-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RNBrk+mbO3klyW9iJRPHAqCu3D9WwyFAM0LDGcQDZsKbG56s3DlFnfcX3QaAp/+L Bbltwl0iG7q/1I4GojYpMw== 0000819689-04-000040.txt : 20040514 0000819689-04-000040.hdr.sgml : 20040514 20040514100850 ACCESSION NUMBER: 0000819689-04-000040 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20040331 FILED AS OF DATE: 20040514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARRHYTHMIA RESEARCH TECHNOLOGY INC /DE/ CENTRAL INDEX KEY: 0000819689 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 720925679 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-09731 FILM NUMBER: 04804924 BUSINESS ADDRESS: STREET 1: 25 SAWYER PASSWAY CITY: FITCHBURG STATE: MA ZIP: 01420 BUSINESS PHONE: 978-345-5000 MAIL ADDRESS: STREET 1: 25 SAWYER PASSWAY CITY: FITCHBURG STATE: MA ZIP: 01420 10QSB 1 art10qsb-1stqtr.htm ART 10-QSB - 1ST QTR 2004

Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-QSB

[ x ] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2004 or

[    ] Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ______ to ______

1-9731
(Commission file No.)

ARRHYTHMIA RESEARCH TECHNOLOGY, INC.
(Exact name of small business issuer as specified in its charter)

DELAWARE 72-0925679
(State or other jurisdiction of incorporation or organization) (I.R.S. employer identification no.)

25 Sawyer Passway
Fitchburg, Massachusetts 01420

(Address of principal executive offices)

(978) 345-5000
(Issuer’s telephone number, including area code)






Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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___.


As of April 27, 2004 there were 2,638,573 shares of the Company’s common stock outstanding.

Transitional Small Business Disclosure Format    Yes         No   X  


ARRHYTHMIA RESEARCH TECHNOLOGY, INC.

TABLE OF CONTENTS

FORM 10-QSB

March 31, 2004

PART I — FINANCIAL INFORMATION
 
  Item 1. Consolidated Financial Statements
     Consolidated Balance Sheets
     Consolidated Statements of Income
     Consolidated Statements of Cash Flows
     Notes to the Consolidated Financial Statements
  Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
  Item 3. Controls and Procedures
 
PART II — OTHER INFORMATION
 
  Item 5. Other Information
  Item 6. Exhibits and Reports on Form 8-K
  SIGNATURES
 
 
Exhibit 31.1 — Certification of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002
 
Exhibit 31.2 — Certification of Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002
 
Exhibit 32.1 — Certification of Chief Executive Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002
 
Exhibit 32.2 — Certification of Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002
 
Exhibit 99.1 - Press Release as issued on May 7, 2004

PART I — FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

ARRHYTHMIA RESEARCH TECHNOLOGY, INC. AND SUBSIDIARY

Consolidated Balance Sheets

(Unaudited)

ASSETS March 31, December 31,
2004 2003
 
 
Current assets:              
   Cash and cash equivalents     $ 2,356,260     $ 2,121,665  
   Trade and other accounts receivable, net of allowance for    
         doubtful accounts of $6,830 and $15,173       1,472,683       1,447,697  
   Inventories, net       970,685       939,964  
   Deposits, prepaid expenses and other current assets       61,320       62,926  
 
 
     Total current assets       4,860,948       4,572,252  
Property and equipment, net of accumulated depreciation of    
   $4,998,168 and $4,873,203       3,307,426       3,065,513  
Goodwill       1,244,000       1,244,000  
Deferred income taxes, net       366,923       398,923  
Other assets       18,547       20,260  
 
 
   Total assets     $ 9,797,844     $ 9,300,948  
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY    
 
Current liabilities:    
   Accounts payable     $ 486,834     $ 283,483  
   Accrued expenses       223,065       165,976  
 
 
     Total current liabilities       709,899       449,459  
 
 
Shareholders' equity:    
   Preferred stock, $1 par value; 2,000,000 shares authorized, none issued       --       --  
   Common stock, $.01 par value; 10,000,000 shares authorized,    
     3,926,491 shares and 3,917,491 shares issued       39,265       39,175  
   Additional paid-in-capital       9,274,033       9,224,169  
   Common stock held in treasury, 1,287,918 shares at cost       (3,526,756 )     (3,526,756 )
   Retained earnings       3,301,403       3,114,901  
 
 
     Total shareholders' equity       9,087,945       8,851,489  
 
 
     Total liabilities and shareholders' equity     $ 9,797,844     $ 9,300,948  
 
 

        The accompanying notes are an integral part of the consolidated financial statements.


ARRHYTHMIA RESEARCH TECHNOLOGY, INC. AND SUBSIDIARY

Consolidated Statements of Income

(Unaudited)

  Three Months Ended March 31,
  2004   2003
 
Revenue     $ 2,152,117     $ 1,875,568  
Cost of sales       1,337,985       1,173,528  
 
 
  Gross profit       814,132       702,040  
 
Selling and marketing       41,942      47,313  
General and administrative       274,803       271,166  
Research and development       7,096       1,497  
 
 
  Income from operations       490,291       382,064  
 
 
Other income (expense)    
  Interest expense       --       (2,528 )
  Other income, net       7,140       5,819  
 
 
        Other income and interest expense       7,140       3,291  
 
 
Income before income taxes       497,431       385,355  
Income tax provision       179,000       106,000  
 
 
  Net income     $ 318,431     $ 279,355  
 
 
Net income per share - basic     $ 0.12     $ 0.10  
 
 
Net income per share - diluted     $ 0.12     $ 0.10  
 
 
Cash dividends declared per share     $ 0.05     $ 0.00  
 
 
 
Weighted average common shares outstanding - basic       2,632,441       2,687,841  
 
Weighted average common shares outstanding - diluted       2,637,329       2,718,064  
 

        The accompanying notes are an integral part of the consolidated financial statements.


ARRHYTHMIA RESEARCH TECHNOLOGY, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

(Unaudited)

  Three Months Ended March 31,
  2004   2003
 
Cash flows from operating activities:            
   Net income     $ 318,431     $ 279,355  
Adjustments to reconcile net income to net cash    
   provided by operating activities:    
   Depreciation       124,965       130,446  
   Changes in assets and liabilities:    
       Trade and other accounts receivable       (24,986 )     (80,455 )
       Inventories       (30,721 )     (15,128 )
       Deposits, prepaid expenses and other assets       35,319       (106,404 )
       Accounts payable and accrued expenses       260,440       123,432  
 
 
         Net cash provided by operating activities       683,448       331,246  
 
 
Cash flows from investing activities:    
   Capital expenditures, net of disposals       (366,878 )     (17,408 )
 
 
         Net cash used in investing activities       (366,878 )     (17,408 )
 
 
Cash flows from financing activities:    
   Cash dividend paid       (131,929 )     --  
   Proceeds from the exercise of stock options and warrants       49,954       --  
   Purchase of treasury stock       --       (438,640 )
 
 
         Net cash used in financing activities       (81,975 )     (438,640 )
 
 
Net increase (decrease) in cash and cash equivalents       234,595       (124,802 )
Cash and cash equivalents at beginning of period       2,121,665       1,773,412  
 
 
Cash and cash equivalents at end of period     $ 2,356,260     $ 1,648,610  
 
 
Non-cash financing and investing activities
   At March 31, 2004 the company has $857 of dividends payable.

        The accompanying notes are an integral part of the consolidated financial statements.


Notes to the Consolidated Financial Statements

1. Basis of Presentation:

        The unaudited interim consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in complete financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. The accompanying unaudited interim consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Arrhythmia Research Technology, Inc. (the “Company”) Annual Report on Form 10-KSB for the year ended December 31, 2003.

        The information furnished reflects, in the opinion of the management of the Company, all adjustments necessary for a fair presentation of the financial results for the interim period presented.

        Interim results are subject to year-end adjustments and audit of year-end results by independent certified public accountants.

2. Inventories:

         Inventories consist of the following as of:

  March 31,   December 31,
  2004   2003
 
 
Raw materials   $ 192,586   $ 144,486
Work-in-process     291,018     347,592
Finished goods     487,081     447,886
 
 
Total   $ 970,685   $ 939,964
 
 

3. Stock-Based Compensation:

        The Company accounts for stock options at intrinsic value in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees (“APB 25”), and related interpretations. Had compensation cost for the Company’s stock options been determined based upon the fair value at the grant date for awards under the plans consistent with the methodology prescribed under Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”), the Company’s net income would have been adjusted to the pro forma amounts indicated below:

  Three months ended March 31,
 
2004
2003
Net income - as reported     $ 318,431   $ 279,355  
Deduct: Total stock-based compensation    
         expense determined under fair            
          value based method       (7,876 )   (7,876 )

Net income - pro forma     $ 310,555   $ 271,479  

Basic earnings per share:    
          as reported     $ 0.12   $ 0.10  
          pro forma     $ 0.12   $ 0.10  
Diluted earnings per share    
          as reported     $ 0.12   $ 0.10  
          pro forma     $ 0.12   $ 0.10  

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

Forward-Looking Statements

        Any forward looking statements made herein are based on current expectations of the Company, involve a number of risks and uncertainties and should not be considered as guarantees of future performance. The factors that could cause actual results to differ materially include: interruptions or cancellation of existing contracts, impact of competitive products and pricing, product demand and market acceptance, risks, the presence of competitors with greater financial resources than the Company, product development and commercialization risks, changing economic conditions in developing countries, and an inability to arrange additional debt or equity financing. More information about factors that potentially could affect the Company’s financial results is included in the Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-KSB for the year ended December 31, 2003.


Results of Operations

         Revenue for the quarter ended March 31, 2004 was $2,152,117 versus $1,875,568 for the quarter ended March 31, 2003, an increase of 14.7%. The increase in revenue in the first quarter is due to continued growth the sensor product line, and increases in other unique electrode applications to our existing customer base. There were no significant sales of the Company’s signal-averaging ECG products in the first quarter 2004.

Revenue from domestic and foreign sales for the three months is as follows:

  Three Months Ending March 31,
    2004
  %
  2003
  %
Canada   $ 875,780   41 $ 743,957   40
Continental Europe     545,326   25   429,842   23
United Kingdom     377,600   17   315,199   17
United States     273,616   13   289,939   15
Pacific Rim     40,432   2   90,385   5
Other     39,363   2   6,246   --
 
 
 
 
Total   $ 2,152,117   100 $ 1,875,568   100
 
 
 
 

          Cost of sales was 62% of revenue for the quarter ended March 31, 2004 compared to 63% of revenues for the same period in 2003. The reduction was directly attributable to the lowering of the cost to manufacture product. The process improvements instituted over the last 18 months continue to maintain margins, and result in the more efficient use of energy, materials and chemicals. These improvements have had significant impact on the total cost of goods sold, and management continues to explore methods to increase gross margins without sacrificing product quality.

          Selling and marketing expense was $41,942 for the quarter ended March 31, 2004 as compared to $47,313 for the same period in 2003. The reduction of $5,371 is directly attributable to lower travel expenses. The travel schedule was not reduced, but the timing of the travel will fall in a different period.

          General and administrative expense was $274,803 for the quarter ended March 31, 2004 as compared to $271,166 for the same period in 2003. The increase of $3,637 cannot be attributed to any single expense and at less than a 2% increase is not significant. Management will continue to work to contain and reduce these costs.

          Research and development expense was $7,096 for the quarter ended March 31, 2004 as compared to $1,497 for the same period in 2003. The increase of $5,599 in the first quarter of 2004 was related to research expenditures related to ART's principal product, Predictor®7 as well as depreciation associated with the research equipment at Micron.

          Other income (expense) was $7,140 of income for the quarter ended March 31, 2004 as compared to $3,291 of income in the same period of 2003. The increase of $3,849 is attributed to elimination of the unused borrowing base fee from the revolving credit line and an increase in interest income associated with greater cash balances.

Income taxes as a percent of income before income taxes were 36% and 27% for the quarters ended March 31, 2004 and 2003, respectively. The reduction of the deferred tax asset valuation allowance in the year ended December 31, 2003 and the increase in pretax earnings has increased the corporate income taxes. Management will continue to maximize any tax incentive programs that could effectively reduce the Company’s tax liability.

Liquidity and Capital Resources

         Working capital was $4,151,049 March 31, 2004 compared to $4,122,793 at December 31, 2003, an increase of $28,296. Capital investment could decrease working capital with any significant obligation resulting from an acquisition, significant expansion of production capacity, a medical study, or further software development.


        Net capital expenditures were $366,878 for the first three months of 2004 as compared to $17,408 for the same period in 2003. Capital expenditures in the first three months of 2004 include $121,323 incurred in the renovation of 45,000 square feet of space expected to be completed in the summer of 2004, and $245,555 in new tools, machinery and equipment.

        The Company’s stock buyback program announced in June of 2003 resulted in the use of $438,640 of operating cash flows to acquire 148,200 shares of common stock in the first nine months of 2003. There has been no stock buy back in the first quarter of 2004.

        The Company negotiated the terms of a demand line of credit with a different bank than that of the same period in 2003. The new bank has agreed to an unsecured $1,000,000 credit line. This non-collateralized financial vehicle was in place in December of 2003. No funds have been drawn down on the line as of March 31, 2004.

        The Company expects to meet cash demands with current operating cash flows for the foreseeable future with one exception. On May 7, 2004, the Company’s wholly-owned subsidiary, Micron Products, Inc., completed the purchase of substantially all of the operating assets of privately-held New England Molders, Inc. (“NEMI”) of Shrewsbury, Massachusetts. Micron paid NEMI a total purchase price of $1,500,000, including $1,100,000 in cash and $400,000 in ART common stock or cash at ART’s option. Micron funded the cash portion of the purchase out of working capital.

Critical Accounting Policies

        The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles requires management to make judgments, assumptions and estimates that affect the amounts reported. Certain of these significant accounting policies are considered to be critical accounting policies, as defined below.

        A critical accounting policy is defined as one that is both material to the presentation of the Company’s financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on the Company’s financial condition and results of operations. Specifically, critical accounting estimates have the following attributes: 1) the Company is required to make assumptions about matters that are highly uncertain at the time of the estimate; and 2) different estimates the Company could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material effect on the Company’s financial condition or results of operations.

        Estimates and assumptions about future events and their effects cannot be determined with certainty. The Company bases its estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as the Company’s operating environment changes. These changes have historically been minor and have been included in the consolidated financial statements as soon as they became known. In addition, management is periodically faced with uncertainties, the outcomes of which are not within its control and will not be known for prolonged periods of time. These uncertainties are discussed in the section above entitled “Forward-looking Statements.” Based on a critical assessment of its accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that the Company’s consolidated financial statements are fairly stated in accordance with generally accepted accounting principles, and present a meaningful presentation of the Company’s financial condition and results of operations.

        Management believes that the following are critical accounting policies:

        Revenue Recognition and Accounts Receivable

        Revenues from the sale of products are recorded when the product is shipped, title and risk of loss have transferred to the purchaser, payment terms are fixed or determinable and payment is reasonably assured.

        Based on management’s on-going analysis of accounts receivable balances, and after the initial recognition of the revenue, if an event occurs which adversely affects the ultimate collectibility of the related receivable, management will record an allowance for the bad debt. Bad debts have not had a significant impact on our financial condition, results of operations or cash flows.


        Inventory and Inventory Reserves

        The Company values its inventory at the lower of cost or market. The Company reviews its inventory for quantities in excess of production requirements, obsolescence and for compliance with internal quality specifications. Any adjustments to inventory would be equal to the difference between the cost of inventory and the estimated net market value based upon assumptions about future demand, market conditions and expected cost to distribute those products to market. If actual market conditions are less favorable than those projected by management, additional inventory reserves may be required.

        The Company maintains a reserve for excess, slow moving, and obsolete inventory as well as inventory with a carrying value in excess of its net realizable value. A review of inventory on hand is made at least annually and a provision for excess, slow moving, and obsolete inventory is recorded. The review is based on several factors including a current assessment of future product demand, historical experience, and product expiration.

         Deferred Tax Assets

        The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. While the Company has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in the event the Company were to determine that it would be able to realize its deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax asset would increase income in the period such a determination was made.

         Asset Impairment – Goodwill

        The Company reviews the valuation of goodwill and intangible assets to assess potential impairments. The management reassesses the useful lives of goodwill and other intangible assets in accordance with the guidelines set forth in SFAS 142. The value assigned to intangible assets is determined by a valuation based on estimates and judgment regarding expectations for the success and life cycle of products acquired from Micron Products Inc. or others in the future. If the actual sale of products and market acceptance differs significantly from the estimates, management may be required to record an impairment charge to write down the asset to its realizable value. To test for impairment, a present value of an estimate of future cash flows related to the intangible asset are calculated compared to the value of the intangible asset. Impairment may have a material adverse effect on the Company’s financial condition or results of operations. A review of goodwill determined impairment was not necessary as of March 31, 2004.

         Asset Impairment – Long Lived Assets

        The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be fully recoverable. When it is determined that the carrying value of such assets may not be recoverable, the Company generally measures any impairment on a projected discounted cash flow method using a discount rate determined by our management to be commensurate with the risk inherent in our current business model.

Item 3. Controls and Procedures

         As of the end of the period covered by this interim report on Form 10-QSB, the Company carried out, under the supervision of, and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer (“the Certifying Officers”), an evaluation of the effectiveness of its “disclosure controls and procedures” (as the term is defined under Rules 13a – 15(e) and 15d – 15(e) promulgated under the Securities Exchange Act of 1934 as amended (‘the Exchange Act”)). Based on this evaluation, the Certifying Officers have concluded that the Company’s disclosure controls and procedures were effective to ensure that material information required to be disclosed in the Company’ filings under the Exchange Act with respect to the Company and its consolidated subsidiaries is recorded, processed, summarized and reported on a timely basis in order to comply with the Company’s disclosure obligations under the Exchange Act and the rules and regulations promulgated thereunder.

         Further, there were no changes in the Company’s internal control over financial reporting during the Company’s first fiscal quarter that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.


PART II — OTHER INFORMATION

Item 5. Other Information

 

On May 6, 2004, the Company filed a registration statement on Form S-3 with the Securities and Exchange Commission to register 500,000 shares of its Common Stock using a “shelf” registration process. The Company may offer shares of its common stock from time to time under the prospectus at prices and on terms to be determined by market conditions at the time of the offering. However, the securities subject of the registration statement may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective.


 

On May 7, 2004, the Company issued a press release reporting that its wholly-owned subsidiary, Micron Products, Inc., completed the purchase of substantially all of the operating assets of privately-held New England Molders, Inc. (“NEMI”) of Shrewsbury, Massachusetts. Micron paid NEMI a total purchase price of $1,500,000, including $1,100,000 in cash and $400,000 in ART common stock or cash at ART’s option. Micron funded the cash portion of the purchase out of working capital. A copy of the press release is attached as Exhibit 99.1. At closing $900,000 was paid, and 7,559 shares were issued to NEMI with the remaining balance subject to adjustments and payable over the next 12 months.


Item 6. Exhibits and Reports on Form 8-K

  (a) Exhibits  
 
    Exhibit 31.1 — Certification of the CEO pursuant to Rule 13a-14(a) or Rule 15(d)-14(a) on page X-1
 
    Exhibit 31.2 — Certification of the CFO pursuant to Rule 13a-14(a) or Rule 15(d)-14(a) on page X-2
 
    Exhibit 32.1 — Certification pursuant to 18 U.S.C. §1350 as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002 on page X-3
 
    Exhibit 32.2 — Certification pursuant to 18 U.S.C. §1350 as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002 on page X-4
 
    Exhibit 99.1 – Press Release issued on May 7, 2004 on page X-5
 
  (b) Reports filed in the first quarter on Form 8-K
 
    1.   On March 3, 2004 the Company filed a current report on form 8-K reporting the issuance of a press
      release announcing a proposed asset purchase.
 
    2.   On February 27, 2004 the Company filed a current report on form 8-K reporting the issuance of a press
      release announcing a cash dividend, and the issuance of press release announcing its
      financial results for the 4th quarter and year ended December 31, 2003

SIGNATURES

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

  ARRHYTHMIA RESEARCH TECHNOLOGY, INC.
  By:       /s/ James E. Rouse                               
               James E. Rouse
               President and Chief Executive Officer
               (Principal Executive Officer)
 
 
  By:       /s/ David A. Garrison                            
               David A. Garrison
               Chief Financial Officer
               (Principal Financial and Accounting Officer)

May 14, 2004

EX-31 2 artexhibit31-1.htm EXHIBIT 31.1 - J. ROUSE CERTIFICATION

Exhibit 31.1

CERTIFICATIONS

I, James E. Rouse, certify that:

  1. I have reviewed this Quarterly Report on Form 10-QSB of Arrhythmia Research Technology, Inc.;
 
  2.

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

 
  3.

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

 
  4.

The small business issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

 
      a.

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

 
      b.

Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 
      c.

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

 
  5.

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

 
      a.

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

 
      b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

 
             DATE:  May 14, 2004  /s/ James E. Rouse
  James E. Rouse
  President and Chief Executive Officer
EX-31 3 artexhibit31-2.htm EXHIBIT 31.2 DAVID A. GARRISON

Exhibit 31.2

CERTIFICATIONS

I, David A. Garrison, certify that:

  1.

I have reviewed this Quarterly Report on Form 10-QSB of Arrhythmia Research Technology, Inc.;

 
  2.

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

 
  3.

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

 
  4.

The small business issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

 
      a.

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

 
      b.

Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 
      c.

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

 
  5.

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

 
      a.

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

 
      b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

 

             DATE:  May 14, 2004 /s/ David A. Garrison
  David A. Garrison
  Chief Financial Officer
EX-32 4 artexhibit32-1.htm EXHIBIT 32-1 - JAMES E. ROUSE

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with this Interim Report on Form 10-QSB of Arrhythmia Research Technology, Inc. (the “Company”) for the quarter ended March 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned President and Chief Executive Officer certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

  (1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 
  (2)

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

 
 
               Date: May 14, 2004 /s/ James E. Rouse
  James E. Rouse
  President and
  Chief Executive Officer
 
 
 
 




A signed original of this written statement required by Section 906 has been provided to Arrhythmia Research Technology, Inc. and will be retained by Arrhythmia Research Technology, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32 5 artexhibit32-2.htm EXHIBIT 32.2 - DAVID A. GARRISON

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with this Interim Report on Form 10-QSB of Arrhythmia Research Technology, Inc. (the “Company”) for the quarter ended March 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Financial Officer certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

  (1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 
  (2)

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

 
 
               Date: May 14, 2004 /s/ David A. Garrison
  David A. Garrison
  Chief Financial Officer
 
 
 
 




A signed original of this written statement required by Section 906 has been provided to Arrhythmia Research Technology, Inc. and will be retained by Arrhythmia Research Technology, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-99 6 artexhibit99-1.htm EXHIBIT 99.1 - PRESS RELEASE

Exhibit 99.1

Arrhythmia Research Technology Inc.

25 Sawyer Passway • Fitchburg, MA 01420 • (978) 345-5000

 
 
AMEX: HRT  
FOR IMMEDIATE RELEASE Contact: David A. Garrison
Website: http://www.arthrt.com (978) 345-5000
May 7, 2004

Arrhythmia Research Technology, Inc.
Announces Asset Purchase

Fitchburg, MA

        Arrhythmia Research Technology, Inc. (“ART”) today announced that its wholly-owned subsidiary, Micron Products, Inc., (“Micron”) the world’s largest manufacturer of Silver/Silver Chloride and Conductive Resin Sensors used in disposable ECG, EKG and EEG monitoring and diagnostic electrodes, has completed the purchase of substantially all of the operating assets of privately-held New England Molders, Inc. (“NEMI”) of Shrewsbury, Massachusetts. Micron paid NEMI a total purchase price of $1,500,000, including $1,100,000 in cash and $400,000 in ART common stock or cash at ART’s option. Micron funded the cash portion of the purchase out of working capital. The Company expects the NEMI acquisition to be accretive to its earnings during the balance of fiscal 2004.

        James Rouse, President and CEO commented, “NEMI is an excellent fit for Micron operationally, financially and strategically. We believe the diversification that the New England Molders division brings to Micron’s product line provides immediate value to our customers and our shareholders. In addition to the expected synergies in engineering, manufacturing, and administration, the fact that medical products are close to fifty percent of NEMI’s approximately $2,000,000 in sales should create significant opportunities in sales and marketing. NEMI’s other markets, including electronics, industrial, consumer and defense related products, represent an immediate diversification and opportunity for Micron. This acquisition is an important step for us in our quest to build on our foundation as we seek to achieve sustained growth and increase shareholder value over the long term through diversification, product development and acquisition.”

        The Company, through Micron, produces silver-plated and conductive resin sensors as a component part of disposable ECG electrodes. The Company also produces proprietary signal-averaging electrocardiographic (SAECG) software used in the detection and treatment of potentially lethal heart arrhythmias and distributes metal snaps to its sensor customers.

        Forward-looking statements made herein are based on current expectations of ART and involve a number of risks and uncertainties and should not be considered as guarantees of future performance. The factors that could cause actual results to differ materially include: interruptions or cancellations of existing contracts, impact of competitive products and pricing, product demand and market acceptance, risks, the presence of competitors with greater financial resources than ART, product development and commercialization risks, changing economic conditions in developing countries, and an inability to arrange additional debt or equity financing.

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