<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 December 31, 1999
-----------------
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
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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
--------------- ---------------
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 January 27, 2000
<PAGE>
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
December 31, 1999 (unaudited) and March 31, 1999 3
Consolidated Statements of Earnings for
the Three Months and Nine Months ended
December 31, 1999 and 1998 (unaudited) 4
Consolidated Statements of Cash Flows
for the Nine Months ended
December 31, 1999 and 1998 (unaudited) 5
Notes to Consolidated Financial Statements (unaudited) 6 - 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8 - 9
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 11
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1 - Consolidated Financial Statements
AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
Consolidated Balance Sheets
Dec.31,1999 Mar.31,1999
----------- -----------
(Unaudited)
Assets
------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $7,641,778 8,209,421
Marketable securities 583,555 -
Accounts receivable, net 53,513 88,991
Prepaid expenses 13,502 19,380
Deferred tax asset 2,227 1,527
------------ ------------
Total current assets 8,294,575 8,319,319
Property and equipment, net 44,391 54,756
Excess cost over fair value of net assets acquired, net 444,493 468,811
------------ ------------
$8,783,459 8,842,886
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable 25,690 50,122
Accrued expenses 82,552 97,801
Income taxes payable 32,970 50,775
------------ ------------
Total current liabilities 141,212 198,698
------------ ------------
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 (3,950) -
Retained earnings 5,384,215 5,382,206
------------ ------------
8,940,464 8,942,405
Treasury shares, at cost, 176,500 shares (298,217) (298,217)
------------ ------------
Total stockholders' equity 8,642,247 8,644,188
------------ ------------
$8,783,459 8,842,886
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
Consolidated Statements of Earnings
(Unaudited)
Three months ended Nine months ended
---------------------------------- --------------------------
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1999 Dec. 31, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues $276,403 281,755 825,550 882,981
Cost of services 131,608 124,592 383,780 390,465
------- ------- ------- -------
Gross margin 144,795 157,163 441,770 492,516
Selling, general and administrative
expenses 267,108 268,599 813,108 847,248
------- ------- ------- -------
Operating loss (122,313) (111,436) (371,338) (354,732)
Other income:
Interest income 121,308 117,421 340,948 347,828
Miscellaneous income 11,285 33,942 36,399 97,868
-------- -------- -------- --------
Earnings before provision
for income taxes 10,280 39,927 6,009 90,964
Provision for income taxes 2,000 22,000 4,000 32,000
--------- --------- --------- --------
Net earnings $ 8,280 17,927 2,009 58,964
========= ======== ======== ========
Net earnings per share:
Basic $ .00 .00 .00 .01
=========== =========== =========== ===========
Diluted $ .00 .00 .00 .01
=========== =========== =========== ===========
Weighted average common shares outstanding:
Basic 4,273,500 4,273,500 4,273,500 4,273,500
========= ========= ========= =========
Diluted 4,405,702 4,380,242 4,424,089 4,384,455
========= ========= ========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
4
<PAGE>
AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
(Unaudited)
Nine months ended
Dec.31,1999 Dec.31,1998
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings from continuing operations $ 2,009 58,964
------------ -----------
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 41,140 59,973
Changes in assets and liabilities:
Accounts receivable 35,478 (2,321)
Prepaid expenses 5,878 9,542
Accounts payable (24,432) (18,179)
Accrued expenses (15,249) 11,021
Income taxes payable (17,805) 50,545
------------ -----------
25,010 110,581
------------ -----------
Net cash provided by operating activities
of continuing operations 27,019 169,545
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Net cash flows used in discontinued operations - (86,204)
------------ -----------
Cash flows from investing activities:
Purchases of marketable securities (588,205) -
Capital expenditures (6,457) (2,614)
------------ -----------
Net cash used in investing activities (594,662) (2,614)
------------ -----------
Net increase (decrease) in cash and cash equivalents (567,643) 80,727
Cash and cash equivalents at beginning of period 8,209,421 8,105,960
------------ -----------
Cash and cash equivalents at end of period $7,641,778 8,186,687
=========== ============
Supplemental disclosure of cash flow information:
Income taxes paid $ 22,500 2,079
=========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
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, 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 Per Share
- ------------------
The following table sets forth the computation of basic and diluted net earnings
per share for the three and nine months ended December 31, 1999 and 1998:
<TABLE>
<CAPTION>
Three months ended Nine months ended
-------------------------- --------------------
12/31/99 12/31/98 12/31/99 12/31/98
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Numerator:
Net earnings $ 8.20 17,927 2,009 58,964
========= ========= ========= =========
Denominator:
Denominator for basic earnings
per share - weighted
average shares 4,273,500 4,273,500 4,273,500 4,273,500
Effect of dilutive securities:
Stock options 132,202 106,742 150,589 110,955
--------- --------- --------- ---------
Denominator for diluted
earnings per share 4,405,702 4,380,242 4,424,089 4,384,455
========= ========= ========= =========
Basic earnings per share $ .00 .0 .00 .01
========= ========= ========= =========
Diluted earnings per share $ .00 .0 .00 .01
========= ========= ========= =========
</TABLE>
Employee stock options totaling 231,500 and 220,500 for the three months ended
December 31 ,1999 and 1998, respectively, were not included in the diluted
earnings per share calculations because their effect would have been
anti-dilutive.
6
<PAGE>
Comprehensive Income
Effective April 1, 1998, the Company adopted SFAS No. 130, Reporting of
Comprehensive Income. SFAS No. 130 establishes standards for reporting and
presentation of comprehensive income and its components. SFAS No. 130 requires
unrealized gains (losses) on the Company's available for sale securities to be
included in other comprehensive income (loss). Comprehensive income for the
three months ended 12/31/99 and 12/31/98, respectively, was $4,330 and $17,927.
For the nine months ended 12/31/99 and 12/31/98, comprehensive income (loss) was
$(1,941) and $58,964, respectively. The Statement requires only additional
disclosures in the consolidated financial statements; it does not affect the
Company's financial position or results of operations.
Marketable Securities
Marketable securities at December 31, 1999 consist of equity securities
purchased during the quarter ended December 31, 1999. These marketable
securities have been classified as available for sale securities and as a result
are recorded at fair value. Fair value 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.
7
<PAGE>
Item 2 -Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations - Three Months and Nine Months ended December 31, 1999 and
1998
Revenues for the three months ended December 31, 1999 totaled $276,403 as
compared with the $281,755 reported for the corresponding period ended December
31, 1998. This represents a decrease of approximately 1.9%. Revenues for the
nine month period ended December 31, 1999 decreased approximately 6.5% from the
comparable period ended December 31, 1998. During the period from March 1999
through May 1999, RPM Rehabilitation & Associates, Inc. ("RPM"), a wholly-owned
subsidiary, 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.
Cost of services increased to 47.6% of revenues for the quarter ended December
31, 1999, as compared to 44.2% of revenues in the same period last year due to a
larger percentage of cases being completed by higher priced rehabilitation
consultants. During the nine months ended December 31, 1999, the cost of
services as a percentage of revenues increased to 46.5% from 44.2% in the nine
months ended December 31, 1998.
Selling, general and administrative expenses remained consistent during the
quarter ended December 31, 1999 as compared to the quarter ended December 31,
1998. Selling, general and administrative expenses for the nine months ended
December 31, 1999 decreased moderately to $813,108 from $847,248 for the nine
months ended December 31, 1998.
Liquidity and Capital Resources
At December 31, 1999, the Company had working capital of $8,153,363 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.
During the quarter ended December 31, 1999, the Company had $594,662 in cash
flows used in investing activities of which $588,205 was used for purchases of
marketable securities.
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.
8
<PAGE>
Year 2000
As of January 27, 2000, the Company has no knowledge of any material issues
relating to Year 2000 related malfunctions that could have a material adverse
effect on the Company's financial condition or results of operations. The
Company is Year 2000 compliant and will continue to monitor all Year 2000
related issues.
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.
9
<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-QSB.
27 Financial Data Schedule (filed with electronically filed
copy only).
(b) None
10
<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: January 27, 2000 By: /s/ Gary Gelman
-------------------
Gary Gelman
Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
Date: January 27, 2000 By: /s/ Gary J. Knauer
----------------------
Gary J. Knauer
Chief Financial Officer and Treasurer
(Principal Financial Officer)
11
<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>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> DEC-31-1999
<CASH> 7,641,778
<SECURITIES> 583,555
<RECEIVABLES> 54,513
<ALLOWANCES> 1,000
<INVENTORY> 0
<CURRENT-ASSETS> 8,294,575
<PP&E> 369,037
<DEPRECIATION> 324,646
<TOTAL-ASSETS> 8,783,459
<CURRENT-LIABILITIES> 141,212
<BONDS> 0
44,500
0
<COMMON> 0
<OTHER-SE> 3,515,699
<TOTAL-LIABILITY-AND-EQUITY> 8,783,459
<SALES> 825,550
<TOTAL-REVENUES> 825,550
<CGS> 383,780
<TOTAL-COSTS> 383,780
<OTHER-EXPENSES> 813,108
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,009
<INCOME-TAX> 4,000
<INCOME-CONTINUING> 2,009
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,009
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
