<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, 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.
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(Exact name of Registrant as specified in its charter)
New York 11-2601199
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(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
- ------------------------------------------------------------------------------
(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
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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, 1998
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AMERICAN CLAIMS EVALUATION, INC.
INDEX
Page No.
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PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of
June 30, 1998 and March 31, 1998 3
Consolidated Statements of Operations
for the Three Months ended
June 30, 1998 and 1997 4
Consolidated Statements of Cash Flows
for the Three Months ended
June 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. Exhibits and Reports on Form 8-K 8
SIGNATURES 9
2
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PART I. FINANCIAL INFORMATION
Item 1 - Consolidated Financial Statements
AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY
Consolidated Balance Sheets
<TABLE>
<CAPTION>
Jun. 30, 1998 Mar. 31, 1998
------------- -------------
(Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 8,106,954 8,105,960
Accounts receivable, net 84,936 90,478
Prepaid expenses 29,690 27,748
----------- -----------
Total current assets 8,221,580 8,224,186
Property and equipment, net 79,448 94,056
Excess cost over fair value of net assets acquired, net 493,130 501,236
----------- -----------
$ 8,794,158 8,819,478
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable 63,232 42,775
Accrued expenses 123,286 101,032
Current liabilities of discontinued operations - 86,204
Income taxes payable 5,651 2,730
Deferred income taxes 2,473 2,473
----------- -----------
Total current liabilities 194,642 235,214
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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 5,337,534 5,322,282
----------- -----------
8,897,733 8,882,481
Less treasury shares, at cost, 176,500 shares (298,217) (298,217)
----------- -----------
Total stockholders' equity 8,599,516 8,584,264
----------- -----------
$ 8,794,158 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
-------------------------------------
Jun. 30, 1998 Jun. 30, 1997
------------- -------------
<S> <C> <C>
Revenues $ 301,152 324,240
Cost of services 135,080 145,749
----------- -----------
Gross margin 166,072 178,491
Selling, general and administrative expenses 286,364 333,298
----------- -----------
Operating loss (120,292) (154,807)
Other income:
Interest income 115,231 110,660
Miscellaneous income 25,313 7,331
----------- -----------
Earnings (loss) before provision for
(benefit from) income taxes 20,252 (36,816)
Provision for (benefit from) income taxes 5,000 (10,000)
----------- -----------
Net earnings (loss) $ 15,252 (26,816)
=========== ===========
Net earnings (loss) per share:
Basic $ .00 (.01)
=========== ===========
Diluted $ .00 (.01)
=========== ===========
Weighted average common shares outstanding:
Basic 4,273,500 4,073,500
=========== ===========
Diluted 4,366,632 4,073,500
=========== ===========
</TABLE>
4
<PAGE>
AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
-------------------------------------
Jun. 30, 1998 Jun. 30, 1997
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) continuing activities $ 15,252 (26,816)
----------- -----------
Adjustments to reconcile net earnings (loss)
to net cash provided by operating activities:
Depreciation and amortization 22,714 29,712
Changes in assets and liabilities:
Accounts receivable 5,542 25,649
Prepaid expenses (1,942) (12,366)
Prepaid income taxes - (9,668)
Accounts payable 20,457 12,456
Accrued expenses 22,254 (6,865)
Income taxes payable 2,921 (11,004)
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Total adjustments 71,946 27,914
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Net cash provided by operating activities
of continuing operations 87,198 1,098
----------- -----------
Net cash flows provided by (used in) discontinued operations (86,204) 90,632
----------- -----------
Cash flows from investing activities:
Capital expenditures - (39,463)
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Net increase in cash and cash equivalents 994 52,267
Cash and cash equivalents at beginning of period 8,105,960 7,648,617
----------- -----------
Cash and cash equivalents at end of period $ 8,106,954 7,700,884
=========== ===========
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 - Three Months ended June 30, 1998 and 1997
Revenues for the three months ended June 30, 1998 totaled $301,152 as compared
with the $324,240 reported for the corresponding period ended June 30, 1997.
This represents a decrease of approximately 7.1%. The related cost of services
remained relatively consistent at 44.9% as a percentage of related revenues
for the three months ended June 30, 1998, as compared to 45.0% of related
revenues in the same period last year.
Selling, general and administrative expenses for the quarter ended June 30,
1998 decreased to $286,364 from $333,298 for the three months ended June 30,
1997. Although management is always exploring various alternatives to decrease
corporate overhead, it anticipates that certain expenditures related to its
search for acquisition candidates will increase.
Liquidity and Capital Resources
At June 30, 1998, the Company had working capital of $8,026,938 as compared to
working capital of $7,988,972 at March 31, 1998. The Company believes that it
has sufficient cash resources and working capital to meet its present cash
requirements.
The Company continues its review of strategic alternatives for maximizing
shareholder value. Potential acquisitions will be evaluated based on their
merits within its current 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) 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: July 28, 1998 By: /s/ Gary Gelman
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Gary Gelman
Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
Date: July 28, 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> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-30-1998
<CASH> 8,106,954
<SECURITIES> 0
<RECEIVABLES> 85,936
<ALLOWANCES> 1,000
<INVENTORY> 0
<CURRENT-ASSETS> 8,221,580
<PP&E> 500,278
<DEPRECIATION> 420,830
<TOTAL-ASSETS> 8,794,158
<CURRENT-LIABILITIES> 194,642
<BONDS> 0
<COMMON> 44,500
0
0
<OTHER-SE> 3,515,699
<TOTAL-LIABILITY-AND-EQUITY> 8,794,158
<SALES> 301,152
<TOTAL-REVENUES> 301,152
<CGS> 135,080
<TOTAL-COSTS> 135,080
<OTHER-EXPENSES> 286,364
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 20,252
<INCOME-TAX> 5,000
<INCOME-CONTINUING> 15,252
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,252
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
