SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB/A
Amendment 1
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY
PERIOD ENDED JUNE 30, 1998
[ ] 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 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 [ ]
The number of shares outstanding of the Issuer's Shares of Common Stock as of
June 30, 1998 was 536,000.
Transitional Small Business Disclosure Format:
Yes [ ] No [ X]
CARC, INC.
Form 10-QSB Index
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Balance Sheet at June 30, 1998............... 1
Unaudited Statements of Operations for the Three
Months Ended June 30, 1998 and 1997.................. 2
Unaudited Statement of Stockholders' Equity for the
Three Months Ended June 30, 1998..................... 3
Unaudited Statements of Cash Flows for the
Three Months Ended June 30, 1998 and 1997............ 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...................................... 8
Item 2. Changes in Securities.................................. 8
Item 3. Defaults Upon Senior Securities........................ 8
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
[CAPTION]
<TABLE>
CARC, INC.
Balance Sheet
June 30, 1998
(unaudited)
Assets
<S> <C>
Current assets:
Cash $ 378,988
Investments 199,596
Accounts receivable, net of allowance for
contractual adjustments of $5,000 135,507
Accrued interest receivable 5,070
Prepaid expenses 59,483
Inventory 11,120
Deferred tax asset 186,600
Total current assets 976,364
Property, plant, and equipment, net 6,365,092
Entrance fees in escrow 132,922
Other assets - principally loan refinancing costs 120,961
$ 7,595,339
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term debt $ 325,248
Accounts payable 62,728
Accrued liabilities 130,027
Unearned revenue 134,225
Total current liabilities 652,228
Deferred tax liability 21,500
Refundable entrance fees 132,922
Long-term debt, excluding current installments 4,329,916
Total liabilities 5,136,566
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 (189,113)
Total stockholders' equity 2,458,773
$ 7,595,339
</TABLE>
[CAPTION]
<TABLE>
CARC, INC.
Statements of Operations
For the Three Months Ended June 30, 1998 and 1997
(Unaudited)
<S> <C> <C>
1998 1997
Operating revenues:
Apartments $ 436,829 $ 386,569
Health Care Center, net 427,288 427,694
Dietary 12,187 10,316
Residential services 1,039 915
Miscellaneous 3,265 -
Total operating revenues 880,608 825,494
Operating expenses:
Apartments 56,048 54,174
Health Care Center 219,114 191,448
Dietary 153,894 148,995
Residential services 5,204 653
Maintenance and repair 27,097 25,076
Housekeeping 34,174 34,104
Administrative and general 76,503 73,433
Depreciation and amortization 85,259 68,965
Utilities 39,395 37,954
Interest 91,579 48,507
Property taxes 23,319 20,559
Miscellaneous 3,661 -
Total operating expenses 815,247 703,868
Income from operations 65,361 121,626
Nonoperating revenue (expense):
Interest and investment income 7,915 7,407
Loss on disposal of equipment - (5,703)
Nonoperating revenue (expense) 7,915 1,704
Income before tax expense 73,276 $ 123,330
Income tax expense 24,000
Net income $ 49,276 $ 123,300
Basic earnings per share $ .09 $ .23
Weighted average number of shares
outstanding during the period 536,000 536,000
</TABLE>
[CAPTION]
<TABLE>
CARC, INC.
Statement of Stockholders' Equity
For the Three Months Ended June 30, 1998
(Unaudited)
<S> <C> <C> <C> <C>
Additional Total
Common Paid In Accumulated Stockholders'
Stock Capital Deficit Equity
Balances at March 31, 1998 $ 536,000 $ 2,111,886 $ (238,389) $ 2,409,497
Net income - - 49,276 49,276
Balances at June 30, 1998 $ 536,000 $ 2,111,886 $ (189,113) $ 1,922,773
</TABLE>
[CAPTION]
<TABLE>
CARC, INC.
Statements of Cash Flows
For the Three Months Ended June 30, 1998 and 1997
(Unaudited)
<S> <C> <C>
1998 1997
Cash flows from operating activities:
Net income $ 49,276 $ 123,330
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 85,259 68,965
Loss on disposal of equipment - 5,703
Provision for deferred income taxes 24,000
Decrease (increase) in:
Cash - funds held for others (20,105) 3,043
Accounts receivable (30,270) 3,564
Accrued interest receivable 8,888 12,198
Prepaid expenses (50,034) (44,631)
Other assets - (30,834)
Increase (decrease) in:
Accounts payable (106,525) 49,764
Accrued liabilities (12,546) 3,550
Unearned revenue 124,731 61,609
Deposits held for others 20,105 (3,043)
Net cash provided by operating activities 92,779 253,218
Cash flows from investing activities:
Capital expenditures (169,531) (302,791)
Cash flows from financing activities:
Principal payments of long-term debt (105,917) (73,372)
Proceeds from bank loan 268,739 198,957
Net cash provided by financing activities 162,822 125,585
Net increase in cash 86,070 76,012
Cash at beginning of period 292,918 236,236
Cash at end of period $ 378,988 $ 312,248
</TABLE>
CARC, INC.
Notes to Interim Financial Statements
June 30, 1998
(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, 1998 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, 1998 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 on
a twenty unit two-bedroom apartment building and an activity center.
At June 30, 1998, the projects are complete.
To finance the construction the Center entered into a loan for
$2,600,000 from Wachovia Bank. The loan is secured by real estate
and apartment rents. The loan was formally closed during the first
quarter of 1998. Interest is 7.85% and monthly payments of $25,205
will be made through January 2007.
Results of Operations - For the three months ended June 30, 1998
compared to the three months ended June 30, 1997.
Operating Revenues
Operating Revenues for the three months ended June 30, 1998 and 1997
were $881,000 and $825,000, respectively. The overall increase in
operating revenues of approximately $55,000 is due primarily to the
additional apartment income made available by the completed
construction. In addition, there was a three percent increase in
rates occurring in the third quarter of 1997 in health care center and
apartment revenues, which is reflected in operating revenues for the
quarter ending June 30, 1998.
Operating Expenses
Operating expenses for the three months ended June 30, 1998 and 1997
were approximately $815,000 and $704,000, respectively. The increase
of $111,000 in expenses was primarily demonstrated in the following
areas of operations. Healthcare expenses increased $29,000 due to
the increased use of temporary employees. Depreciation and
amortization expense increased $16,000 in relation to the new
buildings completed, and interest expense increased $43,000 as a
result of the additional facilities' financing. Residential services
expense increased $5,000 due to hiring an activities director
for the new activities building. Other operating expenses remained
relatively stable.
Nonoperating revenue
Nonoperating revenues, which consist primarily of interest and
investment income, for the three months ended June 30, 1998 remained
relatively stable.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Liquidity
The Center generated $93,000 in cash flows from operating activities
and $163,000 from financing activities for the three months ended
June 30, 1998. The cash flows were used primarily to fund $170,000 of
capital expenditures.
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 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.
Item 4. Submission of Matters to a Vote of Security Holders
Please refer to the following minutes of the shareholers' meeting
held June 10, 1998 for the information requested for this item.
CARC, Inc.
Annual Stockholders Meeting
Wednesday, June 10, 1998
Clemson Downs Activity Center
Present: Burley, Clark, Macholl, Monroe, Neumann, Seefeld, Watson, Wise
and Anita Davis
Absent: Clement
Chairman Monroe opened our meeting by asking Mr. Earl Rambo to offer
the invocation.
Mr. Monroe called on the Crisp Hughes' Accounting Firm
representative to confirm we did have a quorum to conduct business.
This being determined Mr. Monroe introduced the current board
members.
Minutes from the previous years meeting had been distributed to
everyone, so a motion was made to dispense with the reading.
One correction was noted and corrected.
Mendel Sherman was then asked to give the Nominating Committee
Report. This committee consisted of Mr. Sherman, Mr. George Nutt
and Mr. Brooks Patterson. Their nominees for the 98-99 CARC Board
were Neumann, Seefeld, and Wise from last years Board. New
nominees were Tom Lynch, Broy Moyer, Robert Downing, James Fanning,
Anna Forbis and Fred Martin. A recommendation to accept this plate
was proposed and seconded. All present were in favor. Mr. John
Clark was then asked to give his balloting report. Of the 284 votes
received by our office 283 approved the selection of Crisp Hughes as
CARC's independent accountants for the 98-99 year. Ballots totaling
274 approved the nominating committee slate of officers with 10
abstaining. A definite majority was attained.
Our Treasurer, Mr. Macholl reported that we have an increase in
performance over last year. Our stock holder equity has gone up
30% over the last year. A ratio of debt to assets is low at the
present time but this is due to our loans on the new buildings.
Payments on these new notes will soon strengthen this.
Anita Davis reported that our marvelous staff are long term
employees and the very best! Kathryn Newkirk and Jay Rollins are
new employees, but are already a part of the team. Stockholder
equity has risen and our deficit has decreased.
Volunteers are an even growing asset. Many thanks for their
efforts.
Notes from Chairman Monroe: CARC has 70 employees currently with a
yearly payroll of over a million dollars. Our yearly purchases
estimate more than $1 million. The Downs pays property taxes of
$81,700 a year. Currently CARC has 116 apartments with 134
residents and a 52 bed health care center. There are 128 residents
in the homes surrounding the CARC facilities. Our expansion costs
have totaled over $3 million. All of these statistics should make
our stockholders very proud.
Recognition of the out-going board members was presented by past
President Mrs. Helen Gregory.
A motion was then made and seconded that any and all actions taken
in the last 12 months by the officers and board of directors of
CARC on behalf of the corporation be acknowledged affirmed and
approved by the stockholders present at this annual meeting of the
stockholders all present voted in favor.
Recognition of the Shermans for all their work with the CarCourier
was given and a round of "thanks" to our property owners for all
their time and effort.
The dedication of our new building will follow at 3:00 p.m. motion
to adjourn at 3:35 p.m.
Respectfully submitted
Eleanor Burley
Secretary
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits 27 Financial Date Schedule
B. There were no reports on Form 8-K filed for the quarter
ended June 30, 1998.
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 7, 1998 By: /s/ Anita M. Davis
Anita M. Davis
Administrator
(Principal executive officer)
Date: August 7, 1998 By: /s/ Debra Turner
Debra Turner
Accountant
(Principal Financial and
Accounting Officer)
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] MAR-31-1999
[PERIOD-END] JUN-30-1999
[CASH] 378,988
[SECURITIES] 199,596
[RECEIVABLES] 140,507
[ALLOWANCES] 5,000
[INVENTORY] 11,120
[CURRENT-ASSETS] 1,000,364
[PP&E] 10,378,508
[DEPRECIATION] 4,013,416
[TOTAL-ASSETS] 7,595,339
[CURRENT-LIABILITIES] 652,228
[BONDS] 4,655,164
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 536,000
[OTHER-SE] 189,113
[TOTAL-LIABILITY-AND-EQUITY] 7,595,339
[SALES] 0
[TOTAL-REVENUES] 880,608
[CGS] 0
[TOTAL-COSTS] 815,247
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 91,579
[INCOME-PRETAX] 73,276
[INCOME-TAX] 24,000
[INCOME-CONTINUING] 49,276
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 49,276
[EPS-BASIC] 0.09
[EPS-DILUTED] 0.09
</TABLE>
