10QSB 1 0001.txt QUARTERLY REPORT 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 DECEMBER 31, 2000 ----------------- { } 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 -------------------------------------------- (Address of principal executive offices) (516) 938-8000 ---------------------------------- (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 February 9, 2001. Transitional Small Business Disclosure Format (check one): Yes ___ No _X_ AMERICAN CLAIMS EVALUATION, INC. INDEX PAGE NO. PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets as of December 31, 2000 (unaudited) and March 31, 2000 3 Consolidated Statements of Operations for the Three Months and Nine Months ended December 31, 2000 and 1999 (unaudited) 4 Consolidated Statements of Cash Flows for the Nine Months ended December 31, 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 PART I - FINANCIAL INFORMATION ITEM 1. - FINANCIAL STATEMENTS. ------ AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY Consolidated Balance Sheets DEC.31,2000 MAR.31,2000 ----------- ----------- (Unaudited) ASSETS Current Assets: Cash and cash equivalents $6,907,618 7,452,395 Marketable securities 168,798 644,240 Accounts receivable, net 103,027 88,429 Prepaid expenses 13,612 21,886 Deferred tax asset 3,527 15,677 ---------- ---------- Total current assets 7,196,582 8,222,627 Property and equipment, net 118,586 40,079 Excess cost over fair value of net assets acquired, net 412,068 436,386 ---------- ---------- $7,727,236 8,699,092 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 18,480 18,503 Accrued expenses 77,667 78,691 Income taxes payable 40,576 31,386 ---------- ---------- Total current liabilities 136,723 128,580 ---------- ---------- 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 (131,288) (68,600) Retained earnings 4,459,819 5,377,130 ---------- ---------- 7,888,730 8,868,729 Treasury shares, at cost, 176,500 shares (298,217) (298,217) ---------- ---------- Total stockholders' equity 7,590,513 8,570,512 ---------- ---------- $7,727,236 8,699,092 ========== ========== See accompanying notes to consolidated financial statements. 3 AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY Consolidated Statements of Operations (Unaudited) THREE MONTHS ENDED NINE MONTHS ENDED ---------------------- --------------------- DEC. 31, DEC. 31, DEC. 31, DEC. 31, 2000 1999 2000 1999 ---------- --------- --------- --------- Revenues $ 286,018 276,403 832,842 825,550 Cost of services 139,631 131,608 395,939 383,780 ---------- --------- --------- --------- Gross margin 146,387 144,795 436,903 441,770 Selling, general and administrative expenses 267,984 267,108 795,293 813,108 ---------- --------- --------- --------- Operating loss (121,597) (122,313) (358,390) (371,338) Other income: Interest income 117,320 121,308 361,055 340,948 Investment loss (916,976) -- (916,976) -- Miscellaneous income -- 11,285 1,000 36,399 ---------- --------- --------- --------- Earnings (loss) before provision for income taxes (921,253) 10,280 (913,311) 6,009 Provision for income taxes -- 2,000 4,000 4,000 ---------- --------- --------- --------- Net earnings (loss) $ (921,253) 8,280 (917,311) 2,009 ========== ========= ========= ========= Net earnings (loss) per share: Basic $ (.22) .00 (.21) .00 ========== ========= ========= ========= Diluted $ (.22) .00 (.21) .00 ========== ========= ========= ========= Weighted average common shares outstanding: Basic 4,273,500 4,273,500 4,273,500 4,273,500 ========== ========= ========= ========= Diluted 4,273,500 4,405,702 4,273,500 4,424,089 ========== ========= ========= ========= See accompanying notes to consolidated financial statements. 4 AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY Consolidated Statements of Cash Flows (Unaudited) NINE MONTHS ENDED ----------------------- DEC.31, DEC.31, 2000 1999 ---------- --------- Cash flows from operating activities: Net earnings (loss) $ (917,311) 2,009 ---------- --------- Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Depreciation and amortization 42,710 41,140 Investment impairment 916,976 Changes in assets and liabilities: Accounts receivable (14,598) 35,478 Prepaid expenses 8,274 5,878 Accounts payable (23) (24,432) Accrued expenses (1,024) (15,249) Income taxes payable 9,190 (17,805) ---------- --------- 961,505 25,010 ---------- --------- Net cash provided by operating activities 44,194 27,019 ---------- --------- Cash flows from investing activities: Purchases of marketable securities (492,072) (588,205) Capital expenditures (96,899) (6,457) ---------- --------- Net cash flows used in investing activities (588,971) (594,662) ---------- --------- Net decrease in cash and cash equivalents (544,777) (567,643) Cash and cash equivalents at beginning of period 7,452,395 8,209,421 ---------- --------- Cash and cash equivalents at end of period $6,907,618 7,641,778 ========== ========= Supplemental Disclosure of Cash Flow Information: Income taxes paid $ 2,496 22,500 ========== ========= See accompanying notes to consolidated financial statements. 5 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 nine months ended December 31, 2000 and 1999: THREE MONTHS ENDED NINE MONTHS ENDED --------------------- --------------------- 12/31/00 12/31/99 12/31/00 12/31/99 --------- --------- --------- --------- Numerator: Net earnings (loss) $(921,253) 8,280 (917,311) 2,009 ========= ========= ========= ========= 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 -- 132,202 -- 150,589 --------- --------- --------- --------- Denominator for diluted earnings (loss) per share 4,273,500 4,405,702 4,273,500 4,424,089 ========= ========= Basic earnings (loss) per share $ (.22) .00 (.21) .00 ========= ========= ========= ========= Diluted earnings (loss) per share $ (.22) .00 (.21) .00 ========= ========= ========= ========= Employee stock options totaling 595,500 and 231,500 for the three months ended December 31, 2000 and 1999, respectively, were not included in the net earnings (loss) per share calculations because their effect would have been anti-dilutive. 6 MARKETABLE SECURITIES AND INVESTMENT IMPAIRMENT Marketable securities at 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 are reported as accumulated other comprehensive loss as a separate component of stockholders' equity. During the quarter ended December 31, 2000, the Company recorded an impairment charge of $916,976 related to its investment in IVCO common stock which was judged to have experienced an other than temporary decline in value. 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 nine months ended December 31, 2000 and 1999 was $(979,999) and $(1,941), respectively. Comprehensive income (loss) for the three months ended December 31, 2000 and 1999 was $(468,501) and $4,330, respectively. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. ------- RESULTS OF OPERATIONS - THREE MONTHS AND NINE MONTHS ENDED DECEMBER 31, 2000 AND 1999 Revenues for the three months ended December 31, 2000 totaled $286,018 as compared with the $276,403 reported for the corresponding period ended December 31, 1999. This represents an increase of approximately 3.5%. Revenues for the nine month period ended December 31, 2000 remained relatively consistent with the comparable period ended December 31, 1999. Cost of services increased slightly to 48.8% of revenues for the quarter ended December 31, 2000, as compared to 47.6% of revenues in the same period last year. During the nine months ended December 31, 2000, the cost of services as a percentage of revenues increased to 47.5% from 46.5% in the nine months ended December 31, 1999. Selling, general and administrative expenses remained consistent in the quarter ended December 31, 2000 compared to the quarter ended December 31, 1999. Selling, general and administrative expenses for the nine months ended December 31, 2000 decreased to $795,293 from $813,108 for the nine months ended December 31, 1999. An impairment charge of $916,976 was recorded during the three months ended December 31, 2000 on investments in IVCO Industries, Inc. common stock (NASDAQ:IVCO) for which the decline in market value was deemed to be other than temporary. LIQUIDITY AND CAPITAL RESOURCES At December 31, 2000, the Company had working capital of $7,059,859 as compared to working capital of $8,094,047 at March 31, 2000. During the nine months ended December 31, 2000, working capital was adversely affected by an impairment charge of $916,976 as a result of an other than temporary decline in the value of investments in marketable securities. The Company believes that it has sufficient cash resources and working capital to meet its present cash requirements. During the nine months ended December 31, 2000, cash flows used in investing activities totaling $588,971 consisted of purchases of marketable securities totaling $492,072 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 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 December 31, 2000. 9 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: February 9, 2001 By: /s/ GARY GELMAN ----------------------------------------- Gary Gelman Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer) Date: February 9, 2001 By: /s/ GARY J. KNAUER ----------------------------------------- Gary J. Knauer Chief Financial Officer, Treasurer (Principal Financial and Accounting Officer) and Secretary 10