UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549




FORM
10-Q




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




For the
quarter ended June 30, 2009.




OR




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




For the
transition period from ____________ to ____________








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
 ̈




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


Yes  ̈ No  ̈





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





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





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





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










AMERICAN
MEDICAL ALERT CORP. AND SUBSIDIARIES




INDEX




PAGEPart
      I Financial InformationReport
      of Independent Registered Public Accounting Firm
                      1Condensed
      Consolidated Balance Sheets for June 30, 2009 and December 31,
      2008
                      2Condensed
      Consolidated Statements of Income for the Six Months Ended June 30, 2009
      and 2008
                      3Condensed
      Consolidated Statements of Income for the Three Months Ended June 30, 2009
      and 2008
                      4Condensed
      Consolidated Statements of Cash Flows for the Six Months Ended June 30,
      2009 and 2008
                      5Notes
      to Condensed Consolidated Financial Statements
                      7Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                      15Quantitative
      and Qualitative Disclosures About Market Risk
                      32Controls
      and Procedures
                      32Part
      II Other Information
                      33







Report of
Independent Registered Public Accounting Firm
 
 Board of
Directors and Shareholders
 American
Medical Alert Corp. and Subsidiaries
 Oceanside,
New York
 
 We have
reviewed the accompanying condensed consolidated balance sheet of American
Medical Alert Corp. and Subsidiaries (the “Company”) as of June 30, 2009 and the
related condensed consolidated statements of income for the six-month and
three-month periods ended June 30, 2009 and 2008 and cash flows for the
six-months ended June 30, 2009 and 2008. These interim financial statements are
the responsibility of the Company's management.
 
 We
conducted our reviews in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
 
 Based on
our reviews, we are not aware of any material modifications that should be made
to the condensed consolidated interim financial statements referred to above for
them to be in conformity with accounting principles generally accepted in the
United States of America.
 
 We have
previously audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated balance sheet of
American Medical Alert Corp. and Subsidiaries as of December 31, 2008, and the
related consolidated statements of income, shareholders’ equity and cash flows
for the year then ended (not presented herein), and in our report dated March
30, 2009 we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 2008 is fairly stated,
in all material respects, in relation to the consolidated balance sheet from
which it has been derived.
 
 /s/
Margolin, Winer & Evens LLP
 
 Margolin,
Winer & Evens LLP
 Garden
City, New York
 
 August
14, 2009
  1
  PART
I - FINANCIAL INFORMATION
 Item
1. Financial
Statements.
  AMERICAN
MEDICAL ALERT CORP. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED BALANCE SHEETS
  June 30, 2009
                                        (Unaudited)
                                      
                                      
                                      Dec. 31, 2008ASSETSCURRENT
      ASSETSCash
                                      
                                      $
                                      5,047,160
                                      
                                      
                                      $
                                      2,473,733Accounts
      receivable(net
      of allowance for doubtful accounts of $668,000 and
    $646,000)
                                      
                                      
                                      5,568,528
                                      
                                      
                                      
                                      6,001,952Note
      receivable
                                      
                                      
                                      7,127
                                      
                                      
                                      
                                      21,117Inventory
                                      
                                      
                                      543,245
                                      
                                      
                                      
                                      547,596Prepaid
      income taxes
                                      
                                      
                                      189,255
                                      
                                      
                                      
                                      215,427Prepaid
      expenses and other current assets
                                      
                                      
                                      309,115
                                      
                                      
                                      
                                      436,554Deferred
      income taxes
                                      
                                      
                                      412,000
                                      
                                      
                                      
                                      358,000Total
      Current Assets
                                      
                                      
                                      12,076,430
                                      
                                      
                                      
                                      10,054,379FIXED
      ASSETS(net
      of accumulated depreciation and amortization)
                                      
                                      
                                      9,603,473
                                      
                                      
                                      
                                      10,169,907OTHER
      ASSETSIntangible
      assets(net
      of accumulated amortization of $5,953,751and
      $5,386,262)
                                      
                                      
                                      2,533,542
                                      
                                      
                                      
                                      3,085,931Goodwill
      (net of accumulated amortization of $58,868)
                                      
                                      
                                      10,199,300
                                      
                                      
                                      
                                      9,996,152Other
      assets
                                      
                                      
                                      828,338
                                      
                                      
                                      
                                      1,059,89513,561,180
                                      
                                      
                                      
                                      14,141,978TOTAL
      ASSETS
                                      
                                      $
                                      35,241,083
                                      
                                      
                                      $
                                      34,366,264LIABILITIES
      AND SHAREHOLDERS’ EQUITYCURRENT
      LIABILITIES:Current
      portion of long-term debt
                                      
                                      $
                                      1,301,667
                                      
                                      
                                      $
                                      1,754,949Accounts
      payable
                                      
                                      
                                      1,003,833
                                      
                                      
                                      
                                      749,335Accounts
      payable – acquisitions
                                      
                                      
                                      71,939
                                      
                                      
                                      
                                      20,390Accrued
      expenses
                                      
                                      
                                      1,469,169
                                      
                                      
                                      
                                      1,348,823Deferred
      revenue
                                      
                                      
                                      272,568
                                      
                                      
                                      
                                      294,882Total
      Current Liabilities
                                      
                                      
                                      4,119,176
                                      
                                      
                                      
                                      4,168,379DEFERRED
      INCOME TAX LIABILITY
                                      
                                      
                                      1,262,000
                                      
                                      
                                      
                                      1,208,000LONG-TERM
      DEBT, Net of Current Portion
                                      
                                      
                                      2,105,000
                                      
                                      
                                      
                                      2,815,000CUSTOMER
      DEPOSITS
                                      
                                      
                                      112,449
                                      
                                      
                                      
                                      106,196ACCRUED
      RENTAL OBLIGATION
                                      
                                      
                                      527,389
                                      
                                      
                                      
                                      507,512OTHER
      LIABILITIES
                                      
                                      
                                      10,000
                                      
                                      
                                      
                                      10,000TOTAL
      LIABILITIES
                                      
                                      
                                      8,136,014
                                      
                                      
                                      
                                      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;issued9,525,528 shares
      in 2009and
      9,493,402 shares in 2008
                                      
                                      
                                      95,255
                                      
                                      
                                      
                                      94,934Additional
      paid-in capital
                                      
                                      
                                      16,043,241
                                      
                                      
                                      
                                      15,871,305Retained
      earnings
                                      
                                      
                                      11,103,150
                                      
                                      
                                      
                                      9,721,51527,241,646
                                      
                                      
                                      
                                      25,687,754Less
      treasury stock, at cost (48,573 shares in 2009 and 2008)
                                      
                                      
                                      (136,577
                                      )
                                      
                                      
                                      (136,577
                                      )Total
      Shareholders’ Equity
                                      
                                      
                                      27,105,069
                                      
                                      
                                      
                                      25,551,177TOTAL
      LIABILITIES AND SHAREHOLDERS’ EQUITY
                                      
                                      $
                                      35,241,083
                                      
                                      
                                      $
                                      34,366,264
 
 See
accompanying notes to condensed financial statements.
  2
  AMERICAN
MEDICAL ALERT CORP. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
 (Unaudited)
  Six Months Ended June 30,2009
                                                            
                                                            
                                                            2008Revenues:Services
                                                            
                                                            $
                                                            18,982,998
                                                            
                                                            
                                                            $
                                                            18,558,490Product
      sales
                                                            
                                                            
                                                            431,541
                                                            
                                                            
                                                            
                                                            616,57619,414,539
                                                            
                                                            
                                                            
                                                            19,175,066Costs
      and Expenses (Income):Costs
      related to services
                                                            
                                                            
                                                            8,985,373
                                                            
                                                            
                                                            
                                                            9,012,256Costs
      of products sold
                                                            
                                                            
                                                            199,134
                                                            
                                                            
                                                            
                                                            310,708Selling,
      general and administrative expenses
                                                            
                                                            
                                                            7,993,190
                                                            
                                                            
                                                            
                                                            8,311,407Interest
      expense
                                                            
                                                            
                                                            44,302
                                                            
                                                            
                                                            
                                                            166,868Other
      income
                                                            
                                                            
                                                            (150,095
                                                            )
                                                            
                                                            
                                                            (169,556
                                                            )Income
      before Provision for Income Taxes
                                                            
                                                            
                                                            2,342,635
                                                            
                                                            
                                                            
                                                            1,543,383Provision
      for Income Taxes
                                                            
                                                            
                                                            961,000
                                                            
                                                            
                                                            
                                                            633,000NET
      INCOME
                                                            
                                                            $
                                                            1,381,635
                                                            
                                                            
                                                            $
                                                            910,383Net
      income per share:Basic
                                                            
                                                            $
                                                            .15
                                                            
                                                            
                                                            $
                                                            .10Diluted
                                                            
                                                            $
                                                            .14
                                                            
                                                            
                                                            $
                                                            .09Weighted
      average number of common shares outstanding:Basic
                                                            
                                                            
                                                            9,461,888
                                                            
                                                            
                                                            
                                                            9,411,886Diluted
                                                            
                                                            
                                                            9,651,024
                                                            
                                                            
                                                            
                                                            9,708,325
 
 See
accompanying notes to condensed financial statements.
  3
  AMERICAN
MEDICAL ALERT CORP. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
 (Unaudited)
  Three Months Ended June 30,2009
                                                      
                                                      
                                                      2008Revenues:Services
                                                      
                                                      $
                                                      9,342,354
                                                      
                                                      
                                                      $
                                                      9,219,378Product
      sales
                                                      
                                                      
                                                      159,958
                                                      
                                                      
                                                      
                                                      319,9439,502,312
                                                      
                                                      
                                                      
                                                      9,539,321Costs
      and Expenses (Income):Costs
      related to services
                                                      
                                                      
                                                      4,469,407
                                                      
                                                      
                                                      
                                                      4,431,056Costs
      of products sold
                                                      
                                                      
                                                      78,132
                                                      
                                                      
                                                      
                                                      159,953Selling,
      general and administrative expenses
                                                      
                                                      
                                                      3,940,743
                                                      
                                                      
                                                      
                                                      4,156,366Interest
      expense
                                                      
                                                      
                                                      20,620
                                                      
                                                      
                                                      
                                                      64,813Other
      income
                                                      
                                                      
                                                      (37,975
                                                      )
                                                      
                                                      
                                                      (48,893
                                                      )Income
      before Provision for Income Taxes
                                                      
                                                      
                                                      1,031,385
                                                      
                                                      
                                                      
                                                      776,026Provision
      for Income Taxes
                                                      
                                                      
                                                      423,000
                                                      
                                                      
                                                      
                                                      318,000NET
      INCOME
                                                      
                                                      $
                                                      608,385
                                                      
                                                      
                                                      $
                                                      458,026Net
      income per share:Basic
                                                      
                                                      $
                                                      .06
                                                      
                                                      
                                                      $
                                                      .05Diluted
                                                      
                                                      $
                                                      .06
                                                      
                                                      
                                                      $
                                                      .05Weighted
      average number of common shares outstandingBasic
                                                      
                                                      
                                                      9,469,908
                                                      
                                                      
                                                      
                                                      9,417,701Diluted
                                                      
                                                      
                                                      9,720,829
                                                      
                                                      
                                                      
                                                      9,717,985
 
 See
accompanying notes to condensed financial statements.
  4
  AMERICAN
MEDICAL ALERT CORP. AND SUBSIDIARIES
 
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 
 Six Months Ended June 30,2009
                            
                            
                            2008Cash
      Flows From Operating Activities:Net
      income
                            
                            $
                            1,381,635
                            
                            
                            $
                            910,383Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation
      and amortization
                            
                            
                            2,041,165
                            
                            
                            
                            2,137,026Loss
      on write off of fixed assets
                            
                            
                            391
                            
                            
                            
                            -Stock
      compensation charge
                            
                            
                            178,507
                            
                            
                            
                            206,535Decrease
      (increase) in:Accounts
    receivable
                            
                            
                            433,424
                            
                            
                            
                            48,575Inventory
                            
                            
                            4,351
                            
                            
                            
                            (87,387
                            )Prepaid
      income taxes
                            
                            
                            26,172
                            
                            
                            
                            143,183Prepaid expenses and other
      current assets
                            
                            
                            127,439
                            
                            
                            
                            (19,492
                            )Increase
      (decrease) in:Accounts payable, accrued
      expenses and other
                            
                            
                            394,722
                            
                            
                            
                            (127,099
                            )Deferred
      revenue
                            
                            
                            (22,314
                            )
                            
                            
                            107,841Net
      Cash Provided by Operating Activities
                            
                            
                            4,565,492
                            
                            
                            
                            3,319,565Cash
      Flows From Investing Activities:Expenditures
      for fixed assets
                            
                            
                            (707,475
                            )
                            
                            
                            (1,976,988
                            )Repayment
      of notes receivable
                            
                            
                            13,990
                            
                            
                            
                            13,309Decrease
      (increase) in deposit on equipment
                            
                            
                            29,162
                            
                            
                            
                            (257,916
                            )Purchase
      – other
                            
                            
                            (15,099
                            )
                            
                            
                            (45,663
                            )Decrease
      in other assets
                            
                            
                            2,239
                            
                            
                            
                            1,683Net
      Cash Used In Investing Activities
                            
                            
                            (677,183
                            )
                            
                            
                            (2,265,575
                            )Cash
      Flows From Financing Activities:Proceeds
      from long-term debt
                            
                            
                            -
                            
                            
                            
                            100,000Principal
      payments under capital lease obligation
                            
                            
                            -
                            
                            
                            
                            (20,641
                            )Purchase
      of Treasury Stock
                            
                            
                            -
                            
                            
                            
                            (10,242
                            )Repayment
      of long-term debt
                            
                            
                            (1,163,282
                            )
                            
                            
                            (922,297
                            )Payment
      of accounts payable - acquisitions
                            
                            
                            (151,600
                            )
                            
                            
                            (153,999
                            )Proceeds
      upon exercise of stock options and warrants
                            
                            
                            -
                            
                            
                            
                            120,000Net
      Cash Used In Financing Activities
                            
                            
                            (1,314,882
                            )
                            
                            
                            (887,179
                            )
 
 See
accompanying notes to condensed financial statements.
  5
  AMERICAN
MEDICAL ALERT CORP. AND SUBSIDIARIES
 
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
 (Unaudited)
 
 Six Months Ended June 30,2009
                  
                  
                  2008Net
      Increase in Cash
                  
                  $
                  2,573,427
                  
                  
                  $
                  166,811Cash,
      Beginning of Period
                  
                  
                  2,473,733
                  
                  
                  
                  911,525Cash,
      End of Period
                  
                  $
                  5,047,160
                  
                  
                  $
                  1,078,336SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:CASH
      PAID DURING THE PERIOD FOR INTEREST
                  
                  $
                  44,693
                  
                  
                  $
                  165,068CASH
      PAID DURING THE PERIOD FOR INCOME TAXES
                  
                  $
                  819,830
                  
                  
                  $
                  400,312SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
      FINANCING ACTIVITIES:Accounts
      Payable - acquisitions/additional goodwill - American Mediconnect
      Inc.
                  
                  $
                  203,148
                  
                  
                  $
                  130,244Other assets, deposits on equipment transferred to fixed
      assets
                  
                  
                  195,103
                  
                  
                  
                  -
 
 See
accompanying notes to condensed financial statements.
  6
  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, except
for a partial reduction of the Relocation and Employment Assistance Program
(REAP) benefit accrual recorded in December 31, 2007.  The net effect
of this adjustment, which was included in other income, resulted in a reduction
in net income of approximately $40,000 for the six and three months ended June
30, 2008) necessary to present fairly the financial position as of June 30, 2009
and the results of operations for the six and three months ended June 30, 2009
and 2008, and cash flows for the six months ended June 30, 2009 and
2008.
  The
accounting policies used in preparing these financial statements are the same as
those described in the December 31, 2008 financial statements.
  Certain
amounts in the 2008 condensed consolidated financial statements have been
reclassified to conform to the 2009 presentation.
  The
results of operations for the six and three months ended June 30, 2009 are not
necessarily indicative of the results to be expected for any other interim
period or for the full year.
  3.
              Recent
      Accounting Pronouncements:
 
 In December 2007, the FASB issued SFAS
No. 141(R) (revised 2007), “Business Combinations,” (“SFAS 141(R)”), which
replaces SFAS 141. The statement provides a broader definition of the “Acquirer”
and establishes principles and requirements of how the Acquirer recognizes and
measures in its financial statements the identifiable assets acquired and
liabilities assumed as well as how the Acquirer recognizes and measures the
goodwill acquired in the business combination.  SFAS 141(R) applies
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 15, 2008.  Statement No. 141R became effective as of
January 1, 2009 for the Company. Accordingly, any business combination
completed prior to January 1, 2009 was accounted for pursuant to
SFAS No. 141, “Business Combinations.”  Business combinations
completed subsequent to January 1, 2009, will be accounted for pursuant to
Statement No. 141R.  The impact that Statement No. 141R will have
on the Company’s consolidated financial statements will depend upon the
nature,terms
and size of such business combinations, if any.
  7
 
 In
April 2008, the FASB issued FSP FAS 142-3, “Determination of the Useful
Life of Intangible Assets.” FSP FAS 142-3 amends the factors that should be
considered in developing renewal or extension assumptions used to determine the
useful life of a recognized intangible asset under SFAS No. 142, “Goodwill
and Other Intangible Assets.” The intent of FSP FAS 142-3 is to improve the
consistency between the useful life of a recognized intangible asset under SFAS
No. 142 and the period of expected cash flows used to measure the fair
value of the asset under SFAS No. 141(R) and other generally accepted
accounting principles. FSP FAS 142-3 is effective on January 1, 2009. Early
adoption is prohibited.  The provisions of FSP FAS 142-3 are to be
applied prospectively to intangible assets acquired after the effective date,
except for the disclosure requirements which must be applied prospectively to
all intangible assets recognized as of, and subsequent to, the effective date.
Since this standard is applied prospectively, adoption did not have a
significant impact on our consolidated results of operations, financial position
or cash flows.
 
 In May
2009, the FASB issued SFAS No. 165, "Subsequent Events," which establishes
general standards of accounting for and disclosure of events that occur after
the balance sheet date but before the financial statements are issued or are
available to be issued. SFAS No. 165 provides guidance on the period after the
balance sheet date during which management of a reporting entity should evaluate
events or transactions that may occur for potential recognition or disclosure in
the financial statements, the circumstances under which an entity should
recognize events or transactions occurring after the balance sheet date in its
financial statements and the disclosures that an entity should make about events
or transactions that occurred after the balance sheet date. The Company adopted
SFAS No. 165 during the second quarter of 2009.
 
 In July
2009, the FASB issued SFAS No. 168, "Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles." The FASB Accounting
Standards Codification ("Codification") will become the source of authoritative
U.S. GAAP recognized by the FASB to be applied by nongovernmental entities.
Rules and interpretive releases of the Securities and Exchange Commission
("SEC") under authority of federal securities laws are also sources of
authoritative GAAP for SEC registrants. The Codification will supersede all
then-existing non-SEC accounting and reporting standards. SFAS 168 is effective
for interim and annual periods ending after September 15, 2009.  In
the FASB's view, the issuance of SFAS 168 and the Codification will not change
GAAP, and therefore we do not expect the adoption of SFAS 168 to have an effect
on our consolidated financial statements or disclosures.
  8
  4.
              Accounting
      for Stock-Based Compensation:
  Stock
based compensation is recorded in accordance with SFAS Statement No. 123
(revised 2004), “Share-Based Payment”(“Statement
No. 123(R)”), which requires the measurement and recognition of
compensation expense for all share-based payments to employees, including grants
of stock and employee stock options, based on estimated fair
values.
  The
Company granted 15,000 and 25,000 stock options during the six month period
ended June 30, 2009 and 2008, respectively.
  The following tables summarize stock
option activity for the six months ended June 30, 2009 and 2008.
  2009
  WeightedAverageWeighted
                            
                            
                            Remaining
                            
                            
                            AggregateNumber of
                            
                            
                            Average
                            
                            
                            Contractual
                            
                            
                            IntrinsicOptions
                            
                            
                            Option Price
                            
                            
                            Term (years)
                            
                            
                            ValueBalance
      at January 1
                            
                            
                            877,235
                            
                            
                            $
                            4.25Granted
                            
                            
                            15,000
                            
                            
                            
                            5.72Exercised
                            
                            
                            -
                            
                            
                            
                            -Expired/Forfeited
                            
                            
                            (6,650
                            )
                            
                            
                            5.35Balance
      at June 30
                            
                            
                            885,585
                            
                            
                            $
                            4.27
                            
                            
                            
                            2.98
                            
                            
                            $
                            1,387,149Vested
      and exercisable
                            
                            
                            870,585
                            
                            
                            $
                            4.24
                            
                            
                            
                            2.95
                            
                            
                            $
                            1,387,149
  2008
  WeightedAverageWeighted
                            
                            
                            Remaining
                            
                            
                            AggregateNumber of
                            
                            
                            Average
                            
                            
                            Contractual
                            
                            
                            IntrinsicOptions
                            
                            
                            Option Price
                            
                            
                            Term (years)
                            
                            
                            ValueBalance
      at January 1
                            
                            
                            922,273
                            
                            
                            $
                            4.01Granted
                            
                            
                            25,000
                            
                            
                            
                            6.91Exercised
                            
                            
                            (60,000
                            )
                            
                            
                            2.00Expired/Forfeited
                            
                            
                            (15,001
                            )
                            
                            
                            3.35Balance
      at June 30
                            
                            
                            872,272
                            
                            
                            $
                            4.24
                            
                            
                            
                            3.93
                            
                            
                            $
                            1,482,974Vested
      and exercisable
                            
                            
                            869,772
                            
                            
                            $
                            4.24
                            
                            
                            
                            3.93
                            
                            
                            $
                            1,482,974
  9
  The
aggregate intrinsic value of options exercised during the six months ended June
30, 2008 was $288,000. No options were exercised during the six months ended
June 30, 2009.  There were 15,000 and 2,500 nonvested stock options
outstanding as of June 30, 2009 and 2008, respectively.
 
 The
following table summarizes stock-based compensation expense related to all
share-based payments recognized in the condensed consolidated statements of
income.
 
 Three Months
                    Ended June 30,
                  
                  
                  Three Months
                    Ended June 30,2009
                  
                  
                  2008Stock
      options
                  
                  $
                  6,250
                  
                  
                  $
                  32,500Stock
      grants – other
                  
                  
                  22,880
                  
                  
                  
                  22,878Service
      based awards
                  
                  
                  33,845
                  
                  
                  
                  31,068Performance
      based awards
                  
                  
                  29,400
                  
                  
                  
                  31,196Tax
      benefit
                  
                  
                  (37,850
                  )
                  
                  
                  (48,250
                  )Stock-based
      compensation expense, net of tax
                  
                  $
                  54,525
                  
                  
                  $
                  69,392
 
 Six Months
                    Ended June 30,
                  
                  
                  Six Months
                    Ended June 30,2009
                  
                  
                  2008Stock
      options
                  
                  $
                  6,250
                  
                  
                  $
                  36,250Stock
      grants – other
                  
                  
                  45,767
                  
                  
                  
                  45,756Service
      based awards
                  
                  
                  67,690
                  
                  
                  
                  62,137Performance
      based awards
                  
                  
                  58,800
                  
                  
                  
                  62,392Tax
      benefit
                  
                  
                  (73,224
                  )
                  
                  
                  (84,700
                  )Stock-based
      compensation expense, net of tax
                  
                  $
                  105,283
                  
                  
                  $
                  121,835
 
 Stock
Grants - Other
 
 The
outside Board of Directors are granted shares of common stock at the end of each
quarter as compensation for services provided as members of the Board of
Directors and other committees.  These share grants vest
immediately.  In addition, stock grants may be issued to employees at
the Board of Directors’ discretion.
 
 Service
Based Awards
 
 In
January 2006, May 2007 and January 2009 the Company granted 60,000, 22,000 and
21,500 restricted shares, respectively, to certain executives in respect of
services rendered but at no monetary cost.  These shares vest over
periods ranging from 3 to 5 years, on December 31 of each year.  The
Company records the compensation expense on a straight-line basis over the
vesting period.  Fair value for restricted stock awards is based on
the Company's closing common stock price on the date of grant.As
of June 30, 2009 and 2008 there were 41,000 and 31,500 shares vested,
respectively.  The aggregate grant date fair value of restricted stock
grants was $570,410.As
of June 30, 2009 and 2008, the Company had $234,171 and $270,688, respectively,
of total unrecognized compensation costs related to nonvested restricted stock
units expected to be recognized over a weighted average period of 1.94
years.
  10
 
 Performance
Based Awards
 
 In
January 2006 and May 2007, respectively, the Company granted share awards for
90,000 shares (up to 18,000 shares per year through December 31, 2010) and
46,000 shares (up to 11,500 shares per year through December 31, 2010) to
certain executives.  Vesting of such shares is contingent upon the
Company achieving certain specified consolidated gross revenue and Earnings
before Interest and Taxes (“EBIT”) objectives in each of the next four fiscal
years ending December 31. The fair value of the performance shares (aggregate
value of $909,400) is based on the closing trading value of the Company’s stock
on the date of grant and assumes that performance goals will be
achieved.  The fair value of the shares is expensed over the
performance period for those shares that are expected to ultimately
vest.  If such objectives are not met, no compensation cost is
recognized and any recognized compensation cost is reversed. As
of June 30, 2009 and 2008, 29,750 shares were vested.  As of June 30,
2009 and 2008, there was $300,593 and $538,743, respectively, of total
unrecognized compensation costs related to nonvested share awards; that cost is
expected to be recognized over a period of 1.50 years.
 
 5.
              Earnings
      Per Share:
  Earnings
per share data for the six and three months ended June 30, 2009 and 2008 is
presented in conformity with SFAS No. 128, “Earnings Per Share.”
 
 The
following table is a reconciliation of the numerators and denominators in
computing earnings per share:
 
 Income
                                                  
                                                  
                                                  Shares
                                                  
                                                  
                                                  Per-Share(Numerator)
                                                  
                                                  
                                                  (Denominator)
                                                  
                                                  
                                                  AmountsSix Months Ended June 30,
    2009Basic
      EPS - Income available to common stockholders
                                                  
                                                  $
                                                  1,381,635
                                                  
                                                  
                                                  
                                                  9,461,888
                                                  
                                                  
                                                  $
                                                  .15Effect
      of dilutive securities - Options
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  189,136Diluted
      EPS - Income available to common stockholders and assumed
      conversions
                                                  
                                                  $
                                                  1,381,635
                                                  
                                                  
                                                  
                                                  9,651,024
                                                  
                                                  
                                                  $
                                                  .14Three Months Ended June 30,
      2009Basic
      EPS -Income available to common stockholders
                                                  
                                                  $
                                                  603,385
                                                  
                                                  
                                                  
                                                  9,469,908
                                                  
                                                  
                                                  $
                                                  .06Effect
      of dilutive securities - Options
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  250,921Diluted
      EPS - Income available to common stockholders and assumed
      conversions
                                                  
                                                  $
                                                  603,385
                                                  
                                                  
                                                  
                                                  9,720,829
                                                  
                                                  
                                                  $
                                                  .06Six Months Ended June 30,
    2008Basic
      EPS - Income available to common stockholders
                                                  
                                                  $
                                                  910,383
                                                  
                                                  
                                                  
                                                  9,411,886
                                                  
                                                  
                                                  $
                                                  .10Effect
      of dilutive securities - Options
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  296,439Diluted
      EPS - Income available to common stockholders and assumed
      conversions
                                                  
                                                  $
                                                  910,383
                                                  
                                                  
                                                  
                                                  9,708,325
                                                  
                                                  
                                                  $
                                                  .09Three Months Ended June 30,
      2008Basic
      EPS -Income available to common stockholders
                                                  
                                                  $
                                                  458,026
                                                  
                                                  
                                                  
                                                  9,417,701
                                                  
                                                  
                                                  $
                                                  .05Effect
      of dilutive securities - Options
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  300,284Diluted
      EPS - Income available to common stockholders and assumed
      conversions
                                                  
                                                  $
                                                  458,026
                                                  
                                                  
                                                  
                                                  9,717,985
                                                  
                                                  
                                                  $
                                                  .05
  11
 
 6.
              Goodwill
 
 Changes
in the carrying amount of goodwill, all of which relates to the Company’s TBCS
segment, for the six months ended June 30, 2009 and 2008 are as
follows:
 
 Six Months Ended June 30, 2009Balance
      as of January 1, 2009
                            
                            $
                            9,996,152Additional
      Goodwill
                            
                            
                            203,148Balance
      as of June 30, 2009
                            
                            $
                            10,199,300
 
 Six Months Ended June 30, 2008Balance
      as of January 1, 2008
                          
                          $
                          9,766,194Additional
      Goodwill
                          
                          
                          130,244Balance
      as of June 30, 2008
                          
                          $
                          9,896,438
  12
 
 The
addition to goodwill during the six months ended June 30, 2009 and 2008 relates
to the additional purchase price of American Mediconnect, Inc. based on the cash
receipts from the clinical trials portion of the business.
 
 7.
              Long-term
      Debt:
 
 As of
January 1, 2006 the Company had a credit facility arrangement for $4,500,000
which included a revolving credit line which permitted borrowings of $1,500,000
(based on eligible receivables as defined) and a $3,000,000 term loan payable.
The term loan is payable in equal monthly principal installments of $50,000 over
five years commencing January 2006.  The revolving credit line was set
to mature in May 2008.
  In March
2006 and December 2006, the credit facility was amended whereby the Company
obtained an additional $2,500,000 and $1,600,000 of term loans, the proceeds of
which were utilized to finance certain acquisitions.  These term loans
are payable over five years in equal monthly principal installments of
$41,666.67 and $26,666.67, respectively. Additionally, certain of the covenants
were amended.
  In
December 2006, the credit facility was amended to reduce the interest rates
charged by the bank such that borrowings under the term loan will bear interest
at either (a) LIBOR plus 2.00% or (b) the prime rate or the federal funds
effective rate plus .5%, whichever is greater, and the revolving credit line
will bear interest at either (a) LIBOR plus 1.75% or (b) the prime rate or the
federal funds effective rate plus .5%, whichever is greater.  The LIBOR
interest rate charge shall be adjusted in .25% intervals based on the Company’s
ratio of Consolidated Funded Debt to Consolidated EBITDA. In the third quarter
of 2007, the interest rate was reduced by .25% based on this
ratio.  The Company has the option to choose between the two interest
rate options under the amended term loan and revolving credit
line.  Borrowings under the credit facility are collateralized by
substantially all of the assets of the Company.
  On August
13, 2009 the Company amended its credit facility whereby the term of the
revolving credit line was extended through June 2011.  On April 30,
2007, the Company had amended its credit facility whereby the term of the
revolving credit line was extended through June 2010 and the amount of credit
available under the revolving credit line was increased to
$2,500,000.
  As of
June 30, 2009 and March 31, 2009, the Company was in compliance with its
financial covenants in its loan agreement. As of June 30, 2008 and March 31,
2008, the Company was in compliance with its financial covenants in its loan
agreement.
 
 8.
              Major
      Customers:
 
 Since
1983, the Company has provided Personal Emergency Response Systems (“PERS”)
services to the City of New York’s Human Resources Administration Home Care
Service Program ("HCSP").  The contract term with the HCSP is for two
years, commencing September 21, 2007, with two options to renew in favor of HRA
for two additional two year terms.  During the six months ended June
30, 2009 and 2008, the Company’s revenue from this contract represented
6% of its total revenue. As of June 30, 2009 and December 31, 2008,
accounts receivable from the contract represented 8% of accounts
receivable.
  13
  9.
              Segment  Reporting:
 
 The
Company has two reportable segments, (i) Health and Safety Monitoring Systems
(“HSMS”) and (ii) Telephone Based Communication Services (“TBCS”).
  The table
below provides a reconciliation of segment information to total consolidated
information for the six and three months ended June 30, 2009 and
2008:
  
 2009HSMS
                                                      
                                                      
                                                      TBCS
                                                      
                                                      
                                                      ConsolidatedSix Months Ended June 30,
    2009Revenue
                                                      
                                                      $
                                                      10,135,352
                                                      
                                                      
                                                      $
                                                      9,279,187
                                                      
                                                      
                                                      $
                                                      19,414,539Income
      before provision for income taxes
                                                      
                                                      
                                                      1,645,177
                                                      
                                                      
                                                      
                                                      697,458
                                                      
                                                      
                                                      
                                                      2,342,635Total
      assets
                                                      
                                                      
                                                      14,870,915
                                                      
                                                      
                                                      
                                                      20,370,168
                                                      
                                                      
                                                      
                                                      35,241,083HSMS
                                                      
                                                      
                                                      TBCS
                                                      
                                                      
                                                      ConsolidatedThree Months Ended June 30,
      2009Revenue
                                                      
                                                      $
                                                      5,045,867
                                                      
                                                      
                                                      $
                                                      4,456,445
                                                      
                                                      
                                                      $
                                                      9,502,312Income
      before provision for income taxes
                                                      
                                                      
                                                      873,147
                                                      
                                                      
                                                      
                                                      158,238
                                                      
                                                      
                                                      
                                                      1,031,385
 
 2008HSMS
                                        
                                        
                                        TBCS
                                        
                                        
                                        ConsolidatedSix Months Ended June 30,
    2008Revenue
                                        
                                        $
                                        9,778,598
                                        
                                        
                                        $
                                        9,396,468
                                        
                                        
                                        $
                                        19,175,066Income
      before provision for income taxes
                                        
                                        
                                        932,511
                                        
                                        
                                        
                                        610,872
                                        
                                        
                                        
                                        1,543,383Total
      assets
                                        
                                        
                                        16,385,446
                                        
                                        
                                        
                                        18,898,499
                                        
                                        
                                        
                                        35,283,945HSMS
                                        
                                        
                                        TBCS
                                        
                                        
                                        ConsolidatedThree Months Ended June 30,
      2008Revenue
                                        
                                        $
                                        4,941,643
                                        
                                        
                                        $
                                        4,597,678
                                        
                                        
                                        $
                                        9,539,321Income
      before provision for income taxes
                                        
                                        
                                        412,250
                                        
                                        
                                        
                                        363,776
                                        
                                        
                                        
                                        776,026
  14
  10.
              Commitments
      and Contingencies:
  
 The
Company is aware of various threatened or pending litigation claims against the
Company relating to its products and services and other claims arising in the
ordinary course of its business.  The Company has given its insurance
carrier notice of such claims and it believes there is sufficient insurance
coverage to cover any such claims.   Currently, there are no
litigation claims for which an estimate of loss, if any, can be reasonably made
as they are in the preliminary stages and therefore, no liability or
corresponding insurance receivable has been recorded.
 
 11.
              Subsequent
      Event:
 
 On August
12, 2009, the Company entered into an agreement with an independent third party
to sublet a portion of the space occupied in its Long Island City, New York
location.  The sublease, which commences on August 17, 2009 and
expires in March 2018, calls for minimum annual rentals of $125,000 subject to a
3% annual increase.  The sublease agreement also calls for a rent
abatement through October 31, 2009.
 
 The
Company has performed an evaluation of subsequent events through August 14,
2009, which is the date the financial statements were filed.
 
 Item 2.
                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.
  The
following discussion and analysis provides information which management believes
is relevant to an assessment and understanding of the Company’s results of
operations and financial condition.  This discussion and analysis
should be read in conjunction with the consolidated financial statements
contained in the latest Annual Report on Form 10-K for the year ended December
31, 2008.
  Statements
contained in this Quarterly Report on Form 10-Q include “forward-looking
statements” within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act, including, in particular and without limitation,
statements contained herein under the heading “Management’s Discussion and
Analysis of Financial Condition and Results of
Operations.”  Forward-looking statements involve known and unknown
risks, uncertainties and other factors which could cause the Company’s actual
results, performance and achievements, whether expressed or implied by such
forward-looking statements, not to occur or be realized. These include
uncertainties relating to government regulation, technological changes, our
expansion plans and product liability risks.  Such forward-looking
statements generally are based upon the Company’s best estimates of future
results, performance or achievement, based upon current conditions and the most
recent results of operations.  Forward-looking statements may be
identified by the use of forward-looking terminology such as “may,” “will,”
“expect,” “believe,” “estimate,” “project,” “anticipate,” “continue” or similar
terms, variations of those terms or the negative of those
terms.
  15
  You
should carefully consider such risks, uncertainties and other information,
disclosures and discussions which contain cautionary statements identifying
important factors that could cause actual results to differ materially from
those provided in the forward-looking statements. Readers should carefully
review the risk factors and any other cautionary statements contained in the
Company’s Annual Report on Form 10-K and other public filings.  The
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
  Overview:
 
 American
Medical Alert Corp. (“AMAC” or the “Company”) was formed in 1981 as a New York
corporation. The Company’s principal business is the provision of healthcare
communication and monitoring services.  These services are reported
through two operating segments. The first segment, Health Safety and Monitoring
Services (“HSMS”), is comprised of the development and marketing of remote
patient monitoring technologies that include personal emergency response
systems, medication reminder and dispensing systems, telehealth/disease
management technologies and safety monitoring systems to pharmacies. The second
segment, Telephony Based Communication Services (“TBCS”), includes the provision
of centralized call center solutions primarily to the healthcare community
including traditional after hours services, “Daytime Services” applications, and
clinical trial recruitment call center services and
administration.  The Company’s products and services are primarily
marketed to the healthcare community, including hospitals, home care, durable
medical equipment, medical facility, hospice, pharmacy, managed care and other
healthcare oriented organizations.  The Company also offers certain
products and services directly to consumers.
 
 HSMS
 Until
2000, the Company’s principal business was the marketing of personal emergency
response systems (“PERS”), a device that allows a
patient to signal an emergency response center for help in the event of a
debilitating illness or accident.  The PERS business was the entry
point for the Company into the healthcare field, permitting the Company to
establish a network of customers and strategic alliances which served as the
foundation for the Company's expansion remote patient monitoring.
 
 As part
of its expansion strategy, in 1999, the Company secured certain exclusive rights
to a medication reminder appliance which is marketed by the Company under the
name Med-Time®. This natural adjunct to PERS proved to be strategically
advantageous. Medication non-adherence currently costs an estimated $100 billion
annually in the United States and accounts for 10 percent of hospital
admissions.  The Company marketed an early version of Med-Time for
several years.  Realizing the greater opportunity to expand upon our
monitoring capabilities, the Company embarked upon the development of a new
system that would allow for greater medication adherence
oversight.  In 2009, the Company launched 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.
  16
 
 Rounding
out AMAC’s remote patient monitoring portfolio, in 2001, the Company entered the
telehealth market, a market in its embryonic stage, after consideration of the
opportunity to provide new technologies to assist healthcare professionals in
home-based, health management activities. As a distributor of the Health Buddy®
System, many of the Company’s customers have successfully demonstrated the value
proposition associated with incorporating disease management technologies into a
patient’s plan of care. The Company believes the telehealth market will continue
to provide opportunities for AMAC’s expansion as a full source provider of
remote patient monitoring technologies and first line support
services.
 
 TBCS
 Beginning
in 2000, the Company began a program of product diversification and customer
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.
  17
 
 The
Company believes that the overall mix of cash flow generating businesses from
HSMS and TBCS, combined with its emphasis on developing products and services to
support demand from customers and the emerging, home-based monitoring market,
provides the correct blend of stability and growth opportunity.
 
 The
Company believes this strategy will enable it to maintain and increase its role
in the healthcare communications field.  Moreover, based on the
Company’s aggressive growth strategy, management believes its TBCS business will
allow the Company to become the largest provider of these specialized healthcare
communication services in the United States.
 
 Components of Statements of
Income by Operating Segment
 The
following table shows the components of the Statement of Income for the six and
three months ended June 30, 2009 and 2008.
  In thousands (000’s)
                  
                  Three Months Ended June 30,
                  
                  
                  Six Months Ended June 30,2009
                  
                  
                  %
                  
                  
                  2008
                  
                  
                  %
                  
                  
                  2009
                  
                  
                  %
                  
                  
                  2008
                  
                  
                  %RevenuesHSMS
                  
                  
                  5,046
                  
                  
                  
                  53
                  %
                  
                  
                  4,942
                  
                  
                  
                  52
                  %
                  
                  
                  10,135
                  
                  
                  
                  52
                  %
                  
                  
                  9,779
                  
                  
                  
                  51
                  %TBCS
                  
                  
                  4,456
                  
                  
                  
                  47
                  %
                  
                  
                  4,597
                  
                  
                  
                  48
                  %
                  
                  
                  9,280
                  
                  
                  
                  48
                  %
                  
                  
                  9,396
                  
                  
                  
                  49
                  %Total
      Revenues
                  
                  
                  9,502
                  
                  
                  
                  100
                  %
                  
                  
                  9,539
                  
                  
                  
                  100
                  %
                  
                  
                  19,415
                  
                  
                  
                  100
                  %
                  
                  
                  19,175
                  
                  
                  
                  100
                  %Cost
      of Services and Goods SoldHSMS
                  
                  
                  2,083
                  
                  
                  
                  41
                  %
                  
                  
                  2,183
                  
                  
                  
                  44
                  %
                  
                  
                  4,286
                  
                  
                  
                  42
                  %
                  
                  
                  4,299
                  
                  
                  
                  44
                  %TBCS
                  
                  
                  2,464
                  
                  
                  
                  55
                  %
                  
                  
                  2,408
                  
                  
                  
                  52
                  %
                  
                  
                  4,899
                  
                  
                  
                  53
                  %
                  
                  
                  5,024
                  
                  
                  
                  53
                  %Total
      Cost of Services and Goods Sold
                  
                  
                  4,547
                  
                  
                  
                  48
                  %
                  
                  
                  4,591
                  
                  
                  
                  48
                  %
                  
                  
                  9,185
                  
                  
                  
                  47
                  %
                  
                  
                  9,323
                  
                  
                  
                  49
                  %Gross
      ProfitHSMS
                  
                  
                  2,963
                  
                  
                  
                  59
                  %
                  
                  
                  2,759
                  
                  
                  
                  56
                  %
                  
                  
                  5,849
                  
                  
                  
                  58
                  %
                  
                  
                  5,480
                  
                  
                  
                  56
                  %TBCS
                  
                  
                  1,992
                  
                  
                  
                  45
                  %
                  
                  
                  2,189
                  
                  
                  
                  48
                  %
                  
                  
                  4,381
                  
                  
                  
                  47
                  %
                  
                  
                  4,372
                  
                  
                  
                  47
                  %Total
      Gross Profit
                  
                  
                  4,955
                  
                  
                  
                  52
                  %
                  
                  
                  4,948
                  
                  
                  
                  52
                  %
                  
                  
                  10,230
                  
                  
                  
                  53
                  %
                  
                  
                  9,852
                  
                  
                  
                  51
                  %Selling,
      General & Administrative
                  
                  
                  3,941
                  
                  
                  
                  41
                  %
                  
                  
                  4,156
                  
                  
                  
                  44
                  %
                  
                  
                  7,993
                  
                  
                  
                  41
                  %
                  
                  
                  8,311
                  
                  
                  
                  43
                  %Interest
      Expense
                  
                  
                  21
                  
                  
                  
                  -
                  %
                  
                  
                  65
                  
                  
                  
                  1
                  %
                  
                  
                  44
                  
                  
                  
                  -
                  %
                  
                  
                  167
                  
                  
                  
                  1
                  %Other
      Income
                  
                  
                  (38
                  )
                  
                  
                  -
                  %
                  
                  
                  (49
                  )
                  
                  
                  (1
                  )%
                  
                  
                  (150
                  )
                  
                  
                  (1
                  )%
                  
                  
                  (169
                  )
                  
                  
                  (1
                  )%Income
      before Income Taxes
                  
                  
                  1,031
                  
                  
                  
                  11
                  %
                  
                  
                  776
                  
                  
                  
                  8
                  %
                  
                  
                  2,343
                  
                  
                  
                  12
                  %
                  
                  
                  1,543
                  
                  
                  
                  8
                  %Provision
      for Income Taxes
                  
                  
                  423
                  
                  
                  
                  
                  
                  
                  
                  318
                  
                  
                  
                  
                  
                  
                  
                  961
                  
                  
                  
                  
                  
                  
                  
                  633Net
      Income
                  
                  
                  608
                  
                  
                  
                  
                  
                  
                  
                  458
                  
                  
                  
                  
                  
                  
                  
                  1,382
                  
                  
                  
                  
                  
                  
                  
                  910
  18


Results of
Operations:
 
 The
Company has two distinct operating business segments, which are HSMS and
TBCS.
 
 Three Months Ended June 30,
2009 Compared to Three Months Ended June 30, 2008
 
 Revenues:
 
 HSMS
 
 Revenues,
which consist primarily of monthly rental revenues, increased approximately
$104,000, or 2%, for the three months ended June 30, 2009 as compared to the
same period in 2008.  The increase is primarily attributed to the
following factors:
 
 §
              The
      Company experienced revenue growth under its exclusive arrangement with
      Walgreen whereby the Company markets the PERS product directly to the
      consumer.  In the three months ended June 30, 2009, the Company
      recognized increased revenues of approximately $73,000, as compared to the
      same period in 2008, from this
arrangement.
 
 §
              The
      Company has increased its subscriber base with respect to its teleheath
      offering which has resulted in increased revenues.  In the three
      months ended June 30, 2009, the Company recognized increased revenues of
      approximately $47,000, as compared to the same period in
    2008.
 
 §
              Through
      the execution of other new agreements as well as growth within its
      existing PERS subscriber base, the Company’s service revenue increased
      approximately $143,000 as compared to the same period in
      2008.  The Company anticipates that it will continue to grow its
      subscriber base and corresponding revenue through its continued sales and
      marketing efforts.
 
 These
increases were partially offset by a decrease in product sales of approximately
$160,000 mostly due to a decrease in the sales of its enhanced senior living
product portfolio to retirement facilities.
 
 TBCS
 
 The
decrease in revenues of approximately $141,000, or 3%, for the three months
ended June 30, 2009 as compared to the same period in 2008 was primarily due
to:
 
 §
              The
      Company experienced customer attrition at one of the call center locations
      as a result of certain account realignments, which took place as part of
      Company’s overall consolidation process.  This resulted in
      approximately a $102,000 decrease in revenue for the three months ended
      June 30, 2009 as compared to the same period in 2008.  The
      Company has since modified its action plan and has stabilized the client
      base at this location.
  19
  §
              The
      Company recorded a reduction in its project based revenues of
      approximately $162,000 primarily relating to a decrease in its clinical
      trial project based work.  The Company continues to aggressively
      pursue this revenue stream of business and believes it will generate
      increased clinical trial revenues in the second half year of
      2009.
 
 These
decreases in revenues were partially offset by an increase in revenue from our
non-traditional business of approximately $79,000 for the three months ended
June 30, 2009 as compared to the same period in 2008.  This was
primarily facilitated through one of the hospital organizations expanding their
services with the Company.  Additionally, aside from the call center
noted above, the Company continues to experience revenue growth within its
traditional telephone answering service business due to addition of new
customers as well as increased business from its existing customer
base.
 
 Costs Related to Services
and Goods Sold:
 
 HSMS
 
 Costs
related to services and goods sold decreased by approximately $100,000 for the
three months ended June 30, 2009 as compared to the same period in 2008, a
decrease of 5%, primarily due to the following:
 
 §
              As
      a result of a decrease in the Company’s product sales and the Company’s
      overall effort to improve efficiencies within the fulfillment and
      engineering department, the Company incurred less expense of approximately
      $82,000 through the three months ended June 30, 2009 as compared to the
      same period in 2008.
 
 §
              The
      Company’s depreciation expense decreased by approximately $46,000
      primarily as a result of the Company obtaining an alternative supplier to
      purchase its PERS equipment at reduced prices, purchasing fewer devices in
      2008 and 2009, as compared with prior years and improved tracking
      systems relating to the PERS
equipment.
 
 This
decrease was partially offset by an increase of approximately $30,000 resulting
from the Company capitalizing less labor and overhead costs in the three months
ended June 30, 2009 as compared to the same period in 2008. The Company reduced
its purchases of traditional PERS equipment and associated components therefore
requiring less capitalized labor and overhead to prepare these products for
shipment.  This has been facilitated primarily through more efficient
tracking of equipment levels and reorder points.
 
 TBCS
 
 Costs
related to services and goods sold increased by approximately $56,000 for the
three months ended June 30, 2009 as compared to the same period in 2008, an
increase of 2%, primarily due to the following:
  20
  §
              During
      the second quarter of 2009 the Company hired additional personnel for its
      non-traditional answering services which resulted in an increase of
      approximately $85,000.  This was based on increased business in
      this area and the execution of a new customer contract.  The
      Company was required to hire additional personnel prior to the contract
      taking effect so they could properly train and prepare for the required
      work.  The contract is now underway and the Company is
      generating revenue.
 
 The
increase was offset by a reduction in outside labor of approximately $37,000 as
a result of the reduced project based work as described above.
 
 Selling, General and
Administrative Expenses:
 
 Selling,
general and administrative expenses decreased by approximately $215,000 for the
three months ended June 30, 2009 as compared to the same period in 2008, a
decrease of 5%.  The decrease is primarily attributable to the
following:
 
 §
              During
      the second quarter of 2009, the Company incurred approximately $203,000
      less advertising expense as compared to the same period in 2008 due to
      management’s determination relating to the efficiency of the advertising
      program.  The Company continues to evaluate the cost benefit of
      such advertising.
 
 §
              The
      Company recorded less amortization expense in the amount of
      $63,000.  This was primarily the result of certain intangible
      assets associated with previous telephone answering service acquisitions
      being fully amortized as of June 30, 2008 and March 31,
    2009.
 
 §
              These
      decreases were partially offset by an increase in consulting expenses of
      approximately $84,000.  The Company incurred increased
      consulting expenses relating to expanding its sales efforts and promoting
      its new MedSmart medication management
system.
 
 There
were other decreases in selling, general and administrative expenses which arose
out of the normal course of business such as commission and legal expense which
were partially offset by an increase in research and development
expense.
 
 Interest
Expense:
 
 Interest
expense for the three months ended June 30, 2009 and 2008 was approximately
$21,000 and $65,000, respectively.  The decrease of $44,000 was
primarily due to the Company continuing to pay down its term loan as well as a
reduction in the interest rate.
  21
  Other
Income:
 
 Other
income for the three months ended June 30, 2009 and 2008 was approximately
$38,000 and $49,000, respectively. Other income for the three months ended June
30, 2009 primarily includes late fees charged to customers. Other income for the
three months ended June 30, 2008 primarily includes an economic development
incentive through the City of Clovis in the amount of $100,000 which was
partially offset by an adjustment to the Relocation and Employment Assistance
Program credit due from New York City.
  Income Before Provision for
Income Taxes:
 
 The
Company’s income before provision for income taxes for the three months ended
June 30, 2009 was approximately $1,031,000 as compared to $776,000 for the same
period in 2008. The increase of $255,000 for the three months ended June 30,
2009 primarily resulted from a decrease in the Company's costs related to
services and product sales; selling, general and administrative costs and
interest expense partially offset by a decrease in the Company’s service and
product revenues.
 
 Six Months Ended June 30,
2009 Compared to Six Months Ended June 30, 2008
 
 Revenues:
 
 HSMS
 
 Revenues,
which consist primarily of monthly rental revenues, increased approximately
$356,000, or 4%, for the six months ended June 30, 2009 as compared to the same
period in 2008.  The increase is primarily attributed to the following
factors:
 
 §
              The
      Company experienced revenue growth under its exclusive arrangement with
      Walgreen whereby the Company markets the PERS product directly to the
      consumer.  In the six months ended June 30, 2009, the Company
      recognized increased revenues of approximately $190,000, as compared to
      the same period in 2008, from this
arrangement.
 
 §
              The
      Company has increased its subscriber base with respect to its teleheath
      offering which has resulted in increased revenues.  In the six
      months ended June 30, 2009, the Company recognized increased revenues of
      approximately $74,000, as compared to the same period in
    2008.
 
 §
              The
      Company increased revenues from the agreement with a third party agency
      whereby PERS are placed online.  The subscriber base associated
      with this agreement has grown and accounted for an approximate $65,000
      increase in revenue during the six months ended June 30, 2009 as compared
      to the same period in the prior
year.
 
 §
              Through
      the execution of other new agreements as well as growth within its
      existing PERS subscriber base, the Company’s service revenue increased
      approximately $220,000 as compared to the same period in
      2008.  The Company anticipates that it will continue to grow its
      subscriber base and corresponding revenue through its continued sales and
      marketing efforts.
 
  22
  These
increases were partially offset by a decrease in product sales of approximately
$185,000 mostly due to a decrease in the sales of its enhanced senior living
product portfolio to retirement facilities.
 
 TBCS
 
 The
decrease in revenues of approximately $116,000, or 1%, for the six months ended
June 30, 2009 as compared to the same period in 2008 was primarily due
to:
 
 §
              The
      Company experienced customer attrition at one of the call center locations
      as a result of certain account realignments, which took place as part of
      Company’s overall consolidation process.  This resulted in
      approximately an $180,000 decrease in revenue for the six months ended
      June 30, 2009 as compared to the same period in 2008.  The
      Company has since modified its action plan and has stabilized the client
      base at this location.
 
 §
              The
      Company recorded a reduction in its project based revenues of
      approximately $127,000 primarily relating to a decrease in clinical trial
      project based work.  The Company’s continues to aggressively
      pursue this revenue stream of business and believes it will generate
      increased clinical trial revenues in the second half year of
      2009.
 
 These
decreases in revenues were partially offset by an increase in revenue from our
non-traditional business of approximately $113,000 as compared to the six months
ended June 30, 2008.  Additionally, aside from the call center noted
above, the Company continues to experience revenue growth within its traditional
telephone answering service business due to addition of new customers as well as
increased business from its existing customer base.
 
 Costs Related to Services
and Goods Sold:
 
 HSMS
 
 Costs
related to services and goods sold decreased by approximately $13,000 for the
six months ended June 30, 2009 as compared to the same period in 2008, a
decrease of less than 1%, primarily due to the following:
 
 §
              As
      a result of a decrease in the Company’s product sales and the Company’s
      overall effort to improve efficiencies within the fulfillment and
      engineering department, the Company incurred less expense of approximately
      $110,000 through the six months ended June 30, 2009 as compared to the
      same period in 2008.§
              The
      Company’s depreciation expense decreased by approximately $55,000
      primarily as a result of the Company obtaining an alternative supplier to
      purchase its PERS equipment at reduced prices, purchasing fewer devices in
      2008 and 2009, as compared with prior years and improved tracking systems
      relating to the PERS
  equipment.
 
 This
decrease was partially offset by an increase of approximately $105,000 resulting
from the Company capitalizing less labor and overhead costs in the six months
ended June 30, 2009 as compared to the same period in 2008. The Company reduced
its purchases of traditional PERS equipment and associated components therefore
requiring less capitalized labor and overhead to prepare these products for
shipment.  This has been facilitated primarily through more efficient
tracking of equipment levels and reorder points. In
addition, there were certain other expenses which slightly increased, as
compared to the same period in the prior year in the ordinary course of
business.
  23
  TBCS:
 
 Costs
related to services and goods sold decreased by approximately $125,000 for the
six months ended June 30, 2009 as compared to the same period in 2008, a
decrease of 2%, primarily due to the following:
 
 §
              In
      2008, the Company incurred additional labor and telephone service costs
      with the majority of these costs relating to the consolidation of its call
      center infrastructure in order to maximize operational efficiencies. With
      this consolidation effort being substantially completed during 2008, the
      Company has started to realize the operational and financial benefits of
      this effort.  During the first six months of 2009, the Company,
      through this consolidation effort, has realigned its personnel and
      structured its telephone system more efficiently whereby the Company was
      able to reduce its labor and telephone costs by approximately
      $235,000.  The Company anticipates it will continue to realize
      these benefits throughout 2009.
  This
decrease was partially offset by the Company hiring additional personnel for its
non-traditional answering services which resulted in an increase of
approximately $151,000.  This was based on increased business in this
area and the execution of a new customer contract.  With respect to
the new contract, the Company was required to hire additional personnel prior to
the contract taking effect so they could properly train and prepare for the
required work.  The contract is now underway and the Company is
generating revenue.
 
 Selling, General and
Administrative Expenses:
 
 Selling,
general and administrative expenses decreased by approximately $318,000 for the
six months ended June 30, 2009 as compared to the same period in 2008, a
decrease of 4%.  The decrease is primarily attributable to the
following:
 
 §
              During
      the first six months of 2009, the Company incurred approximately $332,000
      less advertising expense as compared to the same period in 2008 due to
      management’s determination relating to the efficiency of the advertising
      program. The Company continues to evaluate the cost benefit of such
      advertising.
 
 §
              As
      a result of the Company’s effort in consolidating its call center
      infrastructure, the Company has benefited from a reduction of
      approximately $110,000 in administrative payroll and related payroll taxes
      in the first six months of 2009 as compared to the same period in
      2008.
 
 §
              The
      Company recorded less amortization expense in the amount of
      $74,000.  This was primarily the result of certain intangible
      assets associated with previous telephone answering service acquisitions
      being fully amortized as of June 30, 2008 and March 31,
    2009.
  24
  These
decreases were partially offset by an increase in consulting expenses of
approximately $189,000.  The Company incurred increased consulting
expenses relating to expanding its sales efforts, promoting its new MedSmart
medication management system as well as incurring fees for the upgrade of
existing websites and accounting systems.
 
 Interest
Expense:
 
 Interest
expense for the six months ended June 30, 2009 and 2008 was approximately
$44,000 and $167,000, respectively.  The decrease of $123,000 was
primarily due to the Company continuing to pay down its term loan as well as a
reduction in the interest rate.
 
 Other
Income:
 
 Other
income for the six months ended June 30, 2009 and 2008 was approximately
$150,000 and $169,000, respectively. Other income for the six months ended June
30, 2009 and 2008 includes primarily a training incentive received from the
State of New Mexico for hiring and training employees within the State and an
economic development incentive through the City of Clovis.  These
incentives accounted for approximately $128,000 and $228,000,
respectively.  In 2007, the Company opened a network operating call
center in New Mexico and hired employees to serve as operators for the telephone
answering service.  In 2008, the Company continued its further
expansion into this facility by also hiring employees to serve as emergency
response operators for the HSMS segment.  The economic development
incentive through the City of Clovis in 2008 was partially offset by an
adjustment to the Relocation and Employment Assistance Program credit due from
New York City in the amount of $73,000.
 
 Income Before Provision for
Income Taxes:
 
 The
Company’s income before provision for income taxes for the six months ended June
30, 2009 was approximately $2,343,000 as compared to $1,543,000 for the same
period in 2008. The increase of $800,000 for the six months ended June 30, 2009
primarily resulted from an increase in the Company's service and product
revenues as well as a decrease in the Company’s costs related to services and
product sales, selling, general and administrative costs and interest
expense.
  Liquidity and Capital
Resources
  As of
January 1, 2006 the Company had a credit facility arrangement for $4,500,000
which included a revolving credit line which permitted borrowings of $1,500,000
(based on eligible receivables as defined) and a $3,000,000 term loan payable in
equal monthly principal installments of $50,000 over five years commencing
January 2006.
  25
  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.
  On August
13, 2009 the Company amended its credit facility whereby the term of the
revolving credit line was extended through June 2011.  On April 30,
2007, the Company had amended its credit facility whereby the term of the
revolving credit line was extended through June 2010 and the amount of credit
available under the revolving credit line was increased to
$2,500,000.
 
 As of
June 30, 2009 and 2008, the Company was in compliance with its financial
covenants in its loan agreement.
 
 The
following table is a summary of contractual obligations as of June 30,
2009:
  Payments
      Due by PeriodContractual  Obligations
                            
                            Total
                            
                            
                            Less
      than 1 year
                            
                            
                            1-3
      years
                            
                            
                            4-5
      years
                            
                            
                            After
      5 yearsRevolving
      Credit Line
                            
                            $
                            950,000
                            
                            
                            
                            
                            
                            $
                            950,000Debt  (a)
                            
                            $
                            3,406,667
                            
                            
                            $
                            1,301,667
                            
                            
                            $
                            2,105,000Operating
      Leases (b)
                            
                            $
                            7,333,177
                            
                            
                            $
                            1,012,503
                            
                            
                            $
                            2,423,380
                            
                            
                            $
                            1,575,188
                            
                            
                            $
                            2,322,106Purchase
      Commitments (c)
                            
                            $
                            807,133
                            
                            
                            $
                            807,133Interest
      Expense (d)
                            
                            $
                            86,981
                            
                            
                            $
                            67,791
                            
                            
                            $
                            19,190Acquisition
      related Commitment (e)
                            
                            $
                            71,939
                            
                            
                            $
                            71,939Total
      Contractual Obligations
                            
                            $
                            12,655,897
                            
                            
                            $
                            3,261,033
                            
                            
                            $
                            5,497,570
                            
                            
                            $
                            1,575,188
                            
                            
                            $
                            2,322,106
  26
  (a)
                –
      Debt includes the Company’s aggregate outstanding term loans which mature
      in 2010 and 2011.
  (b)
                –Operating leases
      include rental of facilities at various locations within the United
      States.  These operating leases include the rental of the
      Company’s call center, warehouse and office facilities.  These
      operating leases have various maturity dates.  The Company
      currently leases office space from the Chairman and principal shareholder
      pursuant to a lease. This lease expires in September 2009.  The
      Company also leases office space from certain telephone answering service
      managers.  The leases with these managers expire in December
      2009 and December 2012,
respectively.
  (c)
                –Purchase commitments
      relate to orders for the Company’s traditional PERS system and its
      MedSmart pill dispenser.
  (d)
                –
      Interest expense relates to interest on the Company’s revolving credit
      line and debt at the Company’s current rate of
  interest.
  (e)
                –
      Acquisition related commitment represents payments due based on
      collections of the clinical trial business relating to the American
      Mediconnect, Inc acquisition in December
2006.
  The
primary sources of liquidity are cash flows from operating activities.  Net
cash provided by operating activities was approximately $4.6 million for the six
months ended June 30, 2009, as compared to approximately $3.3 million for the
same period in 2008. During 2009, the cash provided by operating activities was
primarily from depreciation and amortization of approximately $2.0 million, net
earnings of approximately $1.4 million, an increase in accounts payable and
accrued expenses of approximately $0.4 million and a decrease in accounts
receivable of approximately $0.4 million. The components of depreciation and
amortization primarily relate to the purchases of the Company’s traditional PERS
equipment and the customer lists associated with the acquisition of telephone
answering service businesses.  The increase in accounts payable and
accrued expenses is primarily due to the timing of payments of expenses in the
ordinary course of business.  During 2008, the cash provided by
operating activities was primarily from depreciation and amortization of
approximately $2.1 million and net earnings of approximately $0.9 million. The
components of depreciation and amortization primarily relate to the purchases of
the Company’s traditional PERS equipment and the customer lists associated with
the acquisition of telephone answering service businesses.
  Net cash
used in investing activities for the six months ended June 30, 2009 and 2008
were approximately $0.7 million and $2.3 million, respectively. The primary
component of net cash used in investing activities in 2009 was capital
expenditures of approximately $0.7 million.  Capital expenditures for
2009 primarily related to the continued production and purchase of the
traditional PERS equipment.  The primary component of net cash used in
investing activities in 2008 was capital expenditures of approximately $2.0
million.  Capital expenditures for 2008 primarily related to the
continued production and purchase of the traditional PERS equipment and the
build-out of the Company’s new call center in New Mexico.
  Cash
flows for the six months ended June 30, 2009 used in financing activities were
approximately $1.3 million compared to $0.9 million for the same period in
2008.  The primary component of cash flow used in financing activities
in the first six months of 2009 was the payment of long-term debt of
approximately $1.2 million.  The primary component of cash flow used
in financing activities in 2008 was the payment of long-term debt of
approximately $0.9 million.  This was partially offset by the proceeds
received from long-term debt of $0.1 million and the exercise of stock options
of approximately $0.1 million.
  27
  During
the next twelve months, the Company anticipates it will make capital
expenditures and purchase of inventory items of approximately $1.75 – $2.0
million for the production and purchase of the traditional PERS equipment,
MedSmart pill dispensers and telehealth systems as well as enhancements to its
computer operating systems (this includes outstanding purchase orders issued to
purchase approximately $0.9 million of the traditional PERS equipment and the
MedSmart pill dispenser).  This amount is subject to fluctuations
based on customer demand.  The Company also anticipates incurring
approximately $0.3 - $0.5 million of costs relating to research and development
of its telehealth product and enhanced pill dispenser.
  As of
June 30, 2009, the Company had approximately $5.0 million in cash and the
Company’s working capital was approximately $8.0 million.  The Company
believes that with its present cash balance and with operations of the business
generating positive cash flow, it will be able to meet its cash, working capital
and capital expenditure needs for at least the next twelve months. The Company
also has a revolving credit line, which expires in June 2011 that permits
borrowings up to $2.5 million, of which $950,000 was outstanding at June 30,
2009.
  Off-Balance
Sheet Arrangements:
  As of
June 30, 2009, the Company has not entered into any off-balance sheet
arrangements that are reasonably likely to have a current or future effect on
the Company’s financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital
resources  that is material to investors.
  Other
Factors:
  During
2008, the Company recorded a loss on abandonment of $886,504, which represents
the write-off of assets encompassing prepaid licensing fees and associated
products paid or acquired in connection with a technology provider obtaining and
completing certain new remote telehealth monitoring products and
services.  The technology provider on this initiative experienced a
funding shortfall and has filed for bankruptcy protection and will not be able
to complete the project.  Although the Company has abandoned this
particular project, the Company plans to continue its efforts within the
telehealth sector. In 2008 the Company added to its telehealth offering by
becoming the first US channel market distributor of the Intel® Health Guide. The
Company believes the telehealth market will continue to provide opportunities
for AMAC’s expansion as a full source provider of remote patient monitoring
technologies and first line support services.
  During
2005, the Company entered into two operating lease agreements for additional
space at its Long Island City, New York location in order to consolidate its
warehouse and distribution center and accounting department into this
location.  The leases, which commenced in January 2006 and expire in
March 2018, call for minimum annual rentals of $220,000 and $122,000,
respectively, and are subject to increases in accordance with the term of the
agreements.  The Company is also responsible for the reimbursement of
real estate taxes.  On August 12, 2009, the Company entered into an
agreement with an independent third party to sublet a portion of the additional
space occupied in its Long Island City, New York location.  The
sublease, which commences on August 17, 2009 and expires in March 2018, calls
for minimum annual rentals of $125,000 subject to a 3% annual
increase.  The sublease agreement also calls for a rent abatement
through October 31, 2009.
  28
  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.
 
 Since
1983, the Company has provided Personal Emergency Response Systems (“PERS”)
services to the City of New York’s Human Resources Administration Home Care
Service Program ("HCSP").  The contract term with the HCSP is for two
years, commencing September 21, 2007, with two options to renew in favor of HRA
for two additional two year terms.  During the six months ended June
30, 2009 and 2008, the Company’s revenue from this contract represented
6% of its total revenue. As of June 30, 2009 and December 31, 2008,
accounts receivable from the contract represented 8% of accounts
receivable.
  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.
  29
  In
April 2008, the FASB issued FSP FAS 142-3, “Determination of the Useful
Life of Intangible Assets.” FSP SFAS 142-3 amends the factors that should
be considered in developing renewal or extension assumptions used to determine
the useful life of a recognized intangible asset under SFAS No. 142,
“Goodwill and Other Intangible Assets.” The intent of FSP FAS 142-3 is to
improve the consistency between the useful life of a recognized intangible asset
under FAS No. 142 and the period of expected cash flows used to measure the
fair value of the asset under SFAS No. 141(R) and other generally accepted
accounting principles. FSP FAS 142-3 is effective on January 1, 2009. Early
adoption is prohibited.  The provisions of FSP FAS 142-3 are to be
applied prospectively to intangible assets acquired after the effective date,
except for the disclosure requirements which must be applied prospectively to
all intangible assets recognized as of, and subsequent to, the effective date.
Since this standard is applied prospectively, adoption did not have a
significant impact on our consolidated results of operations, financial position
or cash flows.
 
 In May
2009, the FASB issued SFAS No. 165, "Subsequent Events," which establishes
general standards of accounting for and disclosure of events that occur after
the balance sheet date but before the financial statements are issued or are
available to be issued. SFAS No. 165 provides guidance on the period after the
balance sheet date during which management of a reporting entity should evaluate
events or transactions that may occur for potential recognition or disclosure in
the financial statements, the circumstances under which an entity should
recognize events or transactions occurring after the balance sheet date in its
financial statements and the disclosures that an entity should make about events
or transactions that occurred after the balance sheet date. The Company adopted
SFAS No. 165 during the second quarter of 2009.
 
 In July
2009, the FASB issued SFAS No. 168, "Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles". The FASB Accounting
Standards Codification ("Codification") will become the source of authoritative
U.S. GAAP recognized by the FASB to be applied by nongovernmental entities.
Rules and interpretive releases of the Securities and Exchange Commission
("SEC") under authority of federal securities laws are also sources of
authoritative GAAP for SEC registrants. The Codification will supersede all
then-existing non-SEC accounting and reporting standards. SFAS 168 is effective
for interim and annual periods ending after September 15, 2009.  In
the FASB's view, the issuance of SFAS 168 and the Codification will not change
GAAP, and therefore we do not expect the adoption of SFAS 168 to have an effect
on our consolidated financial statements or disclosures.
 
 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.
  30
  Reserves for Uncollectible Accounts
Receivable
 The
Company makes ongoing assumptions relating to the collectability of its accounts
receivable.  The accounts receivable amount on the balance sheet
includes a reserve for accounts that might not be paid.  In
determining the amount of the reserve, the Company considers its historical
level of credit losses.  The Company also makes judgments about the
creditworthiness of significant customers based on ongoing credit evaluations,
and it assesses current economic trends that might impact the level of credit
losses in the future. The Company recorded reserves for uncollectible accounts
receivable of $668,000 as of June 30, 2009, which is equal to 10.7% of total
accounts receivable.  While the Company believes that the current
reserves are adequate to cover potential credit losses, it cannot predict future
changes in the financial stability of its customers and the Company cannot
guarantee that its reserves will continue to be adequate.  For each 1%
that actual credit losses exceed the reserves established, there would be an
increase in general and administrative expenses and a reduction in reported net
income of approximately $62,000. Conversely, for each 1% that actual credit
losses are less than the reserve, this would decrease the Company’s general and
administrative expenses and increase the reported net income by approximately
$62,000.
 
 Fixed
Assets
 Fixed
assets are stated at cost.  Depreciation for financial reporting
purposes is being provided by the straight-line method over the estimated useful
lives of the related assets.  The valuation and classification of
these assets and the assignment of useful depreciable lives involves significant
judgments and the use of estimates.  Fixed assets are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.  Historically,
impairment losses have not been required.  Any change in the
assumption of estimated useful lives could either result in a decrease or
increase to the Company’s financial results.  A decrease in estimated
useful life would reduce the Company’s net income and an increase in estimated
useful life would increase the Company’s net income.  If the estimated
useful lives of the PERS medical device were decreased by one year, the cost of
goods related to services would increase and net income would decrease by
approximately $185,000 per annum.  Conversely, if the estimated useful
lives of the PERS medical device were increased by one year, the cost of goods
related to services would decrease and net income would increase by
approximately $145,000 per annum.
 
 Valuation of Goodwill
 Pursuant
to Statement of Financial Accounting Standards No. 142, “Goodwill and Other
Intangible Assets,” goodwill and indefinite life intangible assets are no longer
amortized, but are subject to annual impairment tests.  To date, the
Company has not been required to recognize an impairment of goodwill. The
Company tests goodwill for impairment annually or more frequently when events or
circumstances occur indicating goodwill might be impaired. This process involves
estimating fair value using discounted cash flow analyses. Considerable
management judgment is necessary to estimate discounted future cash flows.
Assumptions used for these estimated cash flows were based on a combination of
historical results and current internal forecasts.  The Company cannot
predict certain events that could adversely affect the reported value of
goodwill, which totaled $10,199,300 and $9,996,152 at June 30, 2009 and December
31, 2008, respectively.  If the Company were to experience a
significant adverse impact on goodwill, it would negatively impact the Company’s
net income.
  31
  Accounting
for Stock-Based Awards
 On
January 1, 2006, the Company adopted SFAS Statement No. 123 (revised
2004), “Share-Based Payment”(“Statement
No. 123(R)”), which requires the measurement and recognition of
compensation expense for all share-based payments to employees, including grants
of stock and employee stock options, based on estimated fair values. Stock-based
compensation expense recognized during the period is based on the value of the
portion of share-based payment awards that is ultimately expected to vest during
the period.As a
result of adopting SFAS No. 123R, the Company recorded a pre-tax expense of
approximately $179,000 and $207,000 for stock-based compensation for the six
months ended June 30, 2009 and 2008, respectively.
 
  The
determination of fair value of share-based payment awards to employees and
directors on the date of grant using the Black-Scholes model is affected by the
Company's stock price as well as assumptions regarding a number of highly
complex and subjective variables. These variables include, but are not limited
to the expected stock price volatility over the term of the awards, and actual
and projected employee stock option exercise behaviors.
 
 Item
3.   Quantitative and Qualitative
Disclosures About Market Risk.
 
 Market
Risk Disclosure
 
 The
Company does not hold market risk-sensitive instruments entered into for trading
purposes, nor does it hold market risk sensitive instruments entered into for
other than trading purposes. All sales, operating items and balance sheet data
are denominated in U.S. dollars; therefore, the Company has no significant
foreign currency exchange rate risk.
 
 In the
ordinary course of its business the Company enters into commitments to purchase
raw materials and finished goods over a period of time, generally six months to
one year, at contracted prices. At June 30, 2009 these future commitments were
not at prices in excess of current market, or in quantities in excess of normal
requirements. The Company does not utilize derivative contracts either to hedge
existing risks or for speculative purposes.
 
 Interest
Rate Risk
 
 We are
exposed to market risk from changes in interest rates primarily through our
financing activities.  Interest on our outstanding balances on our
term loan and revolving credit line under our credit facility accrues at a rate
of LIBOR plus 1.75% and LIBOR plus 1.50%, respectively.  Our ability
to carry out our business plan to finance future working capital requirements
and acquisitions of TBCS businesses may be impacted if the cost of carrying debt
fluctuates to the point where it becomes a burden on our
resources.
  32
  Item
4T.  Controls and
Procedures.
  As of the
end of the period covered by this report, the Company carried out an evaluation,
under the supervision and with the participation of its Chief Executive Officer
and President and its Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures. Based on this
evaluation, the Chief Executive Officer and President and the Chief Financial
Officer concluded that the Company's disclosure controls and procedures are
effective to ensure that information required to be disclosed by the Company in
the reports filed by it under the Securities and Exchange Act of 1934, as
amended, is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, and include controls and procedures
designed to ensure that information required to be disclosed by the Company in
such reports is accumulated and communicated to the Company's management,
including the Chief Executive Officer and President and Chief Financial Officer
of the Company, as appropriate to allow timely decisions regarding required
disclosure.
 
 There
were no changes in the Company’s internal control over financial reporting that
occurred during the quarter ended June 30, 2009 that have materially affected,
or are reasonably likely to materially affect, the Company’s internal control
over financial reporting.
 
 PART
II - OTHER INFORMATION
 
 Item
1.   Legal
Proceedings.
 
 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.
  Item
4. Submission of Matters to a Vote of Security Holders.
 
 On July
30, 2009, the Company held its 2009 Annual Meeting of Shareholders (the “2009
Meeting”).
 
 At the
2009 Meeting, the Company’s shareholders (i) elected seven (7) directors to
serve until the 2010 Annual Meeting of Shareholders and until their successors
shall be elected and qualified and (ii) ratified the selection of Margolin,
Winer & Evens LLP as the Company’s independent auditors for the fiscal year
ending December 31, 2009.
  33
  1.
              The
      vote with respect to the election of seven (7) directors was as
      follows:
 
 Name
                        
                        For
                        
                        Authority
      Withheld(a)
      Howard M. Siegel
                        
                        
                        8,360,023
                        
                        178,662(b)
      Jack Rhian
                        
                        
                        8,449,559
                        
                        89,126(c)
      Frederick S. Siegel
                        
                        
                        8,390,201
                        
                        148,484(d)
      Ronald Levin
                        
                        
                        8,189,344
                        
                        349,341(e)
      Yacov Shamash
                        
                        
                        8,436,986
                        
                        101,699(f)
      John S.T. Gallagher
                        
                        
                        8,437,550
                        
                        101,135(g)
      Gregory Fortunoff
                        
                        
                        8,448,906
                        
                        89,779
 
 2.
              The
      proposal to ratify the selection of Margolin, Winer & Evens LLP as the
      Company’s independent auditors for the fiscal year ending December 31,
      2009, was approved by the following
vote:
 
 For
                              
                              Against
                              
                              Abstain8,451,634
                              
                              67,133
                              
                              19,918
 
 Item
5. Other Information
 
 On August
13, 2009, the Company entered into an amendment and waiver to its credit
agreement with JPMorgan Chase Bank, as successor in the interest to the Bank of
New York (the “Lender”). Pursuant to the amendment, the Company’s revolving
credit line was extended until June 30, 2011.  In addition, certain
financial reporting requirements were modified, and the Lender waived the
Company’s obligation to include NM Call Center, Inc. (“NMCC”) as a guarantor
under the Credit Agreement until such time that NMCC generates earnings or
revenues and/or has assets in excess of $750,000.
 
 Item
6.  Exhibits.
 
 No.                      Description
 10.1
                Amendment
      No. 12 and Waiver, dated August 13, 2009, to that certain Credit Agreement
      dated as of May 20, 2002, as thereafter amended from time to time, between
      JPMorgan Chase Bank as successor-in-interest to The Bank of New York, a
      national banking association and American Medical Alert
    Corp.
 15.1
              Letter
      from Margolin, Winer & Evens LLP, the independent accountant of the
      Company, acknowledging awareness of the use in a registration statement of
      a report on the unaudited interim financial information in this quarterly
      report.
 31.1
              Certification
      of CEO Pursuant to Section 302 of the Sarbanes Oxley Act of
      2002
 31.2
              Certification
      of CFO Pursuant to Section 302 of the Sarbanes Oxley Act of
      2002
 32.1
              Certification
      of CEO Pursuant to Section 906 of the Sarbanes Oxley Act of
      2002
 32.2
              Certification
      of CFO Pursuant to Section 906 of the Sarbanes Oxley Act of 2002
  34
  SIGNATURES
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
  AMERICAN
      MEDICAL ALERT CORP.Dated:
      August 14, 2009
                          By:
                          /s/   Jack
    RhianName:
      Jack RhianTitle:
      Chief Executive Officer and
                            PresidentBy:
                          /s/    Richard
      RalloName:
      Richard RalloTitle:
      Chief Financial
Officer
  35