SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[XX] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
33-02035-A
(Commission File Number)
CORRECTIONS SERVICES, INC.
(Exact name of Registrant as specified in its charter)
Florida 59-2508470
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
3040 East Commercial Boulevard
Fort Lauderdale, Florida 33308
(Address of Principal Executive Offices)
(305) 772-2297
(Registrant's Telephone Number)
None
(Former Name, Former Address and former Fiscal Year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for 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 ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
YES NO
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date.
5,276,900 SHARES OF COMMON STOCK, OF $.0001 PAR VALUE, WERE ISSUED AT
JULY 24, 1995, INCLUDING 150,000 SHARES HELD BY THE ISSUER. 5,126,900
SHARES WERE OUTSTANDING AT JULY 24, 1995.
<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - June 30, 1995 (Unaudited)
and December 31, 1994 (Audited).
Consolidated Statement of Operations - Three months and
six months ended June 30, 1995 and 1994 (Unaudited).
Consolidated Statement of Shareholders' Equity - December
31, 1991 through June 30, 1995.
Consolidated Statement of Cash Flows - Six months ended
June 30, 1995 and 1994 (Unaudited).
Notes to Consolidated Financial Statements.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
PART II. OTHER INFORMATION
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
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<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
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<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
<TABLE>
CONSOLIDATED BALANCE SHEETS
ASSETS
<CAPTION>
June 30, December 31,
1995 1994
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 358,378 $ 264,125
Investment in marketable
trading securities - at
market 466,857 468,229
Accounts receivable - trade - net
of allowance for uncollectable
accounts of $2,500 in 1995 and 1994 94,822 124,461
Accounts receivable - other 12,367 9,920
Note receivable - affiliate - current 23,982 --
Note receivable - other 10,500 22,000
Inventory 197,774 200,694
Other 5,853 4,148
TOTAL CURRENT ASSETS 1,170,533 1,093,577
PROPERTY AND EQUIPMENT - net of
accumulated depreciation of $165,345
in 1995 and $165,699 in 1994 6,548 5,290
NOTES RECEIVABLE - Affiliate
- non-current 22,292 --
Other 2,496 3,101
TOTAL ASSETS $1,201,869 $1,101,968
</TABLE>
See accompanying notes to consolidated financial statements.
-4(a)-
<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
<TABLE>
CONSOLIDATED BALANCE SHEETS
(Continued)
LIABILITIES AND SHAREHOLDERS' EQUITY
<CAPTION>
June 30, December 31,
1995 1994
(Unaudited)
<S>
CURRENT LIABILITIES: <C> <C>
Accounts payable and accrued
expenses - principally trade $ 79,108 $ 86,916
Deferred revenue - current 27,112 11,188
TOTAL CURRENT LIABILITIES 106,220 98,104
DEFERRED REVENUE - Non-current 18,503 24,144
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock $.0001 par value;
10,000,000 shares authorized;
5,276,900 shares issued in
1995 and 1994; 5,126,900 shares
outstanding in 1995 and 1994 528 528
Additional paid-in capital 2,095,391 2,095,391
Accumulated deficit ( 992,123) ( 1,089,549)
1,103,796 1,006,370
Less treasury stock, 150,000
shares at cost ( 26,650) ( 26,650)
TOTAL SHAREHOLDERS' EQUITY 1,077,146 979,720
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 1,201,869 $ 1,101,968
</TABLE>
See accompanying notes to consolidated financial statements.
-4(b)-
<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
<TABLE>
CONSOLIDATED STATEMENT OF OPERATIONS
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
REVENUES:
Net sales $ 69,058 $ 142,248 $ 258,186 $ 272,873
Lease income -- -- 1,000 1,994
Repair and maintenance
fee income 35,144 20,471 58,371 35,730
104,202 162,719 317,557 310,597
COST AND EXPENSES:
Cost of sales (excluding
depreciation and
amortization 34,827 96,782 105,294 181,095
Depreciation and
amortization 1,181 2,475 2,013 4,949
Selling, general and
administrative expense 73,748 90,781 162,227 183,633
Interest expense -- -- -- 22
TOTAL OPERATING EXPENSES 109,756 190,038 269,534 369,699
INCOME (LOSS) FROM OPERATIONS ( 5,554) ( 27,319) 48,023 ( 59,102)
OTHER INCOME (EXPENSE)
Interest income 3,643 802 6,630 1,737
Realized and unrealized
gain (loss) on
marketable securities ( 23,615) ( 115,544) 30,940 ( 117,785)
Other 6,623 6,077 11,833 12,963
</TABLE>
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<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
<TABLE>
CONSOLIDATED STATEMENT OF OPERATIONS
(Continued)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
INCOME (LOSS) BEFORE INCOME
TAXES AND EXTRAORDINARY
ITEM ( 18,903) ( 135,984) 97,426 ( 162,187)
PROVISION FOR INCOME TAXES -- -- 25,000 --
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM ( 18,903) ( 135,984) 72,426 ( 162,187)
EXTRAORDINARY ITEM -
TAX BENEFIT OF NET
OPERATING LOSS
CARRYFORWARD -- -- 25,000 --
NET INCOME (LOSS) $( 18,903) $( 135,984) $ 97,426 $( 162,187)
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING 5,126,900 5,201,900 5,126,900 5,201,900
NET INCOME (LOSS)
PER COMMON SHARE $ -- $ ( .03) $ .02 $ ( .03)
</TABLE>
See accompanying notes to consolidated financial statements
-5(b)-
<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
<TABLE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Deficiency)
FROM DECEMBER 31, 1991 THOROUGH JUNE 30, 1995
<CAPTION>
Common Stock
$.0001 Par Value
Authorized Addt'l Retained
10,000,000 Shares Paid-In Earnings Treasury
Shares Amount Capital (Deficit) Stock Total
<S) <C> <C> <C> <C> <C> <C>
Balance - 12/31/91 5,176,900 $ 518 $2,087,068 $(1,205,617) $ $ 881,969
Issuance of common
stock for services 100,000 10 8,323 -- -- 8,333
Net loss for period -- -- -- (1,145,708) -- (1,145,708)
Balance - 12/31/92 5,276,900 528 2,095,391 (2,351,325) -- ( 255,406)
Receipt of Common
Stock in settlement
of Note Receivable
(75,000 Shares) ( 75,000) -- -- -- ( 7,900) ( 7,900)
Net Income for period -- -- -- 1,200,364 -- 1,200,364
Balance - 12/31/93 5,201,900 528 2,095,391 (1,150,961) ( 7,900) 937,058
Net Income for period -- -- -- 61,412 -- 61,412
Purchase of Treasury
Shares ( 75,000) -- -- -- (18,750) ( 18,750)
Balance - 12/31/94 5,126,900 528 2,095,391 (1,089,549) (26,650) 979,720
Net Income for period -- -- -- 97,426 -- 97,426
Balance - 06/30/95 5,126,900 $ 528 $2,095,391 $( 992,123) $(26,650) $1,077,146
</TABLE>
Shown on the accompanying
Balance Sheet as follows: Issued: 5,276,900
Treasury Shares: ( 150,000)
5,126,900
See accompanying notes to consolidated financial statements.
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<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<CAPTION>
Nine Months Ended
June 30, June 30,
1995 1994
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Profit $ 97,426 $( 162,187)
Adjustments to reconcile net income
to net cash (used in) provided by
operating activities:
Depreciation and amortization 2,013 4,949
(Gain) Loss on sale of marketable
securities 16,021 ( 2,045)
Allowance for market decline
of securities ( 46,961) 119,830
Purchase of marketable trading
securities ( 286,237) ( 135,150)
Proceeds from sale of marketable
trading securities 318,549 170,221
Changes in operating assets
and liabilities:
(Increase) decrease in trade
accounts receivable 29,639 ( 69,053)
Decrease in inventory 2,920 74,055
(Increase) decrease in accounts
receivable - Other ( 2,447) ( 3,198)
(Increase) decrease in other assets ( 1,100) 4,364
(Increase) decrease in accounts
payable and accrued expenses ( 7,808) 19,431
Increase (Decrease) in deferred
revenue 10,283 ( 7,334)
(Increase) in restricted cash - ( 100,000)
Total adjustments 34,872 76,070
Net cash provided by (used in)
operating activities 132,298 ( 86,117)
CASH FLOWS FROM INVESTING ACTIVITIES:
Advances paid on notes receivable
- affiliate ( 50,000) --
Principal collections on notes
receivable - affiliate 3,726 --
Principal collection on
note receivable - Other 11,500 1,000
Purchase of property and
equipment ( 3,271) --
Net cash (used in) provided by
investing activities ( 38,045) 1,000
</TABLE>
-7(a)-
<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(Continued)
<CAPTION>
Nine Months Ended
June 30, June 30,
1995 1994
(Unaudited) (Unaudited)
<S> <C> <C>
NET INCREASE IN CASH AND
CASH EQUIVALENTS 94,253 ( 85,117)
CASH AND CASH EQUIVALENTS -
Beginning of period 264,125 173,996
CASH AND CASH EQUIVALENTS -
End of period $ 358,378 $ 88,879
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
-7(b)-
<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENT
JUNE 30, 1995
(Unaudited)
NOTE 1 - FAIR PRESENTATION
The balance sheet as of June 30, 1995, the statement of
operations for the three months and six months ended June 30,
1995 and 1994, the statement of shareholders' equity as of
June 30, 1995 and the statement of cash flows for the six
months ended June 30, 1995 and 1994, have been prepared by
the Company without audit. In the opinion of management, all
adjustments (which include only normal recurring accruals)
necessary to present fairly the financial position and
results of operations at June 30, 1995 and for all periods
presented have been made.
The condensed financial statements as of December 31, 1994,
1993 and 1992 have been derived from audited financial
statements.
The operations for the six months ended June 30, 1995, are
not necessarily indicative of the results of operations to
be expected for the Company's fiscal year.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed
or omitted. It is suggested that these condensed financial
statements be read in conjunction with the consolidated
financial statements and notes thereto as of December 31,
1994, and for the year then ended.
NOTE 2 - BASIS OF PRESENTATION
The accompanying financial statements include accounts of
the Company and its wholly-owned subsidiary, Corrections
Systems International, Inc. All significant intercompany
accounts and transactions have been eliminated in
consolidation.
NOTE 3 - EARNINGS (LOSS) PER SHARE
For the three month and six months periods ended June 30,
1995 and 1994, per share information was computed using the
weighted average number of common shares outstanding during
the periods.
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<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENT
JUNE 30, 1995
(Unaudited)
NOTE 4 - INVESTMENT IN MARKETABLE EQUITY SECURITIES
Marketable trading securities are stated at market value at
the balance sheet date. Market values of investments in
marketable trading securities amounts to $466,857 at June
30, 1995, and $468,229 at December 31, 1994. The cost of
these investments is $598,334 and $646,667 respectively.
Unrealized gains and losses resulting from fluctuations in
the market price of the related trading securities are
currently reflected in the statement of operations under the
caption "Realized (unrealized) gain (loss) on marketable
trading securities".
NOTE 5 - LEGAL PROCEEDINGS
The Company has been a defendant of an Illinois action due
to the apparent wrongful death of an individual at the hands
of an In-House Arrest detainee. The complaint alleged that
the decedent's demise was attributable to "In-House Arrest"
equipment previously marketed by the Company and sold to the
Lake County, Illinois Corrections Department. The Company
filed motions to dismiss the complaint for failing to state
a factual or legal basis for liability against the Company.
On July 14, 1995, the court entered an order granting the
Company's motion and dismissing the entire suit with
prejudice. The Company's litigation counsel is currently
unable to estimate the likelihood of an appeal of the
court's order of dismissal at this time. Management
intends, if necessary, to contest any subsequent appeal
vigorously as without merit.
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<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The analysis of the Company's financial condition, liquidity,
capital resources and results of operations should be viewed in
conjunction with the accompanying financial statements, including
the notes thereto.
(a) Financial Condition. At June 30, 1995, the Company had
current assets of $1,170,533 as compared to $1,093,577 at December
31, 1994, total assets of $1,201,869 as compared to $1,101,968 at
December 31, 1994, current liabilities of $106,220 as compared to
$98,104 at December 31, 1994 and a current net worth of $1,077,146
as compared to $979,720 at December 31, 1994. The change in net
worth was attributable to the net profit incurred for the period
ended June 30, 1995.
(a)(1) Liquidity. In the six (6) months ended June 30, 1995,
the Company had an increase in cash and cash equivalents of
$94,253, due principally to the sale of marketable equity
securities and net income.
The Company's operating expenses have continued in this
reporting period, at what the Company believes to be a minimal
level. The Company has no present commitments that are reasonably
likely to result in its liquidity increasing or decreasing in any
material way. In addition, the Registrant knows of no trend,
additional demand, event or uncertainties that will result in, or
that are reasonably likely to result in, its liquidity increasing
or decreasing in any material way.
(a)(2) Capital Resources. The Company has no present
material commitments for additional capital expenditures. The
Company has no outstanding credit lines or loan commitments in
place and has no immediate need for additional financial credit.
In the event of future need, the Company believes that it will be
able to borrow from its affiliate, Vanderbilt Square Corp., or
borrow commercially at prevailing terms through loans
collateralized, if necessary, by its assets. There can be no
assurance however, that it will be able to secure additional
financing, if needed, or that if available, on terms acceptable to
the Company.
(a)(3) Results of Operations. The Company's revenues for the
six (6) months ending June 30, 1995 were $317,557 as compared to
$310,597 for the period ended June 30, 1994. The principal reason
for increased revenues was increased repair and maintenance income.
Revenues for the three (3) months ended June 30, 1995 were $104,202
as compared to $162,719 for the same period in 1994. The principal
reason for the decrease was the reduction in the sale of new units.
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<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
Costs and expenses for the six (6) months ended June 30, 1995,
amounted to $269,534, as compared to $369,699 for the period ended
June 30, 1994. Costs and expenses decreased in comparison to the
comparable six (6) month period in 1994, primarily due to decreased
cost of sales and reduced legal and consulting fees. Costs and
expenses for the three (3) months ended June 30, 1995 were $109,756
as compared to $190,038 for the same period in 1994. The principal
reason for the reduction in costs and expenses was the reduction in
cost of sales.
The Company realized net profits of $97,426 for the six (6)
month period ended June 30, 1995 as compared to a net loss of
$162,187 for the six (6) month period ended June 30, 1994. The
increase was due to increased repair and maintenance fee income,
increased gain on sales of marketable securities, and a decrease in
cost and expenses. In addition, the Company incurred a net loss
for the three (3) months ended June 30, 1995 of $18,903 as compared
to a net loss of $135,984 for the comparable period last year. The
reduction in net loss was principally attributable to the reduction
in realized and unrealized loss on marketable trading securities.
The Registrant knows of no trends or uncertainties, or other
items, that had, or that the Company reasonably expects will have,
a materially favorable or unfavorable impact on revenues or income
from future operations, if any. Moreover, Registrant knows of no
events that will cause a material change in the relationship
between its costs and revenues.
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<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
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.
CORRECTIONS SERVICES, INC.
Date: August 10, 1995 /S/Norman H. Becker
Norman H. Becker, President
Date: August 10, 1995 /S/Diane Martini
Diane Martini, Secretary/Treasurer
Date: August 10, 1995 /S/Frank R. Bauer
Frank R. Bauer, Vice President
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<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Consolidated
Balance Sheets, Consolidated Statement of Operations, Consolidated Statement of
Shareholders' Equity, Consolidated Statement of Cash Flows and Notes thereto
incorporated in Part I, Item 1., Financial Statements of this Form 10-Q and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000785562
<NAME> CORRECTIONS SERVICES, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> JUN-30-1995
<CASH> 358,378
<SECURITIES> 466,857
<RECEIVABLES> 144,171
<ALLOWANCES> (2,500)
<INVENTORY> 197,774
<CURRENT-ASSETS> 1,170,533
<PP&E> 171,893
<DEPRECIATION> (165,345)
<TOTAL-ASSETS> 1,201,869
<CURRENT-LIABILITIES> 106,220
<BONDS> 0
<COMMON> 528
0
0
<OTHER-SE> 1,103,268
<TOTAL-LIABILITY-AND-EQUITY> 1,201,869
<SALES> 258,186
<TOTAL-REVENUES> 317,557
<CGS> 105,294
<TOTAL-COSTS> 269,534
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 97,426
<INCOME-TAX> 25,000
<INCOME-CONTINUING> 72,426
<DISCONTINUED> 0
<EXTRAORDINARY> 25,000
<CHANGES> 0
<NET-INCOME> 97,426
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
