The meat of today's SEC filing.
TYPE: 10QSB
SEQUENCE: 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 33-4882-D
CLANCY SYSTEMS INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
Colorado 84-1027964
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
2250 S. Oneida #308, Denver, Colorado 80224
(Address of principal executive offices and Zip Code)
(303) 753-0197
(Registrant's telephone number)
N/A
(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
requiredto be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 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 X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of the issuer's classes of common stock,
as of August 13, 1999 is 336,889,149 shares, $.0001 par value.
CLANCY SYSTEMS INTERNATIONAL, INC.
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Balance Sheet - September 30, 1998 and
June 30, 1999 (unaudited) 2 and 3
Statement of Operations - For the Three Months
Ended June 30, 1998 and 1999 (unaudited) 4
Statement of Operations - For the Nine Months
Ended June 30, 1998 and 1999 (unaudited) 5
Statement of Stockholders' Equity - For the Nine
Months Ended June 30, 1999 (unaudited) 6
Statement of Cash Flows - For the Nine Months Ended
June 30, 1998 and 1999 (unaudited) 7
Notes to Unaudited Financial Statements 8
Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION 10
1
CLANCY SYSTEMS INTERNATIONAL, INC.
BALANCE SHEET
September 30, 1998 and June 30, 1999
(Unaudited)
ASSETS
September June
--------- ----
Current assets:
Cash and cash equivalents $ 91,432 $ 200,603
Accounts receivable 244,448 392,166
Inventories (Note 2) 190,960 184,791
Investment in contract, n 23,334 -
Income taxes refundable 16,000 -
---------- ----------
Total current assets 566,174 777,560
Furniture and equipment, at cost:
Office furniture and equipment 235,180 235,180
Equipment under service contracts 1,442,295 1,534,084
---------- ----------
1,677,475 1,769,264
Less accumulated depreciation 1,204,775 1,345,422
---------- ----------
Net furniture and equipment 472,700 423,842
Other assets:
Investment in partnership 329,915 435,535
Deposits and other 28,310 28,310
Deferred tax asset (Note 3) 5,000 -
Software licenses 16,882 -
Software development costs 356,353 388,424
---------- ----------
736,460 852,269
Less accumulated amortization 225,040 251,335
---------- ----------
Net other assets 511,420 600,934
---------- ----------
$1,550,294 $1,802,336
========== ==========
See accompanying notes.
2
CLANCY SYSTEMS INTERNATIONAL, INC.
BALANCE SHEET
September 30, 1998 and June 30, 1999
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
September June
--------- ----
Current liabilities:
Accounts payable $ 37,999 $ -
Note payable - bank - 295,000
Notes payable - related party (Note 4) - 120,000
Income taxes payable - 33,000
Deferred revenue 87,971 134,843
---------- ---------
Total current liabilities 125,970 582,843
Long-term note payable - bank 320,000 -
Stockholders' equity:
Preferred stock, $.0001 par value; 100,000,000
shares authorized, none issued - -
Common stock, $.0001 par value; 800,000,000
shares authorized, 336,889,149 shares issued
and outstanding 33,689 33,689
Additional paid-in capital 1,030,674 1,030,674
Retained earnings 39,961 155,130
---------- ----------
Total stockholders' equity 1,104,324 1,219,493
---------- ----------
$1,550,294 $1,802,336
========== ==========
See accompanying notes.
3
CLANCY SYSTEMS INTERNATIONAL, INC.
STATEMENT OF OPERATIONS
For the Three Months Ended June 30, 1998 and 1999
(Unaudited)
1998 1999
---- ----
Revenues:
Sales $ 36,416 $ 49,331
Service contract income 304,995 268,980
Parking ticket collections 64,777 216,978
---------- ----------
Total revenues 406,188 535,289
Costs and expenses:
Cost of sales 12,828 38,668
Cost of services 119,404 168,638
Cost of parking ticket collections 49,189 70,041
General and administrative 94,720 158,309
Research and development 11,509 14,443
---------- ----------
Total costs and expenses 287,650 450,099
---------- ----------
Income from operations 118,538 85,190
Other income (expense):
Interest income 678 565
Interest expense - (10,108)
---------- ----------
Total other income (expense) 678 (9,543)
---------- ----------
Income before provision for income taxes 119,216 75,647
Provision for income taxes (35,000) (19,000)
Income in equity basis partnership (net of $4,200
tax provision) - 7,300
----------- ----------
Net income $ 84,216 $ 63,947
=========== ==========
Basic net income per common share $ * $ *
=========== ===========
Weighted average number of shares outstanding 336,900,000 336,900,000
=========== ===========
* Less than $.01 per share
See accompanying notes.
4
CLANCY SYSTEMS INTERNATIONAL, INC.
STATEMENT OF OPERATIONS
For the Nine Months Ended June 30, 1998 and 1999
(Unaudited)
1998 1999
---- ----
Revenues:
Sales $ 178,887 $ 196,323
Service contract income 813,821 843,621
Parking ticket collections 129,227 380,308
----------- ----------
Total revenues 1,121,935 1,420,252
Costs and expenses:
Cost of sales 102,225 77,242
Cost of services 404,186 441,397
Cost of parking ticket collections 98,738 231,310
General and administrative 336,387 409,847
Research and development 37,024 37,816
----------- ----------
Total costs and expenses 978,560 1,197,612
----------- ----------
Income from operations 143,375 222,640
Other income (expense):
Interest income 5,950 1,525
Interest expense (8,507) (25,116)
----------- ----------
Total other income (expense) (2,557) (23,591)
----------- ----------
Income before provision for income taxes 140,818 199,049
Provision for income taxes (42,831) (63,500)
Loss in equity basis partnership (net of tax
benefit of $9,500) - (20,380)
----------- ----------
Net income $ 97,987 $ 115,169
=========== ==========
Basic net income per common share $ * $ *
=========== ===========
Weighted average number of shares outstanding 336,900,000 336,900,000
=========== ===========
* Less than $.01 per share
See accompanying ntoes.
5
CLANCY SYSTEMS INTERNATIONAL, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
For the Nine Months Ended June 30, 1999
(Unaudited)
Additional
Common stock paid-in Retained
Shares Amount capital earnings
------ ------ ---------- --------
Balance, September 30, 1998 336,889,149 $33,689 $1,030,674 $ 39,961
Net income for the nine months ended
June 30, 1999 - - - 115,169
----------- ------- ---------- --------
Balance, June 30, 1999 336,889,149 $33,689 $1,030,674 $155,130
=========== ======= ========== ========
See accompanying notes.
6
CLANCY SYSTEMS INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS
For the Nine Months Ended June 30, 1998 and 1999
(Unaudited)
1998 1999
---- ----
Cash flows from operating activities:
Net income $ 97,987 $115,169
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 186,631 207,158
Decrease in deferred tax asset 3,000 5,000
Increase in accounts receivable (82,563) (147,718)
Decrease in inventories 22,116 6,169
Increase in prepaid expense (32,084) -
Loss in equity basis partnership - 29,880
Decrease in accounts payable - (37,999)
Decrease in accrued expenses (2,286) -
Decrease in income taxes refundable - 16,000
Increase in income taxes payable 39,000 33,000
Increase (decrease) in deferred revenue (29,898) 46,872
Decrease in warranty reserve (400) -
-------- --------
Total adjustments 103,516 158,362
-------- --------
Net cash provided by operating activities 201,503 273,531
Cash flows from investing activities:
Acquisition of furniture and equipment - net (185,466) (91,789)
Increase in software development costs (48,474) (32,071)
Investment in partnership - (135,500)
Increase in deposits and other assets (76,475) -
-------- --------
Net cash used in investing activities (310,415) (259,360)
Cash flows from financing activities:
Proceeds from note payable - bank 100,000 -
Proceeds from notes payable - related party - 120,000
Payments on note payable - bank - (25,000)
-------- --------
Net cash provided by financing activities 100,000 95,000
-------- --------
Increase (decrease) in cash and cash equivalents (8,912) 109,171
Cash and cash equivalents at beginning of period 199,195 91,432
-------- --------
Cash and cash equivalents at end of period $190,283 $200,603
======== ========
See accompanying notes.
7
CLANCY SYSTEMS INTERNATIONAL, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 1999
1. Basis of presentation
The accompanying financial statements have been prepared by the
Company, without audit. In the opinion of management, the
accompanying unaudited financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary for a fair
presentation of the financial position as of September 30, 1998
and June 30, 1999, and the results of operations and cash flows for the
periods ended June 30, 1998 and 1999.
2. Inventories
Inventories consist of the following at:
September 30, June 30,
1998 1999
---- ----
Finished goods $ 19,690 $ 9,240
Work in process - 46,198
Purchased parts and supplies 171,270 129,353
-------- -------
$190,960 $184,791
======== ========
3. Income taxes
The provision for income taxes for the three months and nine months
ended June 30, 1998 and 1999 is based on the expected tax rate for the
year.
As of September 30, 1998 and June 30, 1999, total deferred tax
assets and liabilities are as follows:
September 30, June 30,
1998 1999
---- ----
Deferred tax assets $10,000 $ -
Deferred tax liabilities (5,000) -
------- --------
$ 5,000 $ -
======= ========
4. Notes payable - related party
On October 1, 1998, the Company executed a one-year note payable for
$25,000 with an officer of the Company. The note is unsecured, bears
interest at 8%, and is due on October 1, 1999.
On December 1, 1998, the Company executed a one-year note payable for
$30,000 with an officer of the Company. The note is unsecured, bears
interest at 8%, and is due on December 1, 1999.
8
CLANCY SYSTEMS INTERNATIONAL, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 1999
4. Notes payable - related party (continued)
On January 1, 1999, the Company executed a one-year note payable for
$20,000 with an officer of the Company. The note is unsecured, bears
interest at 9%, and is due on January 1, 2000.
On February 1, 1999, the Company executed a one-year note payable for
$20,000 with an officer of the Company. The note is unsecured, bears
interest at 9%, and is due on February 1, 2000.
On March 1, 1999, the Company executed a one-year note payable for
$25,000 with an officer of the Company. The note is unsecured, bears
interest at 9%, and is due on March 1, 2000.
9
Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Material Changes in Financial Condition
At June 30, 1999 the Company had working capital of $194,717
derived primarily from contract sales, as compared to working capital
of $440,204 at September 30, 1998. The Company anticipates that
working capital will be sufficient to meet its working capital
requirements for the current year. Funds will continue to be used
for general and administrative purposes, equipment purchases,
equipment manufacturing, travel, marketing and research and development.
Material Changes in Results of Operations
During the quarter ended June 30, 1999 the Company generated revenues
from contract sales from its professional services contracts,
sales, and privatization contracts. Berkeley, CA and Oklahoma City,
OK each generated revenues in excess of 5% of total revenues. New
clients added during the quarter include Longview, WA; Allright,
Buffalo, NY and Allright, Rochester, NY.
Revenues for the nine-month period ended June 30, 1999 were 27% higher
than the same period in the prior year. Expenses for the nine-month
period ended June 30, 1999 were 22% higher than the same period in the
prior year. The increases in both revenue and expenses were
mainly attributable to the addition of new service contracts during
the period. The Company reported a net profit of $115,169 for the
nine-month period ended June 30, 1999 as compared to a profit of
$97,987 for the same period in the prior year.
During the fiscal year ended September 30, 1998, the Company
upgraded substantially all of its clients to its new year 2000 compliant
software and hardware. Costs associated with the software portion of
the year 2000 upgrade have been insignificant because the Company is
continually upgrading and improving its software for its clients as
a normal course of business. Management estimates costs associated
with completing replacement of hardware to approximate $65,000 during
fiscal year 1999.
Robert Brodbeck resigned his positions as Director and Chairman of the
Board of the Company effective June 25, 1999.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule (1)
(b) During the quarter ended June 30, 1999, the Registrant has
filed no reports on Form 8-K
(1) Filed herewith
10
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.
Date: August 16, 1999 CLANCY SYSTEMS INTERNATIONAL, INC.
(Registrant)
By: /s/ Stanley J. Wolfson
Stanley J. Wolfson, President
and Chief Executive Officer
11
TYPE: EX-27
SEQUENCE: 2
DESCRIPTION: FDS699
ARTICLE: 5
This schedule contains summary financial information extracted
from form 10QSB statements for period ended 6/30/99 and is qualified
in its entirety by reference to such form 10QSB for period ended
6/30/99
PERIOD TYPE: 9-MOS
FISCAL YEAR END: SEP-30-1999
PERIOD END: JUN-30-1999
CASH: 200,603
SECURITIES: 0
RECEIVABLES: 392,166
ALLOWANCES: 0
INVENTORY: 184,791
CURRENT ASSETS: 777,560
PP&E: 1,769,264
DEPRECIATION: 1,345,422
TOTAL ASSETS: 1,802,336
CURRENT LIABILITIES: 582,843
BONDS: 0
PREFERRED MANDATORY: 0
PREFERRED: 0
COMMON: 33,689
OTHER SE: 1,185,804
TOTAL LIABILITY AND EQUITY: 1,802,336
SALES: 196,323
TOTAL REVENUES: 1,420,252
CGS: 77,242
TOTAL COSTS: 749,949
OTHER EXPENSES: 447,663
LOSS PROVISION: 0
INTEREST EXPENSE: 25,116
INCOME PRETAX: 199,049
INCOME TAX: 69,500
INCOME CONTINUING: 115,169
DISCONTINUED: 0
EXTRAORDINARY: 0
CHANGES: 0
NET INCOME: 115,169
EPS BASIC: 0
EPS DILUTED: 0
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