<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
FOR THE THREE MONTHS ENDED MARCH 31, 1999
COMMISSION FILE NUMBER: 33-1507-NY
AMERICAN CORPORATE INVESTORS, INC.
(Name Of Small Business Issuer In Its Charter)
<TABLE>
<S> <C>
Delaware 13-3437739
(State Or Other Jurisdiction Of Incorporation (IRS Employer Ident. No.)
or Organization)
2424 North Federal Highway, Suite 350, Boca Raton, FL 33431
(Address Of Principal Executive Offices) (Zip Code)
Issuer's Telephone Number: (561) 338-5611
</TABLE>
Check whether the issuer (1) 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 such 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
--- ---
Indicate the number of Shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date. As of June 1, 1999, there were
outstanding 5,643,017 shares of Common Stock.
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<S> <C>
Item 1. Condensed consolidated financial statements:
Balance sheet as of March 31, 1999 and
December 31, 1999 3
Consolidated Statement of Operations for the three
months ended March 31, 1999 and 1998 4
Consolidated Statement of cash flows for the three months
ended March 31, 1999 and 1998 5
Notes to consolidated condensed financial statements 6
Item 2. Management's discussion and analysis of financial
Condition 12
PART II. OTHER INFORMATION
Signatures 16
</TABLE>
2
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AMERCIAN CORPORATE INVESTORS INC.
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------------------------------
ASSETS (AUDITED)
<S> <C> <C>
Current assets:
Cash in banks $ 66,160 $ 5,681
Trade accounts receivable 663,745 556,972
Inventories 257,118 250,175
Other accounts receivable 0 89,423
Total current assets 987,023 902,251
Other assets:
Due from affiliates (Note 3) 798,965 671,140
Taxes refunds receivable 196,622 280,466
Other assets (Note 2) 124,970 164,874
Note receivable (Note 4) 2,000,000 2,000,000
Property, plant, and equipment
(net of accumulated depreciation) 6,381,707 5,439,647
Goodwill (net of accumulated amortization) 222,753 242,306
Total assets $10,712,040 $ 9,700,684
LIABILITIES & OWNERS' EQUITY
Current liabilities
Accounts payable 1,474,824 1,385,609
Deferred sales 0 0
Other liabilities 301,336 336,704
Total current liabilities 1,776,160 1,722,313
Long term liabilities:
Equipment loans and notes payable 2,333,102 1,175,130
Pensions and benefits payable 369,605 385,845
Total liabilities 4,478,867 3,283,288
Common stock, par value $.0001 per share,
300,000,000 authorized, 5,643,017 issued and
outstanding 564 564
Contributed capital in excess of par value 12,396,495 12,396,495
Cumulative translation adjustment (Note 2) (18,985) 42,852
Accumulated deficit (6,144,901) (6,022,515)
Total liabilities & owners' equity $10,712,040 $ 9,700,684
</TABLE>
PLEASE SEE THE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS.
3
<PAGE>
AMERICAN CORPORATE INVESTORS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
March 31, March 31,
1999 1998
<S> <C> <C>
Revenues:
Gross sales $ 444,723 $ 255,733
Less cost of goods sold (225,211) (151,572)
Net profit on sales 219,512 104,161
Operating expenses:
Salaries and overhead 168,451 227,611
General administration 95,799 91,533
Depreciation & amortization 38,102 31,192
Total operating expenses 302,352 350,366
Net income (loss) before other revenues & expenses (82,840) (246,205)
Other revenues & expenses:
Interest income 11,878 0
Gain on fixed assets sold 0 3,052
Interest expense (51,424) (9,679)
Net income (loss) before provision for income taxes (122,386) (252,832)
Provision for income taxes
0 0
Net income (loss) ($122,386) ($252,832)
Earnings per share:
Basic ($.02) ($.06)
Diluted ($.02) ($.06)
Weighted average of common shares:
Basic 5,643,017 4,652,699
Diluted 5,643,017 4,562,699
</TABLE>
PLEASE SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS.
4
<PAGE>
AMERICAN CORPORATE INVESTORS INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE QUARTER ENDING MARCH 31, 1999
(UNAUDITED)
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income (loss) ($122,386)
Adjustments to reconcile net loss to cash
provided by operating activities; add back
depreciation & amortization 38,102
Net cash provided (used) by operating activities
(84,284)
Cash flows from other operating activities:
Increase in trade accounts receivable (106,773)
Decrease in other accounts receivable 89,423
Increase in ending inventories (6,943)
Increase in receivables from affiliates (127,825)
Decrease in taxes refunds receivable 83,844
Decrease in other assets 39,904
Increase in accounts payable 89,216
Decrease in other liabilities (35,368)
Increase in equipment loans & notes payable 1,157,972
Decrease in pensions and benefits payable (16,241)
Net cash provided (used) by other operating activities
1,082,925
Cash flows from financing activities:
Purchase of City Mix equipment (565,200)
Capitalized engineering costs of Ramoil Towers project (395,410)
Change in cumulative translation adjustment (Note 2) (61,837)
Net cash provided (used) by financing activities (1,022,447)
Increase (decrease) in cash during 1999 60,478
Cash balance at December 31, 1998 5,681
Cash balance at March 31, 1999 $66,159
</TABLE>
PLEASE SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS.
5
<PAGE>
AMERICAN CORPORATE INVESTORS, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 1999
NOTE 1- GENERAL DESCRIPTION AND NATURE OF BUSINESS
GENERAL
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principals for interim financial information
and with the instructions to Form 10-Q. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principals for complete financial statements. In the opinion of management, all
adjustments considered necessary for a fair presentation have been included. The
results of operations for the three months ended March 31, 1999 is not
necessarily indicative of the results to be expected for the full year. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report for the year ended
December 31, 1998 included in its Annual Report filed on Form 10-K.
OUTSTANDING COMMON STOCK
American Corporate Investors, Inc. (the Company) is a Delaware corporation
organized on December 30, 1986 for the purpose of engaging in and acquiring
profitable business opportunities in the United States and overseas. On June 10,
1996, the Company effected a 1-for-10 reverse split of its issued common stock
reducing its outstanding common shares from 16,670,000 to 166,700 and acquired
100% of the outstanding shares of Ramoil Management Company, Inc. (RMC) in
exchange for 3,135,000 newly issued post-split shares of the Company's stock.
Simultaneous to this transaction, the Company issued common stock warrants where
each warrant entitled the holder to purchase one share of common stock. A total
of 800,000 warrants were issued with an exercise price of $2.50 and 450,000
warrants were issued with an exercise price of $5.00. The warrants expired in
July 1998. During the exercise period of the warrants, 450,000 of the $2.50
warrants had been exercised.
In September 1998, the two majority shareholders of the Company elected to
convert outstanding loans to RMC amounting to $5,667,217 into 1,889,771 shares
of common stock. In addition, 37,000 shares were issued, as a result of warrants
exercised at $2.50 prior to the warrants expiration date.
As a result of the above, the Company's has 5,643,017 issued and outstanding
shares at March 31, 1999.
COMPANY HOLDINGS
Ramoil Management Company, (RMC) was incorporated in 1992 in Boca Raton, Florida
and is in the business of providing consulting and managerial services to its
subsidiary companies,
6
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AMERICAN CORPORATE INVESTORS, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 1999
Ramoil Engineering S.P.A. (RME) and City Mix Concrete Inc. (CMIX) and, until
December 31, 1997, to its affiliate, Ramoil Holdings, Inc. (RMH). In late 1996,
RMC opened a branch office in Abu Dhabi, United Arab Emirates (UAE) in order to
manage the various projects that RMC was engaged in.
Ramoil Engineering S.P.A. (RME) was established in 1993 under Italian law and
provides construction supplies and services. Its principal line of business
consists of the manufacture and sale of commercial furniture and aluminum frames
for windows, doors, and other uses. RME is also involved in providing
engineering services for various construction projects in Italy.
City Mix Concrete, (CMIX) was established in 1998 in Abu Dhabi, United Arab
Emirates and will process and sell concrete to various building projects in the
UAE. Although not yet active, the plant project is under construction and
management expects the plant to be on line in November 1999. CMIX is owned by
RMC through a consulting agreement with its majority shareholder, Rodoljub
Radulovic.
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements included the accounts of RMC, RME, and
CMIX. All inter-company accounts and inter-company sales and purchases have been
eliminated in these consolidated financial statements.
CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates that affect
the reported amount of assets and liabilities and the reported amount of revenue
and expenses during the period reported. Actual results could differ from those
estimates.
REVENUE RECOGNITION
RME recognizes revenue upon shipment of the related goods or performance of
services.
7
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AMERICAN CORPORATE INVESTORS, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 1999
INVENTORIES
Inventories are stated at lower of cost or market. Cost is determined by using
the first-in, first-out method ("FIFO") or by the specific identification method
where feasible. As of March 31, 1999, inventory detailed as follows:
<TABLE>
<S> <C>
Work in process $40,099
Finished goods 217,019
-------
Ending inventory $257,118
</TABLE>
PROPERTY, PLANT, AND EQUIPMENT
Property, plant and equipment are recorded at cost. Depreciation and
amortization are calculated on the straight-line method based upon the following
estimated useful lives:
<TABLE>
<S> <C>
Buildings and Plant 33 years
Leasehold improvements Lease term
Machinery and equipment 7-9 years
Furniture and fixtures 5-8 years
Office equipment 3-5 years
Vehicles 4-5 years
</TABLE>
At March 31, 1999, the property, plant, and equipment account details as
follows:
<TABLE>
<S> <C>
Buildings and Plant $2,829,209
Leasehold improvements 438,152
Machinery and equipment 3,168,172
Furniture and fixtures 331,127
Office equipment 58,043
Vehicles 164,725
Towers project 395,410
Accumulated depreciation (1,003,131)
-----------
Total property, plant, and equipment $6,381,707
</TABLE>
Goodwill is the excess of funds paid over cost by RME to purchase Artifex Inc in
1995. The goodwill account is being amortized over a forty-year period on a
straight-line basis.
OTHER ASSETS
Other assets include prepaid rent and sponsorship fees in the Company's Abu
Dhabi branch.
8
<PAGE>
AMERICAN CORPORATE INVESTORS, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 1999
INCOME TAXES
The Company utilizes Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes", which requires the Company to compute deferred
income taxes based upon the difference between the financial statement and tax
bases of the assets and liabilities using the tax rates in effect for the year
in which the differences are expected to reverse.
FOREIGN CURRENCY TRANSLATION
The financial statements of RME are prepared in Italian lire and the financial
statements of CMIX are prepared in Arabian dirhams. Assets and liabilities are
converted at the exchange rate in effect as of the balance sheet date. Income
and expense items are translated at the average rate in effect over the time
period reported. The capital accounts of RME and CMIX are translated at the rate
prevailing at inception. The resulting differences caused by these translation
adjustments have been accumulated in a separate component of stockholders equity
called the "cumulative translation adjustment". The $61,837 decrease in the
cumulative translation adjustment for fiscal 1998 is due mainly to the change in
the Italian lire rate from 1,652 per dollar at December 31, 1998 to 1,797 per
dollar at March 31, 1999.
NOTE 3- RELATED PARTY TRANSACTIONS
The Company had provided management services to Ramoil Holding Co. LTD (RHC); a
company affiliated through common ownership by the Company's majority
shareholder. Under the terms of the management agreement, the Company received a
minimum annual fee of $1,000,000 with additional amounts due based on other
services. The Company has accounted for these fees as "Due from Affiliates".
Funds that were subsequently remitted by the majority shareholder directly to
the Company or to third parties on behalf of the Company were then netted
against this receivable balance.
During fiscal 1998, management had decided to cancel this consulting agreement
for fiscal 1997 and 1998. The majority shareholder has agreed to a formal
payment plan where the balance of this account will be received over a
three-year period with interest compounded monthly at the floating prime rate.
As of March 31, 1999, RHC had an outstanding receivable balance owed to the
Company of $798,965. The Company has imputed interest on this balance during the
first quarter of 1999 in the amount of $11,878.
9
<PAGE>
AMERICAN CORPORATE INVESTORS, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 1999
NOTE 4- COMMITMENTS
The Company leases its office facilities in Boca Raton, Florida under a
five-year lease agreement, which commenced in August 1997. Future annual
commitments are as follows:
<TABLE>
<S> <C>
1998 $13,201
1999 $47,111
2000 $24,223
</TABLE>
The rent on the office facilities in the Abu Dhabi Emirate is prepaid on an
annual basis and is paid for through September 1999 and is recorded as a prepaid
expense in these consolidated financial statements.
In addition, RMC had entered into an agreement to provide financing for the
construction of 83 apartment and villa units in Al Ain City, Abu Dhabi, United
Emirates with the licensed owner of the land being developed. Under the terms of
the agreement, RMC was obligated to finance the total construction costs of the
project, including licensing fees, while in return receiving a mortgage on the
property developed. The contracted cost of the project is $11,475,410. The
Company has provided $2,000,000 in funding for this project through December 31,
1998.
On April 20, 1999, the parties mutually agreed to cancel this financing
agreement whereby the Company is relieved of its financing obligation and has
received an unsecured promissory note for $2,000,000 payable at 12/31/2001 from
the owner of the land being developed.
NOTE 5- CONTINGENCIES
Substantially all the operations of the Company are conducted in Italy and the
United Arab Emirates. Such operations are affected by the domestic and political
developments occurring there. The degree of theses occurrences and their overall
affect on the Company cannot be predicted but could be material in nature.
In addition, all business activity of a foreign corporation in Abu Dhabi
requires the corporation to be sponsored by an Abu Dhabi national. As of
December 31, 1998, the Company's sponsorship agreements in effect will expire in
late 1999 and early 2000. Normally, the sponsorship agreement provides for an
annual fee to be prepaid to the sponsor and for the sponsor to share in the
proceeds of a completed project on a percentage basis. The agreements are
cancelable, at will, by the sponsor. Cancellation of the sponsorship agreements
could have a material adverse affect on the Company's ability to operate as a
going concern in the United Arab Emirates.
10
<PAGE>
AMERICAN CORPORATE INVESTORS, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 1999
NOTE 6- LEGAL MATTERS
In May 1996, legal actions were filed against the Company and its principal
stockholder. A Russian entity has alleged that it is owed $12 million from a
former affiliated entity's failure to comply with the terms of an oil-trading
contract. The Company has vigorously defended itself against this action and it
is management's position that the eventual disposition of this matter will not
have a material adverse affect on the Company's financial position. Accordingly,
no provision for any loss as a result from the resolution of this matter has
been made.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL - FORWARD LOOKING STATEMENTS.
Certain statements made in this report on form 10Q are "forward looking"
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Such statements involve known and unknown risks, uncertainties, and other
factors that may cause actual results, performance, or achievements of the
Company to be materially different from any future results implied by such
forward looking statements. Although the Company believes that the expectations
reflected in such forward looking statements are based upon reasonable
assumptions, the Company's actual results could differ materially from those set
in the forward-looking statements. Certain factors that might cause such a
difference might include the following: the securing of additional or the
renewal of existing construction contracts, the growth of the market for the
Company's services, the effects of the European economic unification upon the
Company's ability to secure additional business, the ability of the Company to
secure significant additional financing to meet the Company's financing
obligations of various real estate and construction projects the Company has
entered into in the UAE.
RESULTS OF OPERATIONS.
Revenues for the first quarter of 1999 were higher than the comparable period
for 1998 ($444,723 as compared to $255,733) by 73%. Revenues consist mostly of
engineering services performed by Ramoil Engineering S.p.a. (RME), Registrant's
wholly owned subsidiary. Corresponding costs of revenues also increased by
approximately 48% over the first quarter of fiscal 1998 and gross profit
percentage for the first quarter of 1999 climbed to 49% compared with 41% for
the similar period in 1998. The increase in gross margins is due primarily to
revenues in the first quarter being generated mostly by engineering services as
opposed to sales of construction goods where gross margins are lower. The
increase in total revenues during this period is due to increased sales of both
engineering services and construction goods rather than to increases in prices.
Total operating expenses of $302,352 during the first quarter of fiscal 1999
were 14% lower than for the comparable period in 1998. This is primarily due to
a number of significant cuts in staff and overhead costs made by RME according
to its restructuring plan implemented in 1997. Most significantly, RME cut its
workforce from 42 employees to 12 employees during fiscal years 1997 and 1998.
The resultant savings associated with this work force cut has served to
significantly reduce the Company's overall overhead costs. In addition, RME
management plan has called for emphasizing engineering services as opposed to
manufacturing of finished goods. This has resulted in lower overhead costs and
an increased flexibility of operation.
As previously reported, the Company opened a branch office in Abu Dhabi, United
Arab Emirates in order to conduct business and explore new markets in the
region. In early 1997 Registrant entered into a sponsorship agreement with
Sheikh Hazza Bin Zayed Al-Nahyan, Chairman of National Security for the UAE and
Chairman of Saadiyat Free Zone. Under its terms, the sponsor provides consulting
and mediation services in the emerging markets of Abu
12
<PAGE>
Dhabi. The salaries and overhead of the branch office are funded by the Company
on a monthly basis. The total cost of the Abu Dhabi branch office was $133,331
for the quarter ended March 31, 1999. The cost of this branch office was
significantly lower than the first quarter of 1998 as the firm was still in the
developmental stage in the prior period. The office consists of two engineers
and support staff. Management feels that the development of the Abu Dhabi branch
office is complete and does not foresee any significant cost increase from the
current levels.
During the first quarter of fiscal 1999, the Company received non interest
bearing advances from two investors in the amount of $1,399,395 that were used
to fund further construction of the City Mix plant. This amount has been
recorded in the financial statements as "Equipment loans & notes payable."
DISCUSSION OF FINANCIAL CONDITION
On a consolidated basis, as of March 31, 1999 the Company had total assets of
$10,712,040, as compared with $9,700,684 at December 31, 1999, with total
liabilities of $4,478,867, compared to $3,283,288 for December 31, 1998. Of the
Company's assets at March 31, 1999, cash and cash equivalent accounted for
$66,160 and $663,745 represents trade accounts receivable (compared to $5,681
and $556,972 respectively at December 31, 1998). The increase in the Company's
current assets at March 31, 1999 was principally due to the increases in cash,
trade accounts receivable and a minor increase in inventory . However, the
overall increase in total assets resulted, for the most part, from a significant
increase in property, plant and equipment attributable to City Mix project, and
an increase in amount due from affiliates.
At March 31, 1999, the Company reflected a small increase in current
liabilities, attributable primarily to increases in accounts payable, as
compared to December 31, 1999. Further, long term liabilities also increases due
principally to increases in equipment loans and notes payable.
At March 31, 1999, the Company's total stockholders' equity decreased slightly
to $12,466,346, as compared to $12,834,792 at December 31, 1998, due to the
Company's continued operating losses, which dropped to $122,386 in the first
quarter of fiscal 1999 compared to $252,832 in the same period last year. This
resulted in the Company's accumulated deficit increasing to $6,144,901 as
compared to $6,022,515 at the end of 1998. The principal source of funds for the
Company's operations have been, and continue to be, revenues earned by
Engineering and the continued financial support of the Company's major
shareholder, both of which factors are essential to the Company ability to
continue operations.
During the fiscal year ending December 31, 1999, the Company will face
substantial expenditures in connection with the projects now committed to in the
UAE. In addition, the Company will require approximately $165 Million in order
to pay for the shares of the Saadyiat Free Trade Zone Authority. This payment
must be made within 60 days following the official grant of option to purchase
these shares, or the Company will lose its right to acquire such shares. At
present, management has not identified any funding source able or willing to
assist the Company in meeting either of these commitments.
13
<PAGE>
Based upon available cash on hand and expected revenues from the operations of
Engineering, management is of the opinion that it will not have adequate
available funds to meet its anticipated capital expenditures and cash needs for
fiscal 1999. Therefore, unless a funding source is identified and appropriate
funding agreements reached, of which there can be no assurance, it is unlikely
that the Company will be able to meet any of its funding commitments for the
projects now under way in the UAE, except, in management's opinion, the funding
needs for the City Mix Project. However, it is uncertain as to what effect a
default in any of its funding commitments in the UAE will have. It is possible
that the Company's sponsor will terminate his sponsorship and support of the
Company, in which event the Company will no longer be able to conduct any
operations in the UAE and may suffer a loss of all funds invested in those
project to date. In such an event, it is highly unlikely that the Company will
able to re-establish any commercial operations within the forseeable future.
TRENDS AFFECTING LIQUIDITY, CAPITAL RESOURCES AND OPERATIONS
Over the past decade, economic conditions worldwide have favored the development
of business oriented projects designed to meet the needs of developing business
and financial interests in many developing areas. Among the fastest growing
areas in the world is the Middle East. Combining the great wealth that come from
extensive oil-related interests with diminished threats of war and terrorist
activities, the UAE has emerged as a leader in this region. Management believes
this trend, coupled with the support of the Company's sponsor, who himself is a
recognized leader in the region, has situated the Company in a position to
participate in the growth of the UAE. Provided the Company can meet its
financial obligations under the various projects discussed above, management
believes it can be an integral part of the growth being experienced in the UAE
and that the benefits to the Company will be a major factor in its growth over
the foreseeable future.
With the collapse of traditional political and ideological barriers, the demand
for products from all parts of the world has increased perceptibly with many
developing and third world nations now looking for products from many different
countries. This has been particularly true of countries with "soft" currencies
(i.e. currencies not readily exchangeable into established currencies such as
British pounds, US dollars, etc.), which at present are unable to pay for their
purchases in US dollars. Management believes that the greatest demand for all
kinds of foreign products will come from these new developing third world
countries over the foreseeable future. This is but one factor that favors the
development of a free trade zone in the Middle East, such as the Saadiyat Free
Trade Zone proposed by the UAE.
Management knows of no other trends reasonably expected to have a material
impact upon the Company's operations or liquidity in the foreseeable future.
INFLATION.
During the past few years inflation worldwide has been relatively stable which,
coupled with the relative strength of the economic conditions in the Middle
East, including the UAE, discussed above, is expected to have a beneficial
effect upon the Company's planned operations in the UAE. In management's
opinion, these favorable conditions are expected to continue for the
14
<PAGE>
foreseeable future and management does not anticipate that inflation will have
an adverse impact upon its operations in the foreseeable future.
YEAR 2000 COMPLIANCE.
The Year 2000 issue is the result of computer programs being written using two
digits, rather than four to define the applicable year. Any of the Company's
computer programs that have data-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.
Based upon an assessment made during fiscal 1998, the Company has begun to
updated all versions of operations and financial software so that all of its
systems will utilize dates beyond December 31, 1999 properly. In addition, the
Company is evaluating its auxiliary computer application systems for Year 2000
compliance, a process which is expected to be completed during the first half
of 1999. The Company believes that the planned modifications and conversions
will allow it to mitigate the Year 2000 issue.
The Company also is in the process of contacting its significant suppliers,
financial institutions and major customers to determine the extent to which
the Company may be vulnerable to any third parties' failure to remediate their
own Year 2000 issues. The financial impact to the Company of bringing its
equipment and systems into Year 2000 compliance is not anticipated to be
material to its financial position or results of operations.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
None during this period.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: June 7, 1999
AMERICAN CORPORATE INVESTORS, INC.
BY: /s/Aleksandr Taflevich
President
16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 66,160
<SECURITIES> 0
<RECEIVABLES> 663,795
<ALLOWANCES> 0
<INVENTORY> 257,118
<CURRENT-ASSETS> 987,003
<PP&E> 7,384,838
<DEPRECIATION> 1,003,131
<TOTAL-ASSETS> 10,712,040
<CURRENT-LIABILITIES> 1,776,160
<BONDS> 0
<COMMON> 564
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 10,712,040
<SALES> 444,723
<TOTAL-REVENUES> 444,723
<CGS> 225,211
<TOTAL-COSTS> 302,352
<OTHER-EXPENSES> 39,546
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (122,386)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (122,386)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
