<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
{X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
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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.
--------------------------------
(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
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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
--- ---
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, 1999
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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, 1999 and March 31, 1999 3
Consolidated Statements of Operations
for the Three Months ended
June 30, 1999 and 1998 4
Consolidated Statements of Cash Flows
for the Three Months ended
June 30, 1999 and 1998 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 9
SIGNATURES 10
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.30,1999 Mar.31,1999
----------- -----------
(Unaudited)
<S> <C> <C>
Assets
------
Current Assets:
Cash and cash equivalents $ 8,176,028 8,209,421
Accounts receivable, net 89,667 88,991
Prepaid expenses 20,934 19,380
Deferred tax asset 1,527 1,527
----------- -----------
Total current assets 8,288,156 8,319,319
Property and equipment, net 48,586 54,756
Excess cost over fair value of net assets acquired, net 460,705 468,811
----------- -----------
$ 8,797,447 8,842,886
=========== ===========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable $ 52,857 50,122
Accrued expenses 73,136 97,801
Income taxes payable 29,275 50,775
----------- -----------
Total current liabilities 155,268 198,698
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Stockholders' equity:
Common stock, $.01 par value;
10,000,000 shares authorized;
4,450,000 shares issued; 4,273,500
shares outstanding 44,500 44,500
Additional paid-in capital 3,515,699 3,515,699
Retained earnings 5,380,197 5,382,206
----------- -----------
8,940,396 8,942,405
Treasury shares, at cost, 176,500 shares (298,217) (298,217)
----------- -----------
Total stockholders' equity 8,642,179 8,644,188
----------- -----------
$ 8,797,447 8,842,886
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
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AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
Three months ended
------------------
Jun. 30, 1999 Jun. 30, 1998
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Revenues $ 267,044 301,152
Cost of services 119,153 135,080
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Gross margin 147,891 166,072
Selling, general and administrative expenses 266,393 286,364
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Operating loss (118,502) (120,292)
Other income:
Interest income 103,663 115,231
Miscellaneous income 13,830 25,313
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Earnings (loss) before provision
for income taxes (1,009) 20,252
Provision for income taxes 1,000 5,000
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Net earnings (loss) $ (2,009) 15,252
=========== ===========
Net earnings (loss) per share:
Basic $ .00 .00
=========== ===========
Diluted $ .00 .00
=========== ===========
Weighted average common shares outstanding:
Basic 4,273,500 4,273,500
=========== ===========
Diluted 4,273,500 4,366,632
=========== ===========
See accompanying notes to consolidated financial statements.
4
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AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
------------------
Jun.30, 1999 Jun.30, 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) continuing activities $ (2,009) 15,252
----------- -----------
Adjustments to reconcile net earnings (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization 14,276 22,714
Changes in assets and liabilities:
Accounts receivable (676) 5,542
Prepaid expenses (1,554) (1,942)
Accounts payable 2,735 20,457
Accrued expenses (24,665) 22,254
Income taxes payable (21,500) 2,921
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Total adjustments (29,375) 71,946
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Net cash provided by (used in) operating
activities of continuing operations (31,384) 87,198
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Net cash flows used in discontinued operations -- (86,204)
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Net increase (decrease) in cash and cash equivalents (31,384) 994
Cash and cash equivalents at beginning of period 8,209,421 8,105,960
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Cash and cash equivalents at end of period $ 8,176,028 8,106,954
=========== ===========
Supplemental Disclosure of Cash Flow Information:
Income taxes paid $ 22,500 2,079
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
5
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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, 1999. 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 of and for the periods shown.
Earnings (Loss) Per Share
- -------------------------
The following table sets forth the computation of basic and diluted net earnings
(loss) per share for the three months ended June 30, 1999 and 1998:
<TABLE>
<CAPTION>
Three months Three months
ended 06/30/99 ended 06/30/98
--------------- ---------------
<S> <C> <C>
Numerator:
Net earnings (loss) $ (2,009) 15,252
=============== ===============
Denominator:
Denominator for basic earnings (loss)
per share - weighted average shares 4,273,500 4,273,500
Effect of dilutive securities:
Stock options -- 93,132
--------------- ---------------
Denominator for diluted earnings (loss)
per share 4,273,500 4,366,632
=============== ===============
Basic earnings (loss) per share $ .00 $ .00
=============== ===============
Diluted earnings (loss) per share $ .00 $ .00
=============== ===============
</TABLE>
Employee stock options totaling 570,500 and 270,500 for the three months ended
June 30, 1999 and 1998, respectively, were not included in the net earnings
(loss) per share calculations because their effect would have been
anti-dilutive.
6
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- ------ OF OPERATIONS
Results of Operations - Three Months ended June 30, 1999 and 1998
- -----------------------------------------------------------------
Revenues for the three months ended June 30, 1999 totaled $267,044 as compared
with the $301,152 reported for the corresponding period ended June 30, 1998.
This represents a decrease of approximately 11.3%. During the period from March
1999 through May 1999, RPM Rehabilitation & Associates, Inc. ("RPM") experienced
a substantial decrease in new case referrals received from the Washington State
Department of Labor & Industries ("L&I") due to L&I's implementation of a new
performance-based vocational referral program ("the referral program"). RPM's
performance rating was deemed to be below L&I's required rating to receive new
case referrals. Updated ratings were subsequently released by L&I in May 1999
which reported a qualifying rating for RPM. L&I began sending new case referrals
shortly thereafter. It cannot be predicted whether or not RPM will continue to
receive a favorable rating under the referral program as it currently exists.
The related cost of services remained relatively consistent at 44.6% of related
revenues for the three months ended June 30, 1999, as compared to 44.9% of
related revenues in the same period last year.
Selling, general and administrative expenses for the quarter ended June 30, 1999
decreased to $266,393 from $286,364 for the three months ended June 30, 1998.
Liquidity and Capital Resources
- -------------------------------
At June 30, 1999, the Company had working capital of $8,132,888 as compared to
working capital of $8,120,621 at March 31, 1999. 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.
Year 2000
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This issue affects computer systems that have time-sensitive programs that may
not properly recognize the Year 2000. Such programs may interpret the Year 2000
to mean some other year or not interpret it at all. If not corrected, those
programs could cause date-related transaction failures.
Assessment of both Company and client information systems is ongoing. The
Company believes that with minor modifications to existing operating systems,
the Year 2000 issue will not pose significant operational problems for its
computer systems. Communications are in progress with all significant clients
and vendors to determine the extent to which the Company's systems are
vulnerable to such third parties' failure to remediate their own Year 2000
issues. The Company can provide no assurance that such clients and vendors will
complete their respective Year 2000 solutions in time for the Company to fully
test interfaces with them. Although the Company does
7
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not have a formal Year 2000 contingency plan, it will be responding to any
disruption in service from a Year 2000 compliance problem in its systems and
software or in a client's or vendor's system. There is no assurance, however,
that the Company will be able to remedy any disruption in service, in particular
any disruption from a client's or vendor's failure to be Year 2000 compliant.
Based on current plans and efforts to date, management expects that there will
be no material adverse effect on operations and the associated costs to be
incurred are not considered to be material. There is no guarantee, however, that
all problems will be foreseen and corrected. In the event that the Company was
unable to complete any portion of its Year 2000 plans, the Company could be
unable to receive new case referrals, invoice clients and collect payments
electronically.
Forward Looking Statements
- --------------------------
Except for the historical information contained herein, the matters discussed in
this report on Form 10-Q may contain forward-looking statements that involve
risks and uncertainties. The Company's actual results may differ materially from
the results discussed in the forward-looking statements. Factors that might
cause such a difference include, but are not limited to, general economic and
market conditions, the potential loss or termination of existing clients and
contracts and the ability of the Company to successfully identify and thereafter
consummate one or more acquisitions.
8
<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.
9
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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 30, 1999 By: /s/ Gary Gelman
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Gary Gelman
Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
Date: July 30, 1999 By: /s/ Gary J. Knauer
----------------------------------------
Gary J. Knauer
Chief Financial Officer and Treasurer
(Principal Financial Officer)
10
<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-31-2000
<PERIOD-END> JUN-30-1999
<CASH> 8,176,028
<SECURITIES> 0
<RECEIVABLES> 90,667
<ALLOWANCES> 1,000
<INVENTORY> 0
<CURRENT-ASSETS> 8,288,156
<PP&E> 362,580
<DEPRECIATION> 313,994
<TOTAL-ASSETS> 8,797,447
<CURRENT-LIABILITIES> 155,268
<BONDS> 0
<COMMON> 44,500
0
0
<OTHER-SE> 3,515,699
<TOTAL-LIABILITY-AND-EQUITY> 8,797,447
<SALES> 267,044
<TOTAL-REVENUES> 267,044
<CGS> 119,153
<TOTAL-COSTS> 119,153
<OTHER-EXPENSES> 266,393
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,009)
<INCOME-TAX> 1,000
<INCOME-CONTINUING> (2,009)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,009)
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
