<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 September 30, 1998
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.
--------------------------------
(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
---------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(516) 938-8000
----------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
----------------------------------------------------
(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 October 26, 1998
<PAGE>
AMERICAN CLAIMS EVALUATION, INC.
INDEX
Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of
September 30, 1998 and March 31, 1998 3
Consolidated Statements of Operations
for the Six Months and Three Months ended
September 30, 1998 and 1997 4
Consolidated Statements of Cash Flows
for the Six Months ended
September 30, 1998 and 1997 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 Exhibit8 and Reports on Form 8-K
SIGNATURES 9
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1 - Consolidated Financial Statements
AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY
Consolidated Balance Sheets
<TABLE>
<CAPTION>
Sep.30,1998 Mar.31,1998
---------- ----------
(Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $8,161,868 8,105,960
Accounts receivable, net 74,205 90,478
Prepaid expenses 20,473 27,748
---------- ----------
Total current assets 8,256,546 8,224,186
Property and equipment, net 65,101 94,056
Excess cost over fair value of net assets acquired, net 485,024 501,236
---------- ----------
$8,806,671 8,819,478
========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable 42,760 42,775
Accrued expenses 125,486 101,032
Current liabilities of discontinued operations -- 86,204
Income taxes payable 10,651 2,730
Deferred income taxes 2,473 2,473
---------- ----------
Total current liabilities 181,370 235,214
---------- ----------
Stockholders' equity:
Common stock, $.01 par value;
authorized 10,000,000 shares;
4,450,000 shares issued and outstanding 44,500 44,500
Additional paid-in capital 3,515,699 3,515,699
Retained earnings 5,363,319 5,322,282
---------- ----------
8,923,518 8,882,481
Less treasury shares, at cost, 176,500 shares (298,217) (298,217)
---------- ----------
Total stockholders' equity 8,625,301 8,584,264
---------- ----------
$8,806,671 8,819,478
========== ==========
</TABLE>
Note: The balance sheet at March 31, 1998 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 Six months ended
----------------------------------------------------------------
Sep. 30, 1998 Sep. 30, 1997 Sep. 30, 1998 Sep. 30, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues $ 300,074 331,890 601,226 656,130
Cost of services 130,793 146,308 265,873 292,057
----------- ----------- ----------- -----------
Gross margin 169,281 185,582 335,353 364,073
Selling, general and administrative
expenses 292,285 300,485 578,649 633,783
----------- ----------- ----------- -----------
Operating loss (123,004) (114,903) (243,296) (269,710)
Other income:
Interest income 115,176 115,785 230,407 226,445
Miscellaneous income 38,613 10,336 63,926 17,667
----------- ----------- ----------- -----------
Earnings (loss) before provision for
(benefit from) income taxes 30,785 11,218 51,037 (25,598)
Provision for (benefit from) income taxes 5,000 3,000 10,000 (7,000)
----------- ----------- ----------- -----------
Net earnings (loss) $ 25,785 8,218 41,037 (18,598)
=========== =========== =========== ===========
Net earnings per share:
Basic $ .01 .00 .01 .00
=========== =========== =========== ===========
Diluted $ .01 .00 .01 .00
=========== =========== =========== ===========
Weighted average common
shares outstanding:
Basic 4,273,500 4,273,500 4,273,500 4,173,500
=========== =========== =========== ===========
Diluted 4,406,490 4,383,559 4,386,561 4,228,529
=========== =========== =========== ===========
</TABLE>
4
<PAGE>
AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
----------------
Sep.30,1998 Sep.30,1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) from continuing operations $ 41,037 (18,598)
----------- -----------
Adjustments to reconcile net earnings (loss)
to net cash provided by operating activities:
Depreciation and amortization 45,167 90,861
Changes in assets and liabilities:
Accounts receivable 16,273 48,340
Prepaid expenses 7,275 (13)
Accounts payable (15) (6,565)
Accrued expenses 24,454 (4,666)
Income taxes payable 7,921 721
----------- -----------
Total adjustments 101,075 128,678
----------- -----------
Net cash provided by operating activities
of continuing operations 142,112 110,080
----------- -----------
Net cash flows provided by (used in) discontinued operations (86,204) 81,799
----------- -----------
Cash flows from investing activities:
Capital expenditures -- (39,463)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of common stock -- 250,000
----------- -----------
Net increase in cash and cash equivalents 55,908 402,416
Cash and cash equivalents at beginning of period 8,105,960 7,648,617
----------- -----------
Cash and cash equivalents at end of period $ 8,161,868 8,051,033
=========== ===========
Supplemental Disclosure of Cash Flow Information:
Income taxes paid $ 2,079 10,672
=========== ===========
</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, 1998. 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.
Earnings Per Share
The Company has adopted Statement of Financial Accounting Standards No. 128,
Earnings per Share, which requires presentation of two calculations per share.
Basic earnings per share equals net earnings divided by weighted average
common shares outstanding during the period. Diluted earnings per share equals
net earnings divided by the sum of weighted average common shares outstanding
during the period plus common stock equivalents. Common stock equivalents are
assumed to be issued if outstanding stock options were exercised. The Company
has restated all prior period amounts to reflect these calculations.
6
<PAGE>
Item 2 -Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations - Six Months ended September 30, 1998 and 1997
Revenues for the six months ended September 30, 1998 totaled $601,226 as
compared with the $656,130 reported for the corresponding period ended
September 30, 1997. This represents a decrease of approximately 8.4%. The
related cost of services decreased to 44.2% of revenues for the three months
ended September 30, 1998, as compared to 44.5% of related revenues in the same
period last year.
Selling, general and administrative expenses for the six months ended
September 30, 1998 amounted to $578,649, a decrease of $55,134 from the
comparable period ended September 30, 1997. Although management has been
successful in its efforts to reduce corporate overhead, certain expenditures
related to its search for acquisition candidates have increased.
Liquidity and Capital Resources
At September 30, 1998, the Company had working capital of $8,075,176 as
compared to working capital of $7,988,972 at March 31, 1997. The Company
believes that it has sufficient cash resources and working capital to meet its
present cash requirements.
During the six months ended September 30, 1997, net cash provided by financing
activities consisted of $250,000 received from the issuance of common stock.
The Company continues its review of strategic alternatives for maximizing
shareholder value. Potential acquisitions will be evaluated based on their
merits within its remaining line of business, as well as other fields.
Year 2000
The Company is working to resolve the potential impact of the year 2000 on the
ability of the Company's computerized information systems to accurately
process information that may be date-sensitive. Any of the Company's programs
that recognize a date using "00" as the year 1900 rather than the year 2000
could result in errors or system failures. Assessment of both Company and
client information systems has not been completed, but management expects that
there will be no material adverse effects on operations and that future costs
to be incurred will not be material. There is no guarantee, however, that all
problems will be foreseen and corrected.
7
<PAGE>
PART II. OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of American Claims Evaluation,
Inc. was held on October 6, 1998.
One proposal, subject to shareholder approval, was approved at
the Annual Meeting by a vote of shareholders. Under this
proposal, management nominees for election to the Board of
Directors, Messrs. Gelman, Elkin and Gutmann, were reelected as
directors of the Company to serve until their respective
successors are duly elected and qualified.
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) None
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: October 26, 1998 By: /s/ Gary Gelman
------------------------------
Gary Gelman
Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
Date: October 26, 1998 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> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1998
<CASH> 8,161,868
<SECURITIES> 0
<RECEIVABLES> 75,205
<ALLOWANCES> 1,000
<INVENTORY> 0
<CURRENT-ASSETS> 8,256,546
<PP&E> 500,278
<DEPRECIATION> 435,177
<TOTAL-ASSETS> 8,806,671
<CURRENT-LIABILITIES> 181,370
<BONDS> 0
<COMMON> 44,500
0
0
<OTHER-SE> 3,515,699
<TOTAL-LIABILITY-AND-EQUITY> 8,806,671
<SALES> 601,226
<TOTAL-REVENUES> 601,226
<CGS> 265,873
<TOTAL-COSTS> 265,873
<OTHER-EXPENSES> 578,649
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 51,037
<INCOME-TAX> 10,000
<INCOME-CONTINUING> 41,037
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,037
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
