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 SEPTEMBER 30,
1999
[ ]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 otherjurisdiction (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 September 30, 1999 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 September 30, 1999 1
Unaudited Statements of Operations for the
Three Months and Six Months Ended
September 30, 1999 and 1998 2
Unaudited Statement of Stockholders' Equity
for the Six Months Ended September 30, 1999 3
Unaudited Statements of Cash Flows for the
Six Months Ended September 30, 1999 and 1998 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. Change 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
September 30, 1999
(unaudited)
Assets
<S> <C>
Current assets:
Cash $512,531
Investments 107,568
Accounts receivable, net of allowance for
contractual adjustments of $5,000 126,855
Inventory 9,756
Deferred tax asset 118,050
Total current assets 874,760
Property, plant, and equipment, net 5,969,957
Entrance fees in escrow 114,710
Other assets - principally loan
refinancing costs 103,184
$7,062,611
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term debt $332,293
Accounts payable 42,917
Accrued liabilities 137,318
Unearned revenue 67,366
Total current liabilities 579,894
Deferred tax liability 23,600
Refundable entrance fees 114,710
Long-term debt,
excluding current installments 3,765,809
Total liabilities 4,484,013
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 (69,288)
Total stockholders' equity 2,578,598
$7,062.611
</TABLE>
CARC, INC.
Statements of Operations
For the Three and Six Months Ended September 30, 1999 and 1998
(Unaudited)
[CAPTION]
<TABLE>
Three Months Ended Six Months Ended,
September 30 September 30
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Operating revenues:
Apartments $410,004 $450,621 $835,741 $887,450
Health Care Center,
net 407,997 416,813 832,552 844,101
Dietary 9,608 10,635 20,503 22,822
Residential services - 425 - 1,463
Miscellaneous 497 2,076 1,100 5,341
Total operating revenues 828,106 880,570 1,689,896 1,761,177
Operating expenses:
Apartments 51,663 58,606 129,291 114,654
Health Care Center 233,429 229,829 446,380 448,942
Dietary 151,894 158,524 305,768 312,418
Residential services - 4,639 - 9,842
Maintenance and repair 24,388 24,991 60,541 52,088
Housekeeping 36,646 32,915 70,797 67,089
Administrative
and general 75,837 85,403 169,925 161,906
Depreciation and
amortization 92,802 93,703 185,842 178,962
Utilities 45,929 45,259 85,933 84,654
Interest 82,317 90,861 163,222 182,440
Property taxes 21,098 24,497 42,197 47,816
Miscellaneous 3,952 - 3,952 3,661
Total operating expenses 819,955 849,227 1,663,848 1,664,472
Income from operations 8,151 31,343 26,048 96,705
Nonoperating revenue (expense):
Interest and
investment income 7,743 8,138 14,098 16,052
Nonoperating revenue 7,743 8,138 14,098 16,052
Income before
income taxes 15,894 39,481 40,146 112,757
Income tax expense (3,050) (13,500) (9,550) (37,500)
Net income $12,844 $25,981 $30,596 $75,257
Basic earnings per share $.02 $.05 $.06 $.14
Weighted average
number of shares
outstanding during
the period 536,000 536,000 536,000 536,000
</TABLE>
[CAPTION]
<TABLE>
CARC, INC.
Statement of Stockholders' Equity
For the Six Months Ended September 30, 1999
(Unaudited)
<S> <C> <C> <C> <C>
Additional Total
Common Paid-In Accumulated Stockholders'
Stock Capital Deficit Equity
Balances at
March 31, 1999 $536,000 $2,111,886 $(99,884) $2,548,002
Net income - - 30,596 30,596
Balances at
September 30,
1999 $536,000 $2,111,886 $(69,288) $2,578,598
</TABLE>
[CAPTION]
<TABLE>
CARC, INC.
Statements of Cash Flows
For the Six Months Ended September 30, 1999 and 1998
(Unaudited)
<S> <C> <C>
1999 1998
Cash flows from operating activities:
Net income $30,596 $75,257
Adjustment to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 185,842 178,962
Deferred income tax expense 9,550 37,500
Decrease (increase) in:
Cash - funds held for others (6,731) (15,680)
Accounts receivable 5,973 (29,336)
Accrued interest receivable 654 4,771
Prepaid expenses 10,815 (33,812)
Increase (decrease) in:
Accounts payable (26,869) (94,306)
Accrued liabilities (17,589) 47,377
Unearned revenue 26,848 86,450
Deposits held for others 6,731 15,680
Net cash provided by
operating activities 225,820 272,863
Cash flows from investing activities:
Capital expenditures (6,063) (195,635)
Cash flows from financing activities:
Principal payments of
long-term debt (228,698) (212,552)
Proceeds from bank loan - 268,739
Net cash provided (used) by
financing activities (228,698) 56,187
Net increase (decrease) in cash (8,941) 133,415
Cash at beginning of period 521,472 292,918
Cash at end of period $512,531 $426,333
</TABLE>
CARC, INC.
Notes to Interim Financial Statements
September 30, 1999
(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 interim financial
statements should be read in conjunction with the audited financial
statements and the footnotes thereto contained in the Annual Report
on Form 10-KSB for the year ended March 31, 1999 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 interim
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 and six months
ended September 30, 1999 are not necessarily indicative of the
results to be expected for the entire year.
Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Financial Condition
The balance sheet of the Center has not materially changed from March
31, 1999 to September 30, 1999. The Center is in the process of
upgrading one of its buildings to provide assisted living to
residents. Costs incurred through September 30, 1999 are primarily
architect fees of $16,000. The most significant upgrade known at this
time will be the installation of a sprinkler system for approximately
$80,000. Total assets decreased by approximately $222,000 related
primarily to depreciation expense and stockholders' equity increased
by net income.
Results of Operations - For the six months ended September 30, 1999
compared to the six months ended September 30, 1998.
Operating Revenues
Operating revenues for the six months ended September 30, 1999 and
1998 were approximately $1,690,000 and $1,761,000, respectively. The
overall decrease in operating revenues of approximately $71,000 was
due primarily to a decrease in apartment occupancy of 8% and
healthcare center occupancy of 10%. The decrease in apartment
occupancy is a result of discontinuing the residential services. The
decrease in healthcare occupancy is a result of increased competition
from other healthcare providers in the area.
Operating Expenses
Operating expenses for the six months ended September 30, 1999 and
1998 remained relatively stable overall. However, fluctuations were
noted within the following areas of operations. Apartment expenses
increased $14,000 due primarily to repairs of the HVAC systems.
Maintenance expenses increased $8,000 due to repairs of a chiller and
the plumbing and air conditioning systems. Administrative expenses
increased $19,000 due primarily to hiring an additional staff member
in the fourth quarter of 1998. Dietary expenses decreased $6,600 due
to the decrease in occupancy. Residential services decreased $9,800
due to discontinuing the residential services program in the third
quarter of 1998. Interest expense decreased $19,000 as the debt
continues to be paid down.
Nonoperating revenue
Nonoperating revenues, which consist primarily of interest and
investment income, for the six months ended September 30, 1999
remained relatively stable.
Liquidity
The Center generated $226,000 in cash flows from operating activities
for the six months ended September 30, 1999. The cash flows were used
primarily to repay $229,000 of long-term debt.
Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Year 2000
The Center has addressed its Year 2000 compliance issues internally
through a plan that included upgrading computer terminals at a
minimal cost. The network operating system was upgraded to Windows 98
in December 1998. Costs of this upgrade were approximately $11,500.
Externally, the Center has received notification from its most
significant vendors and its primary financial institution confirming
their Year 2000 compliance.
The Center will continue to monitor the Year 2000 issue and, if
necessary, develop a contingency plan to enable operations to
continue and its financial position and operating results not to be
materially impacted should their current plans not provide the
desired results.
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.
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. Exhibit 27.1 Financial Data Schedule
B. There were no reports on Form 8-K filed for the quarter ended
September 30, 1999.
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: 11-1-99 By: /s/ Susan Davis
Susan Davis
Administrator
(Principal executive officer)
Date: 11-1-99 By: /s/ Lynn Shook
Lynn Shook
Accountant
(Principal Financial and
Accouting Officer)
Exhibit 27.1
CARC, INC.
EDGAR - FINANCIAL DATA SCHEDULES
Article 5 of Regulation S-X
Commercial and Industrial Companies
[CAPTION]
<TABLE>
<S> <S> <C>
Item Financial Data as of
Number Item Description September 30, 1999
5-02(1) Cash and cash items $ 512,531
5-02(2) Marketable securities 107,568
5-02(3)(a)(1)Notes and accounts receivable - trade 131,855
5-02(4) Allowances for doubtful accounts 5,000
5-02(6) Inventory 9,756
5-02(9) Total current assets 874,760
5-02(13) Property, plant and equipment 10,422,928
5-02(14) Accumulated depreciation 4,452,971
5-02(18) Total assets 7,062,611
5-02(21) Total current liabilities 579,894
5-02(22) Bonds, mortgages and similar debt 3,765,809
5-02(28) Preferred stock-mandatory redemption -
5-02(29) Preferred stock-no mandatory redemption -
5-02(30) Common stock 536,000
5-02(31) Other stockholders' equity 2,042,598
5-02(32) Total liabilities and
stockholders' equity 7,062,611
5-03(b)(1)(a)Net sales of tangible products -
5-03(b)(1) Total revenues 1,689,896
5-03(b)2(a) Cost of tangible goods sold -
5-03(b)2 Total costs and expenses applicable
to sales and revenues 1,500,626
Exhibit 27.1 (continued)
CARC, INC.
EDGAR - FINANCIAL DATA SCHEDULES
Article 5 of Regulation S-X (continued)
Commercial and Industrial Companies
Item Financial Data as of
Number Item Description September 30, 1999
5-03(b)3 Other costs and expenses $ -
5-03(b)5 Provision for doubtful accounts
and notes -
5-03(b)(8) Interest and amortization
of debt discount 163,222
5-03(b)(10) Income before taxes and other items 40,146
5-03(b)(11) Income tax expense 9,550
5-03(b)(14) Income/loss continuing operations 30,596
5-03(b)(15) Discontinued operations -
5-03(b)(17) Extraordinary items -
5-03(b)(18) Cumulative effect-changes in
accounting principles -
5-03(b)(19) Net income or loss 30,596
5-03(b)(20) Earnings per share-primary .06
5-03(b)(20) Earnings per share-fully diluted .06
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> SEP-30-1999
<CASH> 512,531
<SECURITIES> 107,568
<RECEIVABLES> 131,855
<ALLOWANCES> 5,000
<INVENTORY> 9,756
<CURRENT-ASSETS> 874,760
<PP&E> 10,422,928
<DEPRECIATION> 4,452,971
<TOTAL-ASSETS> 7,062,611
<CURRENT-LIABILITIES> 579,894
<BONDS> 3,765,809
0
0
<COMMON> 536,000
<OTHER-SE> 2,042,598
<TOTAL-LIABILITY-AND-EQUITY> 7,062,611
<SALES> 0
<TOTAL-REVENUES> 1,689,896
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,500,626
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 163,222
<INCOME-PRETAX> 40,146
<INCOME-TAX> 9,550
<INCOME-CONTINUING> 30,596
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,596
<EPS-BASIC> .06
<EPS-DILUTED> .06
</TABLE>
