<PAGE>
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 quarterly period ended June 30, 1997
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or
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number: 0-14807
AMERICAN CLAIMS EVALUATION, INC.
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(Exact name of Registrant as specified in its charter)
New York 11-2601199
- - ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Jericho Plaza, Jericho New York 11753
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(Address of principal executive offices) (Zip Code)
(516) 938-8000
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(Registrant's telephone number, including area code)
Not applicable
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(Former name, former address and former fiscal year,
if changed since last report)
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 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 _____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, par value $.01 per share
4,273,500 shares outstanding at July 28, 1997
<PAGE>
AMERICAN CLAIMS EVALUATION, INC.
INDEX
Page No.
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of
June 30, 1997 and March 31, 1997 3
Consolidated Statements of Operations
for the Three Months ended
June 30, 1997 and 1996 4
Consolidated Statements of Cash Flows
for the Three Months ended
June 30, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 8
SIGNATURES 9
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1 - Consolidated Financial Statements
AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY
Consolidated Balance Sheets
<TABLE>
<CAPTION>
Jun.30,1997 Mar.31,1997
----------- -----------
(Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 7,700,884 7,648,617
Accounts receivable, net 94,231 119,880
Current assets of discontinued operations 102,493 272,871
Prepaid expenses 37,098 24,732
Prepaid income taxes 9,668 --
Deferred income taxes 39,000 39,000
----------- -----------
Total current assets 7,983,374 8,105,100
Property and equipment, net 108,707 81,461
Non-current assets of discontinued operations 61,943 71,332
Excess cost over fair value of net assets acquired, net 525,555 533,661
----------- -----------
$ 8,679,579 8,791,554
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable 33,755 21,299
Accrued expenses 87,209 94,074
Current liabilities of discontinued operations 282,779 362,525
Income taxes payable -- 11,004
Deferred income taxes 8,473 8,473
----------- -----------
Total current liabilities 412,216 497,375
----------- -----------
Stockholders' equity:
Common stock, $.01 par value;
authorized 10,000,000 shares;
4,250,000 shares issued and outstanding 42,500 42,500
Additional paid-in capital 3,267,699 3,267,699
Retained earnings 5,255,381 5,282,197
----------- -----------
8,565,580 8,592,396
Less treasury shares, at cost, 176,500 shares (298,217) (298,217)
----------- -----------
Total stockholders' equity 8,267,363 8,294,179
----------- -----------
$ 8,679,579 8,791,554
=========== ===========
</TABLE>
Note: The balance sheet at March 31, 1997 has been derived from the audited
financial statements at that date.
3
<PAGE>
AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
Jun. 30, 1997 Jun. 30, 1996
------------- -------------
<S> <C> <C>
Revenues $ 324,240 301,089
Cost of services 145,749 129,905
----------- -----------
Gross margin 178,491 171,184
Selling, general and administrative expenses 333,298 317,181
----------- -----------
Operating loss from continuing operations (154,807) (145,997)
Other income:
Interest income 110,660 111,785
Gain on sale of marketable securities -- 285,356
Miscellaneous income 7,331 10,983
----------- -----------
Earnings (loss) from continuing operations
before provision for (benefit from)
income taxes (36,816) 262,127
Provision for (benefit from) income taxes (10,000) 99,000
----------- -----------
Net earnings (loss) from continuing operations (26,816) 163,127
Earnings from discontinued operations, net of taxes -- 99,751
----------- -----------
Net earnings (loss) $ (26,816) 262,878
=========== ===========
Net earnings (loss) per share:
From continuing operations $ (.01) .04
From discontinued operations -- .02
----------- -----------
Net earnings (loss) per share $ (.01) .06
=========== ===========
Weighted average common and common
equivalent shares outstanding 4,073,500 4,266,157
=========== ===========
</TABLE>
4
<PAGE>
AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
Jun.30,1997 Jun.30,1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) from continuing operations $ (26,816) 163,127
----------- -----------
Adjustments to reconcile net earnings (loss)
to net cash provided by operating activities:
Depreciation and amortization 29,712 34,800
Gain on sales of marketable securities -- (285,356)
Deferred income taxes -- (4,000)
Changes in assets and liabilities:
Accounts receivable 25,649 35,546
Prepaid expenses (12,366) (1,240)
Prepaid income taxes (9,668) --
Accounts payable 12,456 (5,860)
Accrued expenses (6,865) (18,982)
Income taxes payable (11,004) 84,549
----------- -----------
Total adjustments 27,914 (160,543)
----------- -----------
Net cash provided by operating activities
of continuing operations 1,098 2,584
----------- -----------
Net cash flows provided by discontinued operations 90,632 165,707
----------- -----------
Cash flows from investing activities:
Purchase of marketable securities -- (118,768)
Proceeds from sales of marketable securities -- 591,116
Capital expenditures (39,463) --
----------- -----------
Net cash provided by (used in) investing activities (39,463) 472,348
----------- -----------
Net increase in cash and cash equivalents 52,267 640,639
Cash and cash equivalents at beginning of period 7,648,617 7,242,029
----------- -----------
Cash and cash equivalents at end of period $ 7,700,884 7,882,668
=========== ===========
Supplemental Disclosure of Cash Flow Information:
Income taxes paid $ 10,672 84,167
=========== ===========
</TABLE>
5
<PAGE>
AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
General
The accompanying unaudited financial statements and footnotes have been
condensed and therefore do not contain all disclosures required by generally
accepted accounting principles. Reference should be made to the Company's
Annual Report to Shareholders for the year ended March 31, 1997. In the opinion
of management, all adjustments (consisting of normal recurring accruals) have
been made to present fairly the financial position, results of operations and
cash flows as at and for the periods shown.
6
<PAGE>
Item 2 -Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations - Three Months ended June 30, 1997 and 1996
Over the past several years, the hospital bill audit ("HBA") industry as a
whole suffered a decline in demand for its services. This negative trend
accelerated during the fiscal year ended March 31, 1997 and management
determined that the Company's HBA division could not continue to operate
profitably. In April 1997, the Company entered into an agreement to sell the
HBA division. As defined in the agreement, the Company will be entitled to
payments based upon the net revenues generated over the period ending April 30,
2000. Due to the uncertainty of the future of hospital bill auditing as a
viable cost containment alternative, management does not anticipate the
potential value of these payments to be material. The financial statements have
been reclassified to exclude the operating results of the HBA division from the
continuing operations and account for them as discontinued operations. The
following discussion relates only to the Company's continuing operations, RPM
Rehabilitation & Associates, Inc., unless otherwise noted.
Revenues for the three months ended June 30, 1997 totaled $324,240 as compared
with the $301,089 reported for the corresponding period ended June 30, 1996.
This represents an increase of approximately 7.7%. The related cost of services
increased to 45.0% of revenues for the three months ended June 30, 1997, as
compared to 43.1% of related revenues in the same period last year.
Selling, general and administrative expenses for the quarter ended June 30,
1997 increased to $333,298 from $317,181 for the three months ended June 30,
1996. This increase resulted from modest increases in operating costs at the
vocational rehabilitation division. Although management is currently exploring
various alternatives to decrease corporate overhead, it anticipates that
certain expenditures related to its search for acquisition candidates will
increase.
During the three months ended June 30, 1996, the Company realized gains of
$285,356 on the sales of marketable securities. The Company did not realize any
such gains in the current period.
Liquidity and Capital Resources
At June 30, 1997, the Company had working capital of $7,571,158 as compared to
working capital of $7,607,725 at March 31, 1997. The Company believes that it
has sufficient cash resources and working capital to meet its present cash
requirements.
During the three months ended June 30, 1997, $39,463 of cash was used for
capital expenditures. Net cash provided by investing activities for the three
months ended June 30, 1996 was $472,348. During this period, $591,116 of cash
provided from the proceeds of sales of marketable securities was offset by
$118,768 used for the purchase of additional marketable securities.
The Company has intensified its review of strategic alternatives for maximizing
shareholder value. With the disposition of the hospital bill audit division
completed, the Company will focus its attention on seeking acquisitions.
Potential acquisitions will be evaluated based on their merits within its
remaining line of business, as well as other fields.
7
<PAGE>
PART II. OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) The following exhibits are filed with this Quarterly
Report on Form 10-Q.
27 Financial Data Schedule (filed with electronically
filed copy only).
(b) On May 5, 1997, the Company filed a report on Form 8-K
dated April 21, 1997, which reported that the Company
had entered into a letter agreement to sell its hospital
bill audit division. As remuneration, the Company will
receive future payments based upon net revenues
generated as defined in the agreement over a period
ending April 30, 2000.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
AMERICAN CLAIMS EVALUATION, INC.
Date: July 28, 1997 By: /s/ Gary Gelman
---------------------------------------
Gary Gelman
Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
Date: July 28, 1997 By: /s/ Gary J. Knauer
---------------------------------------
Gary J. Knauer
Chief Financial Officer and Treasurer
(Principal Financial Officer)
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated financial statements and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> JUN-30-1997
<CASH> 7,700,884
<SECURITIES> 0
<RECEIVABLES> 95,231
<ALLOWANCES> 1,000
<INVENTORY> 0
<CURRENT-ASSETS> 7,983,374
<PP&E> 423,799
<DEPRECIATION> 315,092
<TOTAL-ASSETS> 8,679,579
<CURRENT-LIABILITIES> 412,216
<BONDS> 0
<COMMON> 42,500
0
0
<OTHER-SE> 3,267,699
<TOTAL-LIABILITY-AND-EQUITY> 8,679,579
<SALES> 324,240
<TOTAL-REVENUES> 324,240
<CGS> 145,749
<TOTAL-COSTS> 145,749
<OTHER-EXPENSES> 333,298
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (33,816)
<INCOME-TAX> (10,000)
<INCOME-CONTINUING> (26,816)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (26,816)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
