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 JUNE 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR TRANSITION PERIOD FROM TO
Commission file number 0-18727
CARC, Inc.
(Exact name of registrant as specified in its charter)
South Carolina 57-0641693
(State or other jurisdiction (I.R.S. Employer
of incorporation of organization) Identification No.)
500 Downs Loop
Clemson, SC 29631
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (864) 654-1155
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) or the Securities
Exchange Act of 1934 during the preceding 1-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 [ ]
The number of shares outstanding of the Issuer's Shares of Common
Stock as of June 30, 1997 was 536,000.
Transitional Small Business Disclosure Format:
Yes [ ] No [ X ]
CARC, INC.
Quarterly Report on Form 10-QSB
For the Quarterly Period Ended June 30, 1997
Form 10-QSB Index
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Balance Sheet at June 30, 1997............1
Unaudited Statements of Operations
for the Three Months Ended
June 30, 1997 and 1996..............................2
Unaudited Statements of Stockholders'
Equity for the Three Months
Ended June 30, 1997.................................3
Unaudited Statements of Cash Flows for
the Three Months Ended June 30, 1997 and 1996.......4
Notes to Unaudited Financial Statements.............5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations......................................6 - 7
Part II. OTHER INFORMATION
Item 1. Legal Proceedings...................................7
Item 2. Changes in Securities...............................7
Item 3. Defaults Upon Senior Securities.....................7
Item 4. Submission of Matters to a Vote of Security Holders.8
Item 5. Other Information...................................8
Item 6. Exhibits and Reports on Form 8-K....................8
Signatures..........................................9
<TABLE>
<CAPTION>
CARC, INC.
Balance Sheet
June 30, 1997
(unaudited)
<S> <C>
Assets
Current assets:
Cash $ 312,248
Investments 207,344
Accounts receivable, net of allowance for
contractual adjustments of $5,000 114,785
Accrued interest receivable 3,145
Prepaid expenses 56,423
Inventory 10,799
Total current assets 704,744
Property, buildings, and equipment, net 4,088,875
Entrance fees in escrow 102,875
Other assets - principally loan refinancing costs 133,331
$ 5,029,825
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term debt $ 270,564
Accounts payable 103,729
Accrued payroll 25,072
Accrued payroll and property taxes 45,109
Accrued interest 16,503
Other accrued liabilities 41,723
Unearned revenue 88,129
Total current liabilities 590,829
Refundable entrance fees 102,875
Long-term debt, excluding current installments 2,413,052
Total liabilities 3,106,756
Stockholders' equity:
Common stock $1 par value. Authorized 600,000
shares; issued and outstanding 536,000 shares 536,000
Additional paid-in capital 2,111,886
Accumulated deficit (724,817)
Total stockholders'equity 1,923,069
$ 5,029,825
See accompanying notes to intrim financial statements.
</TABLE>
<TABLE>
<CAPTION>
CARC, INC.
Statements of Operations
For the Three Months Ended June 30, 1997 and 1996
(Unaudited)
<S> <C> <C>
1997 1996
Operating revenues:
Apartments $ 386,569 $ 368,228
Health Care Center 427,694 364,881
Dietary 10,316 13,005
Residential services 915 3,871
Total operating revenues 825,494 749,985
Operating expenses:
Apartments 54,174 51,786
Health Care Center 191,448 194,769
Dietary 148,995 144,238
Residential services 653 3,830
Maintenance and repair 25,076 27,810
Housekeeping 34,104 26,417
Administrative and general 73,433 80,141
Depreciation and amortization 68,965 71,445
Utilities 37,954 42,337
Interest 48,507 56,750
Property taxes 20,559 20,528
Total operating expenses 703,868 720,051
Income from operations 121,626 29,934
Nonoperating revenue (expense):
Interest and investment income 7,407 6,831
Loss on disposal of equipment (5,703) -
Nonoperating revenue (expense) 1,704 6,831
Net income $ 123,330 $ 36,765
Per share information:
Net income $ .23 $ .07
Weighted average number of shares
outstanding during the period 536,000 536,000
See accompanying notes to intrim financial statements.
</TABLE>
<TABLE>
<CAPTION>
CARC, INC.
Statements of Stockholders' Equity
For the Three Months Ended June 30, 1997
(Unaudited)
<S> <C> <C> <C> <C>
Additional Total
Common Paid-In Accumulated Stockholders'
Stock Capital Deficit Equity
Balances at
March 31, 1997 $ 536,000 $ 2,111,886 $ (848,147) $ 1,799,739
Net income - - 123,330 123,330
Balances at
June 30, 1997 $ 536,000 $ 2,111,886 $ (724,817) $ 1,923,069
See accompanying notes to interim financial statements.
</TABLE>
<TABLE>
<CAPTION>
CARC, INC.
Statements of Cash Flows
For the Three Months Ended June 30, 1997 and 1996
(Unaudited)
<S> <C> <C>
1997 1996
Cash flows from operating activities:
Net income $ 123,330 $ 36,765
Adjustment to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 68,965 71,445
Loss on disposal of equipment 5,703 -
Decrease (increase) in:
Cash - funds held for others 3,043 1,327
Accounts receivable 3,564 3,481
Accrued interest receivable 12,198 4,440
Prepaid expenses (44,631) (29,530)
Other assets (30,834) 3,000
Increase (decrease) in:
Accounts payable 49,764 55,876
Accrued expenses 3,550 (9,025)
Unearned revenue 61,609 69,847
Deposits held for others (3,043) (1,327)
Net cash provided by operating activities 253,218 206,299
Cash flows from investing activities:
Capital expenditures (302,791) (47,538)
Cash flows from financing activities:
Principal payments of long-term debt (73,372) (65,128)
Proceeds from bank loan 198,957 -
Net cash provided by (used
in) financing activities 125,585 (65,128)
Net increase in cash 76,012 93,633
Cash at beginning of period 236,236 225,709
Cash at end of period $ 312,248 $ 319,342
See accompanying notes to interim financial statements.
</TABLE>
CARC, INC.
Notes to Interim Financial Statements
June 30, 1997
(1) Basis of Presentation
The accompanying unaudited financial statements, which are for
interim periods, do not include all disclosures provided in the
annual financial statements. These unaudited financial
statements should be read in conjunction with the financial
statements and the footnotes thereto contained in the Annual
Report on Form 10-KSB for the year ended March 31, 1997 of CARC,
Inc., (the "Center") as filed with the Securities and Exchange
Commission.
(2) Interim Periods
In the opinion of the Center, the accompanying unaudited
financial statements contain all adjustments (which are of a
normal recurring nature) necessary for a fair presentation of
the financial statements. The results of operations for the
three months ended June 30, 1997 are not necessarily indicative
of the results to be expected for the full year.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Financial Condition
During the first quarter of 1997, the Center began
construction of a twenty unit two-bedroom apartment building
and an activity center.
There have been no other significant changes in the Center's
financial condition since March 31, 1997.
Results of Operations - For the three months ended
June 30, 1997 compared to three months ended June 30, 1996.
Net income for the three months ended June 30, 1997
increased $86,000 or 236% compared to 1996.
Operating Revenues
Operating revenues for the three months ended June 30, 1997
and 1996 were $825,000 and $750,000, respectively. The
overall increase in operating revenues of $75,000 is due
primarily to a five percent increase of rates for the first
quarter of 1997 compared to the first quarter of 1996, in
health care center and apartment revenues, and a Medicare
rate adjustment totaling $19,000.
Operating Expenses
Operating expenses for the years ended June 30, 1997 and
1996 were $704,000 and $720,000, respectively. The net
decrease was primarily attributable to decreases in
administrative and general, and interest expenses which were
offset by an increase in housekeeping expenses.
Administrative and general expenses decreased approximately
$6,000 due primarily to a decrease in general insurance
costs. Interest expense decreased $8,000 due to a reduction
of the principal balance of the mortgage. Housekeeping
expenses increased approximately $8,000 due to an increase
in temporary employees. Other operating expenses remained
relatively stable.
Nonoperating revenue
Nonoperating revenues for the three months ended June 30,
1997 decreased approximately $5,100 over the same period in
1996 primarily due to a loss on disposal of equipment.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Liquidity
The Center generated $253,218 in cash flows from operating
activities and $198,957 from additional financing for the
three months ended June 30, 1997. The cash flows were used
primarily to fund $302,791 of capital acquisitions.
Future Commitments for Capital Expenditures
During the quarter ended June 30, 1997, the Center entered
into a contract with a construction company for the
construction of a twenty unit two-bedroom apartment building
and an activity center at an estimated cost of $2,598,694.
Approximately $268,000 has been spent on the construction as
of June 30, 1997.
The Center received a maximum construction loan of
$2,800,000 from Wachovia Bank. This loan is secured by the
real estate and apartment rents. Interest is at prime less
.25% and payments of interest only are due through October
1998. Beginning in November 1998, monthly principal and
interest payments will be made through April 2007. The
monthly payment and applicable interest rate will be
determined at a later date.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no material pending legal proceedings, other than
ordinary routine litigation incidental to its business, to
which the CARC, Inc. is a party or to which any of its
property is the subject.
Item 2. Changes in Securities
There have been no changes in securities during the
reporting period.
Item 3. Defaults Upon Senior Securities
None.
PART II - OTHER INFORMATION (continued)
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits None.
B.There were no reports on Form 8-K filed for the three
months ended June 30, 1997.
Signatures
Pursuant to 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.
CARC, Inc.
Clemson, South Carolina
Date: August 6, 1997 By: /s/ Anita M. Davis
Anita M. Davis
Administrator
(Principal executive
officer)
Date: August 6, 1997 By: /s/ Debra Turner
Debra Turner
Accountant
(Principal Financial
and Accounting
Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 312,248
<SECURITIES> 207,344
<RECEIVABLES> 119,785
<ALLOWANCES> 5,000
<INVENTORY> 10,799
<CURRENT-ASSETS> 704,744
<PP&E> 7,826,345
<DEPRECIATION> 3,737,470
<TOTAL-ASSETS> 4,088,875
<CURRENT-LIABILITIES> 590,829
<BONDS> 2,413,052
0
0
<COMMON> 536,000
<OTHER-SE> 724,817
<TOTAL-LIABILITY-AND-EQUITY> 5,029,825
<SALES> 0
<TOTAL-REVENUES> 806,704
<CGS> 0
<TOTAL-COSTS> 685,078
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<INTEREST-EXPENSE> 48,507
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