U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
{X} QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
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{ } TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
EXCHANGE ACT
For the transition period from _____ to _____
Commission file number: 0-14807
AMERICAN CLAIMS EVALUATION, INC.
(Exact name of small business issuer 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)
(516) 938-8000
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(Issuer's telephone number)
Not applicable
--------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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:
The number of shares outstanding of the issuer's common stock, par value $.01,
was 4,273,500 as of November 6, 2000.
Transitional Small Business Disclosure Format (check one): Yes ___ No _X_
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AMERICAN CLAIMS EVALUATION, INC.
INDEX
PAGE NO.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of
September 30, 2000 (unaudited) and March 31, 2000 3
Consolidated Statements of Operations
for the Three Months and Six Months ended
September 30, 2000 and 1999 (unaudited) 4
Consolidated Statements of Cash Flows
for the Six Months ended
September 30, 2000 and 1999 (unaudited) 5
Notes to Consolidated Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis or Plan of Operation 8
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.-FINANCIAL STATEMENTS.
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AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY
Consolidated Balance Sheets
Sep.30,2000 Mar.31,2000
----------- -----------
(Unaudited)
Assets
------
Current Assets:
Cash and cash equivalents $6,915,289 7,452,395
Marketable securities 500,649 644,240
Accounts receivable, net 104,330 88,429
Prepaid expenses 17,868 21,886
Deferred tax asset 106,587 15,677
---------- ---------
Total current assets 7,644,723 8,222,627
Property and equipment, net 124,624 40,079
Excess cost over fair value of net assets acquired, net 420,174 436,386
---------- ---------
$8,189,521 8,699,092
========== =========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable $ 24,779 18,503
Accrued expenses 64,442 78,691
Income taxes payable 41,286 31,386
---------- ---------
Total current liabilities 130,507 128,580
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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
Accumulated other comprehensive loss (584,040) (68,600)
Retained earnings 5,381,072 5,377,130
---------- ---------
8,357,231 8,868,729
Treasury shares, at cost, 176,500 shares (298,217) (298,217)
---------- ---------
Total stockholders' equity 8,059,014 8,570,512
---------- ---------
$8,189,521 8,699,092
========== =========
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 SIX MONTHS ENDED
--------------------------- ----------------------------
SEP. 30, 2000 SEP. 30, 1999 SEP. 30, 2000 SEP. 30, 1999
------------- ------------- ------------- -------------
Revenues $ 276,482 282,103 546,824 549,147
Cost of services 128,851 133,019 256,308 252,172
---------- --------- --------- ---------
Gross margin 147,631 149,084 290,516 296,975
Selling, general and
administrative expenses 265,101 279,607 527,309 546,000
---------- --------- --------- ---------
Operating loss (117,470) (130,523) (236,793) (249,025)
Other income:
Interest income 121,583 115,977 243,735 219,640
Miscellaneous income -- 11,284 1,000 25,114
---------- --------- --------- ---------
Earnings (loss) before
provision for
income taxes 4,113 (3,262) 7,942 (4,271)
Provision for income
taxes 2,000 1,000 4,000 2,000
---------- --------- --------- ---------
Net earnings (loss) $ 2,113 (4,262) 3,942 (6,271)
========== ========= ========= =========
Net earnings (loss)
per share:
Basic $ .00 .00 .00 .00
========== ========= ========= =========
Diluted $ .00 .00 .00 .00
========== ========= ========= =========
Weighted average common
shares outstanding:
Basic 4,273,500 4,273,500 4,273,500 4,273,500
========== ========= ========= =========
Diluted 4,430,339 4,273,500 4,426,736 4,273,500
========== ========= ========= =========
See accompanying notes to consolidated financial statements.
4
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AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
SIX MONTHS ENDED
--------------------------
SEP.30,2000 SEP.30,1999
----------- -----------
Cash flows from operating activities:
Net earnings (loss) $ 3,942 (6,271)
---------- ----------
Adjustments to reconcile net earnings (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 28,566 28,099
Changes in assets and liabilities:
Accounts receivable (15,901) 7,036
Prepaid expenses 4,018 2,974
Accounts payable 6,276 (15,253)
Accrued expenses (14,249) (28,287)
Income taxes payable 9,900 (20,500)
---------- ----------
18,610 (25,931)
---------- ----------
Net cash provided by (used in)
operating activities 22,552 (32,202)
---------- ----------
Cash flows from investing activities:
Purchases of marketable securities (462,759) --
Capital expenditures (96,899) --
---------- ----------
Net cash flows used in investing activities (559,658) --
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Net decrease in cash and cash equivalents (537,106) (32,202)
Cash and cash equivalents at beginning of period 7,452,395 8,209,421
---------- ----------
Cash and cash equivalents at end of period $6,915,289 8,177,219
========== ==========
Supplemental Disclosure of Cash Flow Information:
Income taxes paid $ 1,786 22,500
========== ==========
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, 2000. 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 and six months ended September 30, 2000 and 1999:
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------- ---------------------
9/30/00 9/30/99 9/30/00 9/30/99
---------- --------- --------- ----------
Numerator:
Net earnings (loss) $ 2,113 (4,262) 3,942 (6,271)
========== ========= ========= ==========
Denominator:
Denominator for basic earnings
(loss) per share - weighted
average shares 4,273,500 4,273,500 4,273,500 4,273,500
Effect of dilutive securities:
Stock options 156,839 -- 153,236 --
---------- --------- --------- ----------
Denominator for diluted
earnings (loss) per share 4,430,339 4,273,500 4,426,736 4,273,500
========== ========= ========= ==========
Basic earnings (loss) per share $ .00 .00 .00 .00
========== ========= ========= ==========
Diluted earnings (loss) per share $ .00 .00 .00 .00
========== ========= ========= ==========
Employee stock options totaling 125,000 and 595,500 for the three months ended
September 30, 2000 and 1999, 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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MARKETABLE SECURITIES
Marketable securities at September 30, 2000 consist of shares of IVC Industries,
Inc. ("IVCO") common stock which have been classified as available for sale
securities. As a result, they are recorded at fair value which is determined
based on quoted market prices. Unrealized losses, net of taxes, are reported as
accumulated other comprehensive loss as a separate component of stockholders'
equity.
COMPREHENSIVE LOSS
Statement of Financial Accounting Standards (SFAS) No. 130, REPORTING
COMPREHENSIVE INCOME, establishes standards for reporting and presentation of
comprehensive income and its components. SFAS No. 130 requires unrealized losses
on the Company's available for sale marketable securities to be included in
other comprehensive loss. Comprehensive loss for the six months ended September
30, 2000 and 1999 was $511,498 and $6,271, respectively. Comprehensive loss for
the quarter ended September 30, 2000 and 1999 was $312,327 and $4,262,
respectively.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
-------
RESULTS OF OPERATIONS - THREE MONTHS AND SIX MONTHS ENDED
SEPTEMBER 30, 2000 AND 1999
Revenues for the three months ended September 30, 2000 totaled $276,482 as
compared with the $282,103 reported for the corresponding period ended September
30, 1999. This represents a decrease of approximately 2.0%. Revenues for the six
month period ended September 30, 2000 remained relatively consistent with the
comparable period ended September 30, 1999.
Cost of services decreased slightly to 46.6% of revenues for the quarter ended
September 30, 2000, as compared to 47.2% of revenues in the same period last
year. During the six months ended September 30, 2000, the cost of services as a
percentage of revenues increased to 46.9% from 45.9% in the six months ended
September 30, 1999.
Selling, general and administrative expenses decreased $14,506 to $265,101 in
the quarter ended September 30, 2000, from $279,607 in the quarter ended
September 30, 1999. Selling, general and administrative expenses for the six
months ended September 30, 2000 decreased to $527,309 from $546,000 for the six
months ended September 30, 1999.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2000, the Company had working capital of $7,514,216 as compared
to working capital of $8,094,047 at March 31, 2000. The Company believes that it
has sufficient cash resources and working capital to meet its present cash
requirements.
The cost of marketable securities held at June 30, 2000 was $1,187,749. The fair
value of these equity securities (IVCO common stock) is based on quoted market
prices. Accordingly, unrealized losses of $584,040 (net of applicable deferred
taxes of $103,060) have been recorded to reduce the carrying value of these
securities to market value and are reported in accumulated other comprehensive
loss as a separate component of stockholders' equity.
During the six months ended September 30, 2000, cash flows used in investing
activities totaling $559,658 consisted of purchases of marketable securities
totaling $462,759 and capital expenditures of $96,899.
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.
FORWARD LOOKING STATEMENTS
Except for the historical information contained herein, the matters discussed in
this report on Form 10-QSB 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
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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-QSB.
27 Financial Data Schedule (filed with electronically filed
copy only).
(b) No reports on Form 8-K were filed during the quarter ended
September 30, 2000.
9
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AMERICAN CLAIMS EVALUATION, INC.
Date: November 6, 2000 By: /s/ Gary Gelman
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Gary Gelman
Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
Date: November 6, 2000 By: /s/ Gary J. Knauer
--------------------------------------
Gary J. Knauer
Chief Financial Officer, Treasurer
(Principal Financial and Accounting
Officer) and Secretary
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