UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended September 30, 2009
or
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ________ to ________
Commission file number: 0-14807
AMERICAN CLAIMS EVALUATION, INC.
(Exact name of registrant as specified in its charter)
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New York
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11-2601199
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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One Jericho Plaza, Jericho, New York
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11753
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(Address of principal executive offices)
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(Zip Code)
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(516) 938-8000
(Registrants telephone number, including area code)
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 twelve months
(or for 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
þ
No
o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes
o
No
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer or a smaller reporting company. See definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
(Check one)
Large accelerated filer
o
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
þ
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). Yes
o
No
þ
The number of shares outstanding of the Registrants common stock as of November 13, 2009 was
4,754,900.
AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY
INDEX
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Page No.
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PART I FINANCIAL INFORMATION
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Item 1.
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Financial Statements
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Condensed Consolidated Balance Sheets as of September 30, 2009 (unaudited) and March 31, 2009
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3
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Condensed Consolidated Statements of Operations for the Three and Six Months ended September 30, 2009 and 2008 (unaudited)
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4
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Condensed Consolidated Statements of Cash Flows for the Six Months ended September 30, 2009 and 2008 (unaudited)
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5
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Notes to Condensed Consolidated Financial Statements (unaudited)
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6 - 10
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Item 2.
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Managements Discussion and Analysis of Financial Condition and Results of Operations
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10 - 11
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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12
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Item 4T.
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Controls and Procedures
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12
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PART II OTHER INFORMATION
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Item 6.
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Exhibits
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13
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SIGNATURES
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14
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements.
AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
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Sept. 30, 2009
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Mar. 31, 2009
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(Unaudited)
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Assets
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Current assets:
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Cash and cash equivalents
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$
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3,916,082
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$
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4,143,445
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Accounts receivable, net
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814,931
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847,510
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Receivable from former ITG shareholders
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170,715
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Prepaid expenses and other current assets
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59,569
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119,514
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Total current assets
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4,790,582
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5,281,184
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Property and equipment, net
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203,335
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235,493
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Goodwill
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145,000
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750,000
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Intangible assets, net
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557,855
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Other assets
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17,415
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17,415
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Total assets
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$
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5,714,187
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$
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6,284,092
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Liabilities and Stockholders Equity
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Current liabilities:
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Accounts payable
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$
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38,749
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$
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99,492
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Accrued expenses
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497,565
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604,626
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Capital leases payable current portion
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18,879
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18,051
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Total current liabilities
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555,193
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722,169
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Long-term liabilities:
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Capital leases payable net of current portion
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17,895
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27,546
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Commitments
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Stockholders equity:
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Common stock, $.01 par value; authorized
20,000,000 shares; issued 5,050,000 shares;
outstanding 4,754,900 shares
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50,500
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50,500
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Additional paid-in capital
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4,952,199
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4,952,199
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Retained earnings
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605,673
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998,951
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5,608,372
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6,001,650
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Treasury stock, at cost
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(467,273
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(467,273
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Total stockholders equity
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5,141,099
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5,534,377
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Total liabilities and stockholders equity
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$
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5,714,187
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$
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6,284,092
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See accompanying notes to condensed consolidated financial statements.
3
AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Operations
(Unaudited)
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Three months ended
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Six months ended
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Sept. 30,
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Sept. 30,
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Sept. 30,
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Sept. 30,
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2009
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2008
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2009
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2008
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Revenues
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$
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1,317,905
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$
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247,690
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$
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3,224,996
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$
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247,690
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Cost of services
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964,137
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175,334
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2,240,686
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175,334
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Gross margin
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353,768
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72,356
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984,310
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72,356
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Selling, general and
administrative expenses
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708,745
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254,500
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1,383,424
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461,611
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Operating loss from
continuing operations
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(354,977
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(182,144
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(399,114
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(389,255
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Other income (expense):
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Interest income
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2,390
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35,907
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7,808
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77,706
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Interest expense
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(921
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(260
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(1,972
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(260
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Loss from continuing
operations
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(353,508
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(146,497
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(393,278
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(311,809
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Discontinued operations:
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Gain (loss) from discontinued
operations
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3,832
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(1,996
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Gain on sale of discontinued
operations
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90,513
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90,513
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Net loss
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$
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(353,508
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$
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(52,152
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)
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$
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(393,278
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$
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(223,292
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Net earnings (loss) per share:
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From continuing operations
basic and diluted
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$
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(0.07
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$
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(0.03
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$
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(0.08
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$
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(0.07
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From discontinued operations
basic and diluted
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$
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0.00
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$
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0.02
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$
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0.00
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$
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0.02
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Weighted average shares
basic and diluted
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4,754,900
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4,761,800
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4,754,900
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4,761,800
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See accompanying notes to condensed consolidated financial statements.
4
AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
(Unaudited)
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Six months ended
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Sept. 30,
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Sept. 30,
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2009
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2008
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Cash flows from operating activities:
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Loss from continuing operations
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$
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(393,278
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)
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$
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(311,809
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)
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Adjustments to reconcile net loss to net cash
used in operating activities:
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Depreciation and amortization
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102,307
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15,628
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Stock-based compensation expense
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15,600
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Changes in operating assets and liabilities:
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Accounts receivable
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32,579
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(44,485
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)
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Prepaid expenses and other current assets
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29,362
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24,932
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Accounts payable
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(60,743
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)
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(46,947
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)
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Accrued expenses
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(107,061
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)
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64,317
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(3,556
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)
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29,045
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Net cash used in operating activities of
continuing operations
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(396,834
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)
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(282,764
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Operating activities of discontinued operations
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34,439
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Net cash used in operating activities
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(396,834
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)
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(248,325
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)
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Cash flows from investing activities:
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Acquisition of business, net of cash acquired
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(568,375
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Acquisition escrow refund
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30,583
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Proceeds from acquisition purchase price adjustment
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170,715
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Proceeds from sale of subsidiary, net of cash divested
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149,391
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Capital expenditures
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(23,004
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)
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Net cash provided by (used in) investing activities
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178,294
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(418,984
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Investing activities of discontinued operations
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(9,452
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)
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Net cash provided by (used in) investing
activities
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178,294
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(428,436
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)
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Cash flows from financing activities:
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Principal payment on debt
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(1,105,356
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)
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Principal payment on capital leases payable
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(8,823
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)
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(1,670
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)
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Net cash used in financing activities
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(8,823
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)
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(1,107,026
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)
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Net decrease in cash and cash equivalents
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(227,363
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)
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(1,783,787
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)
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Cash and cash equivalents at beginning of period
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4,143,445
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6,239,442
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Cash and cash equivalents at end of period
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$
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3,916,082
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$
|
4,455,655
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Supplemental disclosure of cash flow information:
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Cash paid during the period for:
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Interest
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$
|
1,972
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|
$
|
260
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|
|
|
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|
|
See accompanying notes to condensed consolidated financial statements.
5
AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
September 30, 2009
(Unaudited)
Overview
American Claims Evaluation, Inc. (together with its subsidiary, we, our, us, or the
Company) provides a comprehensive range of services to children with developmental delays and
disabilities in New York State and has developed a reputation for providing well-rounded
therapeutic solutions through our wholly owned subsidiary, Interactive Therapy Group Consultants,
Inc. (ITG).
Basis of Presentation
The accompanying unaudited consolidated financial statements and footnotes have been condensed and
therefore do not contain all disclosures required by generally accepted accounting principles in
the United States of America (GAAP). In our opinion, these financial statements reflect all
adjustments, consisting of normal recurring adjustments, necessary to make the consolidated
financial position, results of operations and cash flows for the interim periods presented not
misleading. Results for interim periods are not necessarily indicative of results which may be
achieved for a full year.
Accordingly, these condensed consolidated financial statements should be read in conjunction with
our audited consolidated financial statements and the notes thereto contained in our Annual Report
on Form 10-K for the fiscal year ended March 31, 2009 (the Annual Report), as filed with the
Securities and Exchange Commission (SEC).
Use of Estimates
The preparation of financial statements in conformity with GAAP requires that we make estimates and
assumptions that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reported period. Actual results could differ from those
estimates.
Recently Implemented Accounting Guidance
In June 2009, the Financial Accounting Standards Board (FASB) issued new accounting guidance that
established the FASB Accounting Standards Codification (Codification or ASC) as the single
source of authoritative GAAP to be applied by nongovernmental entities, except for the rules and
interpretive releases of the SEC under authority of federal securities laws, which are sources of
authoritative GAAP for SEC registrants. The FASB will no longer issue new standards in the form of
Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts; instead the FASB will
issue Accounting Standards Updates. Accounting Standards Updates will not be authoritative in their
own right as they will only serve to update the Codification. These changes and the Codification
itself do not change GAAP. This new guidance became effective for interim and annual periods ending
after September 15, 2009. Other than the manner in which new accounting guidance is referenced,
the adoption of these changes did not have a material effect on our consolidated financial
statements.
In December 2007, new accounting guidance on business combinations was issued which established
principles and requirements as to how acquirers recognize and measure in these financial statements
the identifiable assets acquired, the liabilities assumed, noncontrolling interests and goodwill
acquired in the business combination or a gain from a bargain purchase. This guidance is effective
for business combinations with an acquisition date on or after the beginning of the first annual
reporting period
6
beginning on or after December 15, 2008. This guidance will have an impact on our accounting for
any future business acquisitions.
In December 2007, the FASB issued new accounting guidance, under ASC Topic 810 on consolidations,
which establishes the accounting for noncontrolling interests in a subsidiary and the
deconsolidation of a subsidiary. This guidance requires (a) the ownership interest in the
subsidiary held by parties other than the parent to be clearly identified and presented in the
consolidated balance sheet within equity, but separate from the parents equity, (b) the amount of
consolidated net income attributable to the parent and to the noncontrolling interest to be clearly
identified and presented on the face of the consolidated statement of operations and (c) changes in
a parents ownership interest while the parent retains its controlling financial interest in its
subsidiary to be accounted for consistently. Entities must provide sufficient disclosures that
clearly identify and distinguish between the interests of the parent and the interests of the
noncontrolling owners. This guidance is effective for financial statements issued for fiscal years
beginning on or after December 15, 2008 and interim periods within those fiscal years. This
guidance may have an impact on our accounting for any future business acquisitions.
In April 2008, the FASB issued new accounting guidance, under ASC Topic 350 on intangibles, which
outlines the requirements for determining the useful life of an intangible asset. The new guidance
is intended to improve the consistency between the useful life of a recognized intangible asset and
the period of expected cash flows used to measure the fair value of the asset when the underlying
arrangement includes renewal or extension of terms that would require substantial costs or result
in a material modification to the asset upon renewal or extension. Companies estimating the useful
life of a recognized intangible asset must now consider their historical experience in renewing or
extending similar arrangements or, in the absence of historical experience, must consider
assumptions that market participants would use about renewal or extension as adjusted for
entity-specific factors. This guidance is effective for financial statements issued for fiscal
years beginning on or after December 15, 2008 and interim periods within those fiscal years. We
expect that the new guidance may have an impact on the accounting for any future business
acquisitions.
In June 2008, the FASB issued new accounting guidance, under ASC Topic 260 on earnings per share,
related to the determination of whether instruments granted in share-based payment transactions are
participating securities. This guidance clarifies that all outstanding unvested share-based payment
awards that contain rights to nonforfeitable dividends participate in undistributed earnings with
common shareholders. Awards of this nature are considered participating securities and the
two-class method of computing basic and diluted earnings per share must be applied. This guidance
is effective for financial statements issued for fiscal years beginning on or after December 15,
2008 and interim periods within those fiscal years. The adoption of this guidance did not have a
material effect on our consolidated financial statements.
In November 2008, the FASB issued new accounting guidance, under ASC Topic 323 on investments
equity method and joint ventures, relating to the accounting for equity method investments. This
guidance addresses how the initial carrying value of an equity method investment should be
determined, how it should be tested for impairment, and how changes in classification from equity
method to cost method should be treated. This guidance is effective on a prospective basis in
fiscal years beginning on or after December 15, 2008 and interim periods within those fiscal years.
We expect this guidance to have an impact on its accounting for any future business acquisitions.
In May 2009, the FASB issued new accounting guidance, under ASC Topic 855 on subsequent events,
which sets forth a) the period after the balance sheet date during which management of a reporting
entity should evaluate events or transactions that may occur for potential recognition or
disclosure in the financial statements, b) the circumstances under which an entity should recognize
events or transactions occurring after the balance sheet date in its financial statements, and c)
the disclosures that an entity should make about events or transactions that occurred after the
balance sheet date. This guidance was
7
effective for interim and annual periods ending after June 15, 2009. The adoption of this guidance
did not have a material effect on our consolidated financial statements.
Revenue Recognition
We recognize revenue for services rendered when there is evidence of billable time expended and
recoverability is reasonably assured. Deferred revenue is recorded for federal flow-through
funding attributable to special education programs when invoiced and recognized over the applicable
program periods.
Credit Risk
Service revenue is concentrated within a limited number of clients throughout New York State;
municipalities within New York State provide substantial and significant revenue to us. This
concentration of customers may impact our overall exposure to credit risk, either positively or
negatively, in that our customers may be similarly affected by changes in economic or other
conditions in New York State.
Goodwill and Intangible Assets
In September 2008, we acquired all of the outstanding shares of ITG for an adjusted net purchase
price of $174,632. The purchase price of the acquisition exceeded the carrying value of the assets
acquired. The allocation of the excess of the purchase price over the fair value of the tangible
assets acquired was classified as follows:
|
|
|
|
|
Customer contracts
|
|
$
|
570,000
|
|
Non-compete convenant
|
|
|
35,000
|
|
Goodwill and other non-amortizable intangibles
|
|
|
145,000
|
|
|
|
|
|
|
|
|
|
|
Total excess purchase price over fair value of tangible assets acquired
|
|
$
|
750,000
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|
|
|
|
|
Customer contracts are being amortized over a fifteen-year period and the non-compete covenant
is being amortized over a five-year period. Amortization expense totaling $47,145 for the six
months ended September 30, 2009 is included in selling, general and administrative expenses in the
consolidated statements of operations.
Accrued Expenses
The components of accrued expenses were as follows:
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|
|
|
|
|
|
|
|
Sept. 30, 2009
|
|
|
March 31, 2009
|
|
Accrued compensation and related taxes
|
|
$
|
463,440
|
|
|
$
|
553,926
|
|
Other
|
|
|
34,125
|
|
|
|
50,700
|
|
|
|
|
|
|
|
|
|
|
$
|
497,565
|
|
|
$
|
604,626
|
|
|
|
|
|
|
|
|
Seasonality
Our business is moderately seasonal in nature based on the school year. Accordingly, our second
fiscal quarter (the three month period ending September 30), which includes two full months during
which schools are not in session (July and August), is the quarter in which we achieve our lowest
volume of revenues.
8
Net Earnings (Loss) Per Share
Basic earnings (loss) per share is based on the weighted average number of common shares
outstanding. Diluted earnings (loss) per share reflects the maximum dilution from potential common
shares issuable pursuant to the exercise of stock options, if dilutive, outstanding during each
period. Our net loss and weighted average shares outstanding used for computing diluted loss per
share for continuing operations and discontinued operations were the same as those used for
computing basic loss per share for the three and six months ended September 30, 2009 and 2008
because the inclusion of common stock equivalents to the calculation of diluted loss per share for
continuing operations would be anti-dilutive. Potentially dilutive securities consisting of
employee and director stock options to purchase 1,221,000 and 1,233,500 shares as of September 30,
2009 and 2008, respectively, were not included in the diluted net loss per share calculations
because their effect would have been anti-dilutive.
Stock Option Plans
We accounted for stock-based compensation by recording stock options at their fair value on the
measurement date, which is typically the date the services are performed (generally the vesting
period of the grant).
There were no stock options granted during the six month period ended September 30, 2009.
Stock-based compensation totaling $15,600 was recognized during the six months ended September 30,
2008 based on the fair value of stock options granted. We estimate the fair value of stock options
granted using the Black-Scholes option pricing model.
At September 30, 2009, all outstanding options to purchase shares are fully vested. However,
certain option grants contain disposition restrictions which prohibit the sale of 50% of the shares
obtained through the exercise of such awarded options until the first anniversary of the grant date
and the remaining 50% of the shares obtained through the exercise of the awarded options until the
second anniversary of the grant date. At September 30, 2009, there was no unrecognized
compensation cost related to non-vested stock option awards.
The following table summarizes information about stock option activity for the six months ended
September 30, 2009:
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|
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|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Weighted
|
|
|
|
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|
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|
|
Weighted
|
|
|
Average
|
|
|
|
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|
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|
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|
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Average
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Remaining
|
|
|
Aggregate
|
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|
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Exercise
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Contractual
|
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Intrinsic
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Shares
|
|
|
Price
|
|
|
Term
|
|
|
Value
|
|
Outstanding at March 31, 2009
|
|
|
1,246,000
|
|
|
$
|
2.12
|
|
|
5.3 years
|
|
|
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|
Granted
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$
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|
|
|
|
|
|
|
|
|
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Expired
|
|
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(25,000
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)
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|
$
|
2.50
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at September 30, 2009
|
|
|
1,221,000
|
|
|
$
|
2.11
|
|
|
4.9 years
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
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|
|
Exercisable at September 30, 2009
|
|
|
1,221,000
|
|
|
$
|
2.11
|
|
|
4.9 years
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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There were no options outstanding with an exercise price less than the closing price of our
shares of $0.65 as of September 30, 2009. Accordingly, there was no intrinsic value associated
with outstanding options at such date.
Regulatory Matters
We are currently exploring alternatives to ITGs corporate structure concerning non-compliance
issues regarding the practice of certain licensed professions in the State of New York. If a
change in professional practice structure is deemed necessary, we will take all appropriate
measures to assure
9
compliance on a timely basis. Revenues derived from services performed by these
licensed professionals approximate 23% of total revenues for the six months ended September 30,
2009.
Subsequent Events
We have completed an evaluation of the impact of any subsequent events through November 13, 2009,
the date these financial statements were issued, and determined that there were no subsequent
events requiring disclosure in or adjustment to these financial statements.
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
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. Our 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 and our ability to successfully identify and thereafter consummate one or more
acquisitions.
Critical Accounting Policies
Our significant accounting policies are described in Note 1 of the Notes to Consolidated Financial
Statements included in our Annual Report. A discussion of our critical accounting policies and
estimates is included in Managements Discussion and Analysis of Financial Condition and Results of
Operations (the MD&A) in our Annual Report. There have been no material changes to the critical
accounting policies or estimates reported in the MD&A section of our audited financial statements
for the year ended March 31, 2009 as filed with the SEC.
Results of Operations Three and Six Months ended September 30, 2009 and 2008
On September 12, 2008, we completed the disposition of our wholly-owned subsidiary, RPM
Rehabilitation & Associates, Inc. (RPM). The financial statements have been reclassified to
exclude the operating results of RPM from the continuing operations and account for them as
discontinued operations. The following discussion relates only to our continuing operations,
unless otherwise noted.
During the three and six month periods ended September 30, 2009, we recognized revenues of
$1,317,905 and $3,224,996, respectively, from ITGs operations. Revenues for the current quarter
were approximately 31% lower than our first quarter ended June 30, 2009 as a result of the decline
in demand for our services during the summer months when schools are not in session.
The costs of services for the three and six month periods ended September 30, 2009 were
approximately 73.2% and 69.5% of revenue, respectively, consisting of payroll and payroll-related
costs paid to ITGs staff of salaried and per diem clinicians. The cost of services as a
percentage of revenues for the quarter is higher than our previously reported quarter due to
decreased utilization of our salaried clinicians during our slowest operating quarter.
Selling, general and administrative expenses for the three and six month periods ended September
30, 2009 were $708,745 and $1,383,424, respectively, as compared to $254,500 and $461,611 for the
three and six month periods ended September 30, 2008, respectively. The increase in selling, general and
administrative expenses in the current fiscal year versus the prior years comparable periods is
the result of expenses incurred by ITGs operations and the recording of amortization expense for
intangible assets resulting from the ITG acquisition. Excluding ITGs expenses, corporate selling,
general and
10
administrative expenses for the three months ended September 30, 2009 experienced a
slight decrease over the comparable period in the prior year.
Interest income for the three and six months ended September 30, 2009 were $2,390 and $7,808,
respectively, as compared to interest income of $35,907 and $77,706 for the three and six months
ended September 30, 2008, respectively. The decrease in interest income was a result of
substantial declines in prevailing interest rates compounded by a reduction in cash balances
available for investment due to the payment to purchase ITG and subsequent repayment of ITGs bank
debt.
Liquidity and Capital Resources
At September 30, 2009, we had working capital of $4,253,389 as compared to working capital of
$4,559,015 at March 31, 2009. We believe that we have sufficient cash resources and working
capital to meet our present cash requirements.
During the six months ended September 30, 2009, net cash used in operating activities was $396,834,
predominately attributable to the operating loss of $393,278 and partially offset by changes in
operating assets and liabilities.
For the six months ended September 30, 2009, cash flows provided by investing activities related to
the repayment of a receivable from the former shareholders of ITG and the return of funds held in
escrow.
Future minimum lease payments under non-cancelable capital and operating leases and subleases,
exclusive of future escalation charges, for the remainder of the fiscal year ending March 31, 2010
and fiscal years ending thereafter are as follows:
|
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Capital
|
|
|
Operating
|
|
|
|
Leases
|
|
|
Leases
|
|
2010
|
|
$
|
10,762
|
|
|
$
|
106,000
|
|
2011
|
|
|
21,523
|
|
|
|
176,000
|
|
2012
|
|
|
8,004
|
|
|
|
128,000
|
|
2013
|
|
|
|
|
|
|
94,000
|
|
2014
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
Total minimum lease payments
|
|
|
40,289
|
|
|
$
|
509,000
|
|
|
|
|
|
|
|
|
|
Less: Amounts representing interest
|
|
|
(3,515
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Present value of minimum lease payments
|
|
|
36,774
|
|
|
|
|
|
Less: Current portion
|
|
|
(18,879
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term portion of capital leases
|
|
$
|
17,895
|
|
|
|
|
|
|
|
|
|
|
|
|
|
While we have not experienced any significant impact from the general slowdown of the economy
or current global credit crisis, continuing economic deterioration could have a negative impact on
our net revenues and profitability in future periods.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
11
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are subject to interest rate risks that arise from normal business operations. Most of our cash
and cash equivalents are invested at variable rates of interest and decreases in market interest
rates have caused a related significant reduction in our interest income over prior periods.
Item 4T. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure the reliability of the financial
statements and other disclosures included in this Report. As of the end of the fiscal quarter ended
September 30, 2009, we carried out an evaluation, under the supervision and with the participation
of our management, including the Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and procedures pursuant to
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based upon
that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures are effective in timely alerting them to material information
required to be included in our periodic SEC filings.
(b) Changes in Internal Controls over Financial Reporting
There were no changes in our internal controls over financial reporting that occurred during the
quarter ended September 30, 2009 that have materially affected, or are reasonably likely to
materially affect, the internal controls over financial reporting.
We are aware that there is a lack of segregation of duties due to the small number of employees
dealing with general administrative and financial reporting matters. However, we have decided that
considering the employees involved and the control procedures in place, risks associated with such
lack of segregation are mitigated by active management involvement and the potential benefits of
adding employees to clearly segregate duties do not justify the expenses associated with such
increases.
12
PART II OTHER INFORMATION
Item 6. Exhibits.
|
Exhibit 10.17
|
|
Lease Agreement, dated October 19, 2009, with respect to the
Interactive Therapy Group Consultants, Inc. office located at 1870 South Winton
Road, Rochester, NY
|
|
|
Exhibit 31.1
|
|
Section 302 Principal Executive Officer Certification
|
|
|
Exhibit 31.2
|
|
Section 302 Principal Financial Officer Certification
|
|
|
Exhibit 32.1
|
|
Section 1350 Certification
|
|
|
Exhibit 32.2
|
|
Section 1350 Certification
|
13
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.
|
|
|
|
|
|
AMERICAN CLAIMS EVALUATION, INC.
|
|
Date: November 13, 2009
|
By:
|
/s/ Gary Gelman
|
|
|
|
Gary Gelman
|
|
|
|
Chairman of the Board,
President and Chief Executive Officer
|
|
|
|
|
|
Date: November 13, 2009
|
By:
|
/s/ Gary J. Knauer
|
|
|
|
Gary J. Knauer
|
|
|
|
Chief Financial Officer,
Treasurer and Secretary
|
|
|
14
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