of Independent Registered Public Accounting Firm
                1Condensed
      Consolidated Balance Sheets for March 31, 2009 and December 31,
      2008
                2Condensed
      Consolidated Statements of Income for the Three Months Ended March 31,
      2009 and 2008
                3Condensed
      Consolidated Statements of Cash Flows for the Three Months Ended March 31,
      2009 and 2008
                4Notes
      to Condensed Consolidated Financial Statements
                6Management’s
      Discussion and Analysis ofFinancial
      Condition and Results of Operations
                13Quantitative
      and Qualitative Disclosures About Market Risks
                25Controls
      and Procedures
                26Part
      II Other Information
                26





Report of
Independent Registered Public Accounting Firm





Board of
Directors and Shareholders


American
Medical Alert Corp. and Subsidiaries


Oceanside,
New York





We have
reviewed the accompanying condensed consolidated balance sheet of American
Medical Alert Corp. and Subsidiaries (the “Company”) as of March 31, 2009 and
the related condensed consolidated statements of income and cash flows for the
three-months ended March 31, 2009 and 2008. These interim financial statements
are the responsibility of the Company's management.





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





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





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





/s/
Margolin, Winer & Evens LLP





Margolin,
Winer & Evens LLP


Garden
City, New York





May 14,
2009


1


PART
I - FINANCIAL INFORMATION


Item
1. Financial
Statements.




AMERICAN
MEDICAL ALERT CORP. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS





ASSETS


March 31, 2009
                        (Unaudited)
                      
                      
                      Dec. 31, 2008CURRENT
      ASSETSCash
                      
                      $
                      4,514,992
                      
                      
                      $
                      2,473,733Accounts
      receivable(net
      of allowance for doubtful accounts of $663,500 and
    $646,000)
                      
                      
                      5,671,248
                      
                      
                      
                      6,001,952Note
      receivable
                      
                      
                      14,166
                      
                      
                      
                      21,117Inventory
                      
                      
                      501,501
                      
                      
                      
                      547,596Prepaid
      income taxes
                      
                      
                      121,687
                      
                      
                      
                      215,427Prepaid
      expenses and other current assets
                      
                      
                      389,876
                      
                      
                      
                      436,554Deferred
      income taxes
                      
                      
                      383,000
                      
                      
                      
                      358,000Total
      Current Assets
                      
                      
                      11,596,470
                      
                      
                      
                      10,054,379FIXED
      ASSETS(Net
      of accumulated depreciation and amortization)
                      
                      
                      9,902,593
                      
                      
                      
                      10,169,907OTHER
      ASSETSIntangible
      assets(net
      of accumulated amortization of $5,695,702 and $5,386,262)
                      
                      
                      2,791,591
                      
                      
                      
                      3,085,931Goodwill
      (net of accumulated amortization of $58,868)
                      
                      
                      10,128,718
                      
                      
                      
                      9,996,152Other
      assets
                      
                      
                      866,340
                      
                      
                      
                      1,059,89513,786,649
                      
                      
                      
                      14,141,978TOTAL
      ASSETS
                      
                      $
                      35,285,712
                      
                      
                      $
                      34,366,264LIABILITIES
      AND SHAREHOLDERS’ EQUITYCURRENT
      LIABILITIES:Current
      portion of long-term debt
                      
                      $
                      1,301,667
                      
                      
                      $
                      1,754,949Accounts
      payable
                      
                      
                      634,179
                      
                      
                      
                      749,335Accounts
      payable – acquisitions
                      
                      
                      133,922
                      
                      
                      
                      20,390Accrued
      expenses
                      
                      
                      2,105,025
                      
                      
                      
                      1,348,823Deferred
      revenue
                      
                      
                      357,414
                      
                      
                      
                      294,882Total
      Current Liabilities
                      
                      
                      4,532,207
                      
                      
                      
                      4,168,379DEFERRED
      INCOME TAX LIABILITY
                      
                      
                      1,233,000
                      
                      
                      
                      1,208,000LONG-TERM
      DEBT, Net of Current Portion
                      
                      
                      2,460,000
                      
                      
                      
                      2,815,000CUSTOMER
      DEPOSITS
                      
                      
                      122,496
                      
                      
                      
                      106,196ACCRUED
      RENTAL OBLIGATION
                      
                      
                      517,450
                      
                      
                      
                      507,512OTHER
      LIABILITIES
                      
                      
                      10,000
                      
                      
                      
                      10,000TOTAL
      LIABILITIES
                      
                      
                      8,875,153
                      
                      
                      
                      8,815,087COMMITMENTS
      AND CONTINGENT LIABILITIES
                      
                      
                      -
                      
                      
                      
                      -SHAREHOLDERS’
      EQUITYPreferred
      stock, $.01 par value – authorized, 1,000,000 shares; none issued and
      outstandingCommon
      stock, $.01 par value – authorized 20,000,000 shares; issued 9,509,673
      shares in 2009 and 9,493,402 shares in 2008
                      
                      
                      95,097
                      
                      
                      
                      94,934Additional
      paid-in capital
                      
                      
                      15,957,274
                      
                      
                      
                      15,871,305Retained
      earnings
                      
                      
                      10,494,765
                      
                      
                      
                      9,721,51526,547,136
                      
                      
                      
                      25,687,754Less
      treasury stock, at cost (48,573 shares in 2009 and 2008)
                      
                      
                      (136,577
                      )
                      
                      
                      (136,577
                      )Total
      Shareholders’ Equity
                      
                      
                      26,410,559
                      
                      
                      
                      25,551,177TOTAL
      LIABILITIES AND SHAREHOLDERS’ EQUITY
                      
                      $
                      35,285,712
                      
                      
                      $
                      34,366,264





See
accompanying notes to condensed financial statements.


2


AMERICAN
MEDICAL ALERT CORP. AND SUBSIDIARIES




CONDENSED
CONSOLIDATED STATEMENTS OF INCOME




(Unaudited)




Three Months Ended March 31,2009
                              
                              
                              2008Revenues:Services
                              
                              $
                              9,640,644
                              
                              
                              $
                              9,339,112Product
      sales
                              
                              
                              271,583
                              
                              
                              
                              296,6339,912,227
                              
                              
                              
                              9,635,745Costs
      and Expenses (Income):Costs
      related to services
                              
                              
                              4,515,966
                              
                              
                              
                              4,581,200Costs
      of products sold
                              
                              
                              121,002
                              
                              
                              
                              150,755Selling,
      general and administrative expenses
                              
                              
                              4,052,447
                              
                              
                              
                              4,155,041Interest
      expense
                              
                              
                              23,682
                              
                              
                              
                              102,055Other
      income
                              
                              
                              (112,120
                              )
                              
                              
                              (120,663
                              )Income
      before Provision for Income Taxes
                              
                              
                              1,311,250
                              
                              
                              
                              767,357Provision
      for Income Taxes
                              
                              
                              538,000
                              
                              
                              
                              315,000NET
      INCOME
                              
                              $
                              773,250
                              
                              
                              $
                              452,357Net
      income per share:Basic
                              
                              $
                              .08
                              
                              
                              $
                              .05Diluted
                              
                              $
                              .08
                              
                              
                              $
                              .05Weighted
      average number of common shares outstandingBasic
                              
                              
                              9,453,868
                              
                              
                              
                              9,406,070Diluted
                              
                              
                              9,581,219
                              
                              
                              
                              9,698,665





See
accompanying notes to condensed financial statements.


3


AMERICAN
MEDICAL ALERT CORP. AND SUBSIDIARIES





CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)





Three Months Ended March 31,2009
                  
                  
                  2008Cash
      Flows From Operating Activities:Net
      income
                  
                  $
                  773,250
                  
                  
                  $
                  452,357Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation
      and amortization
                  
                  
                  1,050,972
                  
                  
                  
                  1,036,673Stock
      compensation charge
                  
                  
                  86,132
                  
                  
                  
                  88,893Decrease
      (increase) in:Accounts
      receivable
                  
                  
                  330,704
                  
                  
                  
                  (185,171
                  )Inventory
                  
                  
                  46,095
                  
                  
                  
                  (136,871
                  )Prepaid
      income taxes
                  
                  
                  93,740
                  
                  
                  
                  177,892Prepaid
      expenses and other current assets
                  
                  
                  46,678
                  
                  
                  
                  6,492Increase
      (decrease) in:Accounts
      payable, accrued expenses and other
                  
                  
                  667,284
                  
                  
                  
                  36,190Deferred
      revenue
                  
                  
                  62,532
                  
                  
                  
                  (13,124
                  )Net
      Cash Provided by Operating Activities
                  
                  
                  3,157,387
                  
                  
                  
                  1,463,331Cash
      Flows From Investing Activities:Expenditures
      for fixed assets
                  
                  
                  (282,346
                  )
                  
                  
                  (729,371
                  )Repayment
      of notes receivable
                  
                  
                  6,951
                  
                  
                  
                  6,613Deposit
      on equipment and software
                  
                  
                  -
                  
                  
                  
                  (106,953
                  )Purchase
      – other
                  
                  
                  (15,099
                  )
                  
                  
                  (24,153
                  )Decrease
      in other assets
                  
                  
                  1,682
                  
                  
                  
                  337Net
      Cash Used In Investing Activities
                  
                  
                  (288,812
                  )
                  
                  
                  (853,527
                  )Cash
      Flows From Financing Activities:Principal
      payments under capital lease obligation
                  
                  
                  -
                  
                  
                  
                  (10,297
                  )Purchase
      of treasury stock
                  
                  
                  -
                  
                  
                  
                  (10,242
                  )Repayment
      of long-term debt
                  
                  
                  (808,282
                  )
                  
                  
                  (382,594
                  )Payment
      of accounts payable - acquisitions
                  
                  
                  (19,034
                  )
                  
                  
                  -Proceeds
      upon exercise of stock options and warrants
                  
                  
                  -
                  
                  
                  
                  120,000Net
      Cash Used In Financing Activities
                  
                  
                  (827,316
                  )
                  
                  
                  (283,133
                  )





See
accompanying notes to condensed financial statements.


4


AMERICAN
MEDICAL ALERT CORP. AND SUBSIDIARIES





CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)


(Unaudited)





Three Months Ended March 31,2009
                      
                      
                      2008Net
      Increase in Cash
                      
                      $
                      2,041,259
                      
                      
                      $
                      326,671Cash,
      Beginning of Period
                      
                      
                      2,473,733
                      
                      
                      
                      911,525Cash,
      End of Period
                      
                      $
                      4,514,992
                      
                      
                      $
                      1,238,196SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:CASH
      PAID DURING THE PERIOD FOR INTEREST
                      
                      $
                      23,682
                      
                      
                      $
                      78,480CASH
      PAID DURING THE PERIOD FOR INCOME TAXES
                      
                      $
                      119,098
                      
                      
                      $
                      134,240SUPPLEMENTAL
      SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:Accounts
      payable due sellers in connection with acquisitions
                      
                      $
                      132,566
                      
                      
                      $
                      83,265Other
      assets, deposits on equipment transferred to fixed assets
                      
                      
                      189,346
                      
                      
                      
                      -





See
accompanying notes to condensed financial statements.


5


AMERICAN
MEDICAL ALERT CORP. AND SUBSIDIARIES




Notes to
Condensed Consolidated Financial Statements


(Unaudited)




1.           General:




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




2.           Results
of Operations:




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




In the
opinion of management, the accompanying unaudited condensed financial statements
contain all adjustments (consisting only of normal recurring accruals) necessary
to present fairly the financial position as of March 31, 2009 and the results of
operations and cash flows for the three months ended March 31, 2009 and
2008.




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




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




The
results of operations for the three months ended March 31, 2009 are not
necessarily indicative of the results to be expected for any other interim
period or for the full year.




3.
            Recent
      Accounting Pronouncements:




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


6


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




4.         Accounting
for Stock-Based Compensation:




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




The
Company granted 5,000 stock options during the three month period ended March
31, 2008.  No options were granted during the three month period ended
March 31, 2009.




The following tables summarize stock
option activity for the first quarter ended March, 31, 2009 and 2008.




2009WeightedAverageWeighted
                      
                      
                      Remaining
                      
                      
                      AggregateNumber
      of
                      
                      
                      Average
                      
                      
                      Contractual
                      
                      
                      IntrinsicOptions
                      
                      
                      Option Price
                      
                      
                      Term (years)
                      
                      
                      ValueBalance
      at January 1
                      
                      
                      877,235
                      
                      
                      $
                      4.25Granted
                      
                      
                      -
                      
                      
                      
                      -Exercised
                      
                      
                      -
                      
                      
                      
                      -Expired/Forfeited
                      
                      
                      (4,150
                      )
                      
                      
                      5.31Balance
      at March 31
                      
                      
                      873,085
                      
                      
                      $
                      4.25
                      
                      
                      
                      3.20
                      
                      
                      $
                      1,063,653Vested
      and exercisable
                      
                      
                      873,085
                      
                      
                      $
                      4.25
                      
                      
                      
                      3.20
                      
                      
                      $
                      1,063,653


7




2008WeightedAverageWeighted
                          
                          
                          Remaining
                          
                          
                          AggregateNumber
      of
                          
                          
                          Average
                          
                          
                          Contractual
                          
                          
                          IntrinsicOptions
                          
                          
                          Option Price
                          
                          
                          Term (years)
                          
                          
                          ValueBalance
      at January 1
                          
                          
                          922,273
                          
                          
                          $
                          4.01Granted
                          
                          
                          5,000
                          
                          
                          
                          6.51Exercised
                          
                          
                          (60,000
                          )
                          
                          
                          2.00Expired/Forfeited
                          
                          
                          (9,525
                          )
                          
                          
                          2.85Balance
      at March 31
                          
                          
                          857,748
                          
                          
                          $
                          4.18
                          
                          
                          
                          5.17
                          
                          
                          $
                          1,492,423Vested
      and exercisable
                          
                          
                          855,248
                          
                          
                          $
                          4.17
                          
                          
                          
                          5.17
                          
                          
                          $
                          1,492,423





The
aggregate intrinsic value of options exercised during the first quarter ended
March 31 2008 was $288,000. No options were exercised during the first quarter
ended March 31, 2009.  There were no nonvested stock options
outstanding as of March 31, 2009. There were 2,500 nonvested stock options
outstanding as of March 31, 2008.





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




Three Months Ended March 31,2009
                
                
                2008Stock
      options
                
                $
                -
                
                
                $
                3,750Stock
      grants – other
                
                
                22,887
                
                
                
                22,878Service
      based awards
                
                
                33,845
                
                
                
                31,069Performance
      based awards
                
                
                29,400
                
                
                
                31,196Tax
      benefit
                
                
                (35,315
                )
                
                
                (36,450
                )Stock-based
      compensation expense, net of tax
                
                $
                50,817
                
                
                $
                52,443


8


Stock
Grants - Other





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





Service
Based Awards





In
January 2006, May 2007 and January 2009 the Company granted 60,000, 22,000 and
21,500 restricted shares, respectively, to certain executives in respect of
services rendered but at no monetary cost.  These shares vest over
periods ranging from 3 to 5 years, on December 31 of each year.  The
Company records the compensation expense on a straight-line basis over the
vesting period.  Fair value for restricted stock awards is based on
the Company's closing common stock price on the date of grant.As
of March 31, 2009 and 2008 there were 41,000 and 31,500 shares vested,
respectively.  The aggregate grant date fair value of restricted stock
grants was $570,410.As
of March 31, 2009 and 2008, the Company had $268,015 and $301,756, respectively,
of total unrecognized compensation costs related to nonvested restricted stock
units expected to be recognized over a weighted average period of 2.17
years.





Performance
Based Awards





In
January 2006 and May 2007, respectively, the Company granted share awards for
90,000 shares (up to 18,000 shares per year through December 31, 2010) and
46,000 shares (up to 11,500 shares per year through December 31, 2010) to
certain executives.  Vesting of such shares is contingent upon the
Company achieving certain specified consolidated gross revenue and Earnings
before Interest and Taxes (“EBIT”) objectives in each of the next four fiscal
years ending December 31. The fair value of the performance shares (aggregate
value of $909,400) is based on the closing trading value of the Company’s stock
on the date of grant and assumes that performance goals will be
achieved.  The fair value of the shares is expensed over the
performance period for those shares that are expected to ultimately
vest.  If such objectives are not met, no compensation cost is
recognized and any recognized compensation cost is reversed. As
of March 31, 2009 and 2008, 29,750 shares were vested.  As of March
31, 2009 and 2008, there was $350,691 and $569,939, respectively, of total
unrecognized compensation costs related to nonvested share awards; that cost is
expected to be recognized over a period of 1.75 years.


9


5.                 Earnings
Per Share:




Earnings
per share data for the three months ended March 31, 2009 and 2008 is presented
in conformity with SFAS No. 128, “Earnings Per Share.”





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





March 31, 2009
                          
                          Income
                            (Numerator)
                          
                          
                          Shares
                            (Denominator)
                          
                          
                          Per-Share
                            AmountsBasic
      EPS - Income available to common shareholders
                          
                          $
                          773,250
                          
                          
                          
                          9,453,868
                          
                          
                          $
                          .08Effect
      of dilutive securities - Options
                          
                          
                          -
                          
                          
                          
                          127,351Diluted
      EPS - Income available to common shareholders and assumed
      conversions
                          
                          $
                          773,250
                          
                          
                          
                          9,581,219
                          
                          
                          $
                          .08March 31, 2008Basic
      EPS -Income available to common shareholders
                          
                          $
                          452,357
                          
                          
                          
                          9,406,070
                          
                          
                          $
                          .05Effect
      of dilutive securities -Options
                          
                          
                          -
                          
                          
                          
                          292,595Diluted
      EPS - Income available to  common shareholders and assumed
      conversions
                          
                          $
                          452,357
                          
                          
                          
                          9,698,665
                          
                          
                          $
                          .05





6.         Goodwill





Changes
in the carrying amount of goodwill, all of which relate to the Company’s TBCS
segment, for the three months ended March 31, 2009 and 2008 are as
follows:





Three Months Ended March 31,
      2009Balance
      as of January 1, 2009
                  
                  $
                  9,996,152Additional
      Goodwill
                  
                  
                  132,566Balance
      as of March 31, 2009
                  
                  $
                  10,128,718




10





Three Months Ended March 31,
      2008Balance
      as of January 1, 2008
                    
                    $
                    9,766,194Additional
      Goodwill
                    
                    
                    83,265Balance
      as of March 31, 2008
                    
                    $
                    9,849,459




The
addition to goodwill during the three months ended March 31, 2009 and 2008
relates to additional purchase price of American Mediconnect, Inc. based on the
cash receipts from the clinical trials portion of the business.





7.           Long-term
Debt:





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




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




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




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




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





8.            Major
Customers:





11


Since
1983, the Company has provided Personal Emergency Response Systems (“PERS”)
services to the City of New York’s Human Resources Administration Home Care
Service Program ("HCSP").  The contract term with the HCSP is for two
years, commencing September 21, 2007, with two options to renew in favor of HRA
for two additional two year terms.  During the three months ended
March 31, 2009 and 2008, the Company’s revenue from this contract represented
6% of its total revenue. As of March 31, 2009 and December 31, 2008,
accounts receivable from the contract represented 9% and 8% of accounts
receivable, respectively.




9.Segment  Reporting:





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




The table
below provides a reconciliation of segment information to total consolidated
information for the three months ended March 31, 2009 and 2008:







2009HSMS
                                  
                                  
                                  TBCS
                                  
                                  
                                  ConsolidatedRevenue
                                  
                                  $
                                  5,089,485
                                  
                                  
                                  $
                                  4,822,742
                                  
                                  
                                  $
                                  9,912,227Income
      before provision for income taxes
                                  
                                  
                                  772,030
                                  
                                  
                                  
                                  539,220
                                  
                                  
                                  
                                  1,311,250Total
      assets
                                  
                                  
                                  14,896,742
                                  
                                  
                                  
                                  20,388,970
                                  
                                  
                                  
                                  35,285,7122008HSMS
                                  
                                  
                                  TBCS
                                  
                                  
                                  ConsolidatedRevenue
                                  
                                  $
                                  4,836,955
                                  
                                  
                                  $
                                  4,798,790
                                  
                                  
                                  $
                                  9,635,745Income
      before provision for income taxes
                                  
                                  
                                  520,261
                                  
                                  
                                  
                                  247,096
                                  
                                  
                                  
                                  767,357Total
      assets
                                  
                                  
                                  16,778,179
                                  
                                  
                                  
                                  18,529,491
                                  
                                  
                                  
                                  35,307,670





10.               Commitments
and Contingencies:





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


12




Item 2.Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.




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




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




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




Overview:





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


13





HSMS


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





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





Rounding
out AMAC’s remote patient monitoring portfolio, in 2001, the Company entered the
telehealth market, a market in its embryonic stage, after consideration of the
opportunity to provide new technologies to assist healthcare professionals in
home-based, health management activities. As a distributor of the Health Buddy®
System, many of the Company’s customers have successfully demonstrated the value
proposition associated with incorporating disease management technologies into a
patient’s plan of care. In 2008, The Company added to its telehealth offering by
becoming the first US channel market distributor of the Intel® Health Guide. The
Intel® Health Guide is a comprehensive personal health system that promotes
greater patient engagement and more efficient care by combining an in-home
patient device with an online interface, thus allowing clinicians to monitor
patients and remotely manage care. The Company believes the telehealth market
will continue to provide opportunities for AMAC’s expansion as a full source
provider of remote patient monitoring technologies and first line support
services.


14


TBCS


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





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





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





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





The
Company believes that the overall mix of cash flow generating businesses from
HSMS and TBCS, combined with its emphasis on developing products and services to
support demand from customers and the emerging, home-based monitoring market,
provides the correct blend of stability and growth opportunity.  The
Company believes this strategy will enable it to maintain and increase its role
in the healthcare communications field.  Moreover, based on the
Company’s aggressive growth strategy, management believes its TBCS business will
allow the Company to become the largest provider of these specialized healthcare
communication services in the United States.





Components of Statements of
Income by Operating Segment


The
following table shows the components of the Statement of Income for the three
months ended March 31, 2009 and 2008.




15







In
      thousands (000’s)
                        
                        Three Months Ended March
31,2009
                        
                        
                        %
                        
                        
                        2008
                        
                        
                        %RevenuesHSMS
                        
                        
                        5,089
                        
                        
                        
                        51
                        %
                        
                        
                        4,837
                        
                        
                        
                        50
                        %TBCS
                        
                        
                        4,823
                        
                        
                        
                        49
                        %
                        
                        
                        4,799
                        
                        
                        
                        50
                        %Total
      Revenues
                        
                        
                        9,912
                        
                        
                        
                        100
                        %
                        
                        
                        9,636
                        
                        
                        
                        100
                        %Cost
      of Services and Goods SoldHSMS
                        
                        
                        2,204
                        
                        
                        
                        43
                        %
                        
                        
                        2,116
                        
                        
                        
                        44
                        %TBCS
                        
                        
                        2,433
                        
                        
                        
                        50
                        %
                        
                        
                        2,616
                        
                        
                        
                        55
                        %Total
      Cost of Services and Goods Sold
                        
                        
                        4,637
                        
                        
                        
                        47
                        %
                        
                        
                        4,732
                        
                        
                        
                        49
                        %Gross
      ProfitHSMS
                        
                        
                        2,885
                        
                        
                        
                        57
                        %
                        
                        
                        2,721
                        
                        
                        
                        56
                        %TBCS
                        
                        
                        2,390
                        
                        
                        
                        50
                        %
                        
                        
                        2,183
                        
                        
                        
                        45
                        %Total
      Gross Profit
                        
                        
                        5,275
                        
                        
                        
                        53
                        %
                        
                        
                        4,904
                        
                        
                        
                        51
                        %Selling,
      General & Administrative
                        
                        
                        4,052
                        
                        
                        
                        41
                        %
                        
                        
                        4,155
                        
                        
                        
                        43
                        %Interest
      Expense
                        
                        
                        24
                        
                        
                        
                        -
                        %
                        
                        
                        102
                        
                        
                        
                        1
                        %Other
      Income
                        
                        
                        (112
                        )
                        
                        
                        (1
                        )%
                        
                        
                        (120
                        )
                        
                        
                        (1
                        )%Income
      before Income Taxes
                        
                        
                        1,311
                        
                        
                        
                        13
                        %
                        
                        
                        767
                        
                        
                        
                        8
                        %Provision
      for Income Taxes
                        
                        
                        538
                        
                        
                        
                        
                        
                        
                        
                        315Net
      Income
                        
                        
                        773
                        
                        
                        
                        
                        
                        
                        
                        452





Results of
Operations:





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





Three Months Ended March 31,
2009 Compared to Three Months Ended March 31, 2008





Revenues:





HSMS





Revenues,
which consist primarily of monthly rental revenues, increased approximately
$252,000, or 5%, for the three months ended March 31, 2009 as compared to the
same period in 2008.  The increase is primarily attributed to the
following factors:





§
            In
      2007, the Company entered into an exclusive arrangement with Walgreen to
      provide the Company’s PERS product under the Walgreen brand name directly
      to the consumer. In the first quarter of 2009, the Company recognized
      increased revenue of approximately $117,000 from this arrangement as
      compared to the same period in 2008.  The Company anticipates it
      will continue to see growth under this arrangement with
      Walgreen.


16





§
            In
      late 2006, the Company executed a new agreement with a third party agency
      whereby PERS were placed online.  The subscriber base associated
      with this agreement has grown and accounted for an approximate $34,000
      increase in revenue during the first quarter of 2009 as compared to the
      same period in the prior year.





The
remaining increase in revenue is from the execution of other new agreements as
well as growth within its existing subscriber base.  The Company
anticipates that it will continue to grow its subscriber base and corresponding
revenue through its continued sales and marketing efforts.





TBCS





The
increase in revenues of approximately $24,000, or 1%, for the three months ended
March 31, 2009 as compared to the same period in 2008 was primarily due to the
following:


·
              The
      Company continues to experience revenue growth within its telephone
      answering service businesses due to addition of new customers as well as
      increased business from its existing customer base.  The
      increase was partially offset by customer
      attrition at one of the call center locations as a result of certain
      account realignment.  The Company has modified its action
      plan and believes that it will experience reduced attrition at this
      location moving forward.


Based on
the demand for US based healthcare communication services and on some of the
work which is currently in process, the Company anticipates that there will be
continued growth in this business segment with further expansion into healthcare
and hospital organizations, clinical trial recruitment pharmacies and to
physicians through its marketing strategies.





Costs Related to Services
and Goods Sold:





HSMS





Costs
related to services and goods sold increased by approximately $88,000 for the
three months ended March 31, 2009 as compared to the same period in 2008, an
increase of 4%, primarily due to the following:





·
            The
      Company capitalized less labor and overhead costs in the three months
      ended March 31, 2009 as compared to the same period in 2008 resulting in
      an increase in expense of approximately $75,000.  The Company
      reduced its purchases of traditional PERS devices and associated
      components therefore requiring less capitalized labor and overhead to
      prepare these products for shipment.  This has been facilitated
      primarily through more efficient tracking of inventory levels and reorder
      points.  The related personnel have now been utilized in other
      capacities within the inventory fulfillment department to enhance the
      monitoring of the Company’s expanded product
  base.


17





TBCS:





Costs
related to services and goods sold decreased by approximately $183,000 for the
three months ended March 31, 2009 as compared to the same period in 2008, a
decrease of 7%, primarily due to the following:





§
            In
      the first quarter of 2008, the Company incurred additional labor and
      telephone service costs with the majority of these costs relating to the
      consolidation of its call center infrastructure in order to maximize
      operational efficiencies.  With this consolidation effort being
      substantially completed during 2008, the Company has started to realize
      the operational and financial benefits of this effort.  During
      the first quarter of 2009, the Company, through this consolidation effort,
      has realigned its personnel and structured its telephone system more
      efficiently whereby the Company was able to reduce its labor and telephone
      costs by approximately $169,000.  The Company anticipates it
      will continue to realize these benefits throughout
  2009.




Selling, General and
Administrative Expenses:





Selling,
general and administrative expenses decreased by approximately $103,000 for the
three months ended March 31, 2009 as compared to the same period in 2008, a
decrease of 2%.  The decrease is primarily attributable to the
following:





§
            During
      the first quarter of 2009, the Company incurred less advertising expense
      as compared to the same period in 2008 by approximately
      $129,000.  The reduction in advertising expense is primarily
      related to the Walgreen campaign; whereby the Company reduced its
      advertising spending in the first quarter of 2009.  Moving ahead
      in 2009, the Company anticipates increasing its advertising expenditure,
      specifically as it relates to the Walgreen campaign as well as the
      promotion of its MedSmart medication reminder and pill
      dispenser.





§
            As
      a result of the Company’s effort in consolidating its call center
      infrastructure, the Company has benefited from a reduction of
      approximately $92,000 in administrative payroll and related payroll taxes
      in the first quarter of 2009 as compared to the same period in
      2008.





§
            These
      decreases were partially offset by an increase in consulting expense of
      approximately $105,000.  The Company incurred increased
      consulting expenses relating to expanding its sales efforts as well as
      incurring fees to the upgrade of existing websites and accounting
      systems.





There
were other decreases in selling, general and administrative expenses which arose
out of the normal course of business such as minor purchases and legal expense
which were partially offset by increases in amortization and utility
expense.


18


Interest
Expense:





Interest
expense for the three months ended March 31, 2009 and 2008 was approximately
$24,000 and $102,000, respectively.  The decrease of $78,000 was
primarily due to the Company continuing to pay down its term loan as well as a
significant reduction in the interest rate.





Other
Income:





Other
income for the three months ended March 31, 2009 and 2008 was approximately
$112,000 and $120,000, respectively. Other income for the three months ended
March 31, 2009 and 2008 includes a training incentive received from the State of
New Mexico for hiring and training employees within the State and an economic
development incentive through the City of Clovis.  These incentives
accounted for approximately $73,000 and $80,000, respectively.  In
2007, the Company opened a network operating call center in New Mexico and hired
employees to serve as operators for the telephone answering
service.  In 2008, the Company continued its further expansion into
this facility by also hiring employees to serve as emergency response operators
for the HSMS segment.





Income Before Provision for
Income Taxes:





The
Company’s income before provision for income taxes for the three months ended
March 31, 2009 was approximately $1,311,000 as compared to $767,000 for the same
period in 2008. The increase of $544,000 for the three months ended March 31,
2009 primarily resulted from an increase in the Company's service revenues and
decrease in the Company’s costs related to services and product sales and
selling, general and administrative costs as well as decrease in the Company’s
interest expense.





Liquidity and Capital
Resources




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




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




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


19


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





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





The
following table is a summary of contractual obligations as of March 31,
2009:




Payments Due by PeriodContractual 
    Obligations
                
                Total
                
                
                Less than 1
                  year
                
                
                1-3 years
                
                
                4-5 years
                
                
                More than 5
                  yearsRevolving
      Credit Line
                
                $
                950,000
                
                
                $
                -
                
                
                $
                950,000Debt 
      (a)
                
                $
                2,811,667
                
                
                $
                1,301,667
                
                
                $
                1,510,000Operating
      Leases (b)
                
                $
                7,622,799
                
                
                $
                1,078,228
                
                
                $
                2,455,472
                
                
                $
                1,563,507
                
                
                $
                2,525,592Purchase
      Commitments (c)
                
                $
                901,254
                
                
                $
                901,254Interest
      Expense (d)
                
                $
                107,829
                
                
                $
                76,258
                
                
                $
                31,571Acquisition
      Related Commitment (e)
                
                $
                133,922
                
                
                $
                133,922Total
      ContractualObligations
                
                $
                12,527,471
                
                
                $
                3,491,329
                
                
                $
                4,947,043
                
                
                $
                1,563,507
                
                
                $
                2,525,592




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




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




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




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


20


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




The
primary sources of liquidity are cash flows from operating activities.  Net
cash provided by operating activities was approximately $3.2 million for the
three months ended March 31, 2009, as compared to approximately $1.5 million for
the same period in 2008. During the first quarter of 2009, the cash provided by
operating activities was primarily from depreciation and amortization of
approximately $1.0 million, net earnings of approximately $0.8 million and an
increase in accounts payable and accrued expenses of approximately $0.7 million.
The components of depreciation and amortization primarily relate to the
purchases of the Company’s traditional PERS product and the customer lists
associated with the acquisition of telephone answering service
businesses.  The increase in accounts payable and accrued expenses is
primarily due to the timing of payments of expenses in the ordinary course of
business.   Cash provided by operating activities during the
first quarter of 2008 were the result of depreciation and amortization of
approximately $1.0 million and net earnings of approximately $0.5 million. The
components of depreciation and amortization primarily relate to the purchases of
the Company’s traditional PERS product and the customer lists associated with
the acquisition of telephone answering service businesses.




Net cash
used in investing activities was approximately $0.3 million for the three months
ended March 31, 2009 as compared to approximately $0.9 million for the same
period in 2008.  The primary component of net cash used in investing
activities in the first quarter of 2009 was capital expenditures of
approximately $0.3 million, net of deposits on equipment being transferred to
fixed assets of approximately $0.2 million.  Capital expenditures for
the first quarter of 2009 primarily related to the continued production and
purchase of the traditional PERS system.  The primary component of net
cash used in investing activities in the first quarter of 2008 was capital
expenditures of approximately $0.7 million.  Capital expenditures for
the first quarter of 2008 primarily related to the continued production and
purchase of the traditional PERS system and the build-out of the Company’s call
center in New Mexico.




Cash
flows for the three months ended March 31, 2009 used in financing activities
were approximately $0.8 million compared to $0.3 million for the same period in
2008.  The primary component of cash flow used in financing activities
in the first quarter of 2009 was the payment of long-term debt of approximately
$0.8 million.  The primary component of cash flow used in financing
activities in the first quarter of 2008 was the payment of long-term debt of
approximately $0.4 million which was partially offset by the proceeds received
on the exercise of stock options of approximately $0.1 million.




During
the next twelve months, the Company anticipates it will make capital
expenditures and purchase of inventory items of approximately $2.25 – $2.75
million for the production and purchase of the traditional PERS systems,
MedSmart pill dispensers and telehealth systems as well as enhancements to its
computer operating systems (this includes outstanding purchase orders issued to
purchase approximately $0.9 million of the traditional PERS systems and the
MedSmart pill dispenser).  This amount is subject to fluctuations
based on customer demand.  The Company also anticipates incurring
approximately $0.3 - $0.5 million of costs relating to research and development
of its telehealth product and enhanced pill dispenser.


21


As of
March 31, 2009, the Company had approximately $4.5 million in cash and the
Company’s working capital was approximately $7.1 million.  The Company
believes that with its present cash balance and with operations of the business
generating positive cash flow, it will be able to meet its cash, working capital
and capital expenditure needs for at least the next twelve months. The Company
also has a revolving credit line, which expires in June 2010 that permits
borrowings up to $2.5 million, of which $950,000 was outstanding at March 31,
2009.




Off-Balance
Sheet Arrangements:




As of
March 31, 2009, the Company has not entered into any off-balance sheet
arrangements that are reasonably likely to have an impact on the Company’s
current and future financial condition.




Other
Factors:




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





During
2005, the Company entered into two operating lease agreements for additional
space at its Long Island City, New York location in order to consolidate its
warehouse and distribution center and accounting department into this
location.  The leases, which commenced in January 2006 and expire in
March 2018, call for minimum annual rentals of $220,000 and $122,000,
respectively, and are subject to increases in accordance with the term of the
agreements.  The Company is also responsible for the reimbursement of
real estate taxes.





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


22





Since
1983, the Company has provided Personal Emergency Response Systems (“PERS”)
services to the City of New York’s Human Resources Administration Home Care
Service Program ("HCSP").  The contract term with the HCSP is for two
years, commencing September 21, 2007, with two options to renew in favor of HRA
for two additional two year terms.  During the three months ended
March 31, 2009 and 2008, the Company’s revenue from this contract represented
6% of its total revenue. As of March 31, 2009 and December 31, 2008,
accounts receivable from the contract represented 9% and 8% of accounts
receivable, respectively.




Recent
Accounting Pronouncements:




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





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


23


Critical
Accounting Policies:





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





Reserves for Uncollectible Accounts
Receivable


The
Company makes ongoing assumptions relating to the collectability of its accounts
receivable.  The accounts receivable amount on the balance sheet
includes a reserve for accounts that might not be paid.  In
determining the amount of the reserve, the Company considers its historical
level of credit losses.  The Company also makes judgments about the
creditworthiness of significant customers based on ongoing credit evaluations,
and it assesses current economic trends that might impact the level of credit
losses in the future. The Company recorded reserves for uncollectible accounts
receivable of $663,500 as of March 31, 2009, which is equal to 10.5% of the
total accounts receivable.  While the Company believes that the
current reserves are adequate to cover potential credit losses, it cannot
predict future changes in the financial stability of its customers and the
Company cannot guarantee that its reserves will continue to be
adequate.  For each 1% that actual credit losses exceed the reserves
established, there would be an increase in general and administrative expenses
and a reduction in reported net income of approximately $63,000. Conversely, for
each 1% that actual credit losses are less than the reserve, this would decrease
the Company’s general and administrative expenses and increase the reported net
income by approximately $63,000.





Fixed
Assets


Fixed
assets are stated at cost.  Depreciation for financial reporting
purposes is being provided by the straight-line method over the estimated useful
lives of the related assets.  The valuation and classification of
these assets and the assignment of useful depreciable lives involves significant
judgments and the use of estimates.  Fixed assets are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.  Historically,
impairment losses have not been required.  Any change in the
assumption of estimated useful lives could either result in a decrease or
increase to the Company’s financial results.  A decrease in estimated
useful life would reduce the Company’s net income and an increase in estimated
useful life would increase the Company’s net income.  If the estimated
useful lives of the PERS medical device were decreased by one year, the cost of
goods related to services would increase and net income would decrease by
approximately $160,000 per annum.  Conversely, if the estimated useful
lives of the PERS medical device were increased by one year, the cost of goods
related to services would decrease and net income would increase by
approximately $135,000 per annum.


24


Valuation of Goodwill


Pursuant
to Statement of Financial Accounting Standards No. 142, “Goodwill and Other
Intangible Assets,” goodwill and indefinite life intangible assets are no longer
amortized, but are subject to annual impairment tests.  To date, the
Company has not been required to recognize an impairment of goodwill. The
Company tests goodwill for impairment annually or more frequently when events or
circumstances occur indicating goodwill might be impaired. This process involves
estimating fair value using discounted cash flow analyses. Considerable
management judgment is necessary to estimate discounted future cash flows.
Assumptions used for these estimated cash flows were based on a combination of
historical results and current internal forecasts.  The Company cannot
predict certain events that could adversely affect the reported value of
goodwill, which totaled $10,128,718 and $9,996,152 at March 31, 2009 and
December 31, 2008, respectively.  If the Company were to experience a
significant adverse impact on goodwill, it would negatively impact the Company’s
net income.





Accounting
for Stock-Based Awards


On
January 1, 2006, the Company adopted SFAS Statement No. 123 (revised
2004), “Share-Based Payment”(“Statement
No. 123(R)”), which requires the measurement and recognition of
compensation expense for all share-based payments to employees, including grants
of stock and employee stock options, based on estimated fair values. Stock-based
compensation expense recognized during the period is based on the value of the
portion of share-based payment awards that is ultimately expected to vest during
the period.As a
result of adopting SFAS No. 123R, the Company recorded a pre-tax expense of
approximately $86,000 and $89,000 for stock-based compensation for the three
months ended March 31, 2009 and 2008, respectively.




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





Item
3.   Quantitative and Qualitative
Disclosure About Market Risk.





Market
Risk Disclosure





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





In the
ordinary course of its business the Company enters into commitments to purchase
raw materials and finished goods over a period of time, generally six months to
one year, at contracted prices. At March 31, 2009 these future commitments were
not at prices in excess of current market, or in quantities in excess of normal
requirements. The Company does not utilize derivative contracts either to hedge
existing risks or for speculative purposes.


25





Interest
Rate Risk





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





Item
4T.  Controls and
Procedures.




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





There
were no changes in the Company’s internal control over financial reporting that
occurred during the quarter ended March 31, 2009 that have materially affected,
or are reasonably likely to materially affect, the Company’s internal control
over financial reporting.





PART
II - OTHER INFORMATION





Item
1. Legal
Proceedings.





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


26


Item
6.  Exhibits.





No.
                  
                  Description15.1
                  
                  Letter
      from Margolin, Winer & Evens LLP, the independent accountant of the
      Company, acknowledging awareness of the use in a registration statement of
      a report on the unaudited interim financial information in this quarterly
      report31.1
                  
                  Certification
      of CEO Pursuant to Section 302 of the Sarbanes Oxley Act of
      200231.2
                  
                  Certification
      of CFO Pursuant to Section 302 of the Sarbanes Oxley Act of
      200232.1
                  
                  Certification
      of CEO Pursuant to Section 906 of the Sarbanes Oxley Act of
      200232.2
                  
                  Certification
      of CFO Pursuant to Section 906 of the Sarbanes Oxley Act of
      2002


27





SIGNATURES




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




AMERICAN
      MEDICAL ALERT CORP.Dated:
      May 14, 2009
                    By:
                    /s/
      Jack RhianName:
      Jack RhianTitle:
      Chief Executive Officer and PresidentBy:
                    /s/
      Richard RalloName:
      Richard RalloTitle:
      Chief Financial
Officer


28