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 March 31, 1996
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)
(954) 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 APRIL 25, 1996, INCLUDING 150,000 SHARES HELD BY THE ISSUER IN
TREASURY. 5,126,900 SHARES WERE OUTSTANDING AT APRIL 25, 1996.
<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 1996 (Unaudited) and
December 31, 1995 (Audited).
Consolidated Statement of Operations - Three months ended
March 31, 1996 and 1995 (Unaudited).
Consolidated Statement of Shareholders' Equity - December 31,
1992 through March 31, 1996.
Consolidated Statement of Cash Flows - Three months ended
March 31, 1996 and 1995 (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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CORRECTIONS SERVICES, INC. AND SUBSIDIARY
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
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<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 390,145 $ 261,385
Investment in marketable
trading securities - at
market 580,553 588,830
Accounts receivable - trade - net
of allowance for uncollectable
accounts of $2,500 in 1996 and 1995 77,782 60,290
Accounts receivable - other 17,659 5,996
Note receivable - affiliate - current 10,500 10,500
Inventory 148,793 148,196
Other 9,229 4,511
TOTAL CURRENT ASSETS 1,234,661 1,079,708
PROPERTY AND EQUIPMENT - net of
accumulated depreciation of $169,095
in 1996 and $168,181 in 1995 4,972 5,250
Other 2,333 2,378
TOTAL ASSETS $1,241,966 $1,087,236
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Continued)
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable and accrued
expenses - principally trade $ 66,324 $ 72,802
Deferred revenue - current 55,316 47,580
TOTAL CURRENT LIABILITIES 121,640 120,382
DEFERRED REVENUE - Non-current 74,280 9,851
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock $.0001 par value;
10,000,000 shares authorized;
5,276,900 shares issued in
1996 and 1995; 5,126,900 shares
outstanding in 1996 and 1995 528 528
Additional paid-in capital 2,095,391 2,095,391
Accumulated deficit ( 1,023,223) ( 1,112,266)
1,072,696 983,653
Less treasury stock, 150,000
shares at cost in 1996 and 1995 ( 26,650) ( 26,650)
TOTAL SHAREHOLDERS' EQUITY 1,046,046 957,003
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 1,241,966 $ 1,087,236
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1996 1995 *
(Unaudited) (Unaudited)
<S> <C> <C>
REVENUES:
Net sales $ 84,790 $ 189,128
Lease income -- 1,000
Repair and maintenance
fee income 46,043 23,227
130,833 213,355
COST AND EXPENSES:
Cost of sales (excluding
depreciation and
amortization 54,185 70,467
Depreciation & amortization 914 832
Selling, general and
administrative expense 71,538 88,479
TOTAL OPERATING EXPENSES 126,637 159,778
INCOME (LOSS) FROM OPERATIONS 4,196 53,577
OTHER INCOME (EXPENSE)
Interest and
dividend income 9,143 8,197
Realized and unrealized
gain (loss) on
marketable securities 75,704 54,555
INCOME (LOSS) BEFORE INCOME
TAXES AND EXTRAORDINARY
ITEM 89,043 116,329
PROVISION FOR INCOME TAXES 13,000 --
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM 76,043 116,329
EXTRAORDINARY ITEM -
TAX BENEFIT OF NET
OPERATING LOSS
CARRYFORWARD 13,000 --
NET INCOME (LOSS) $ 89,043 $ 116,329
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING 5,126,900 5,126,900
NET INCOME (LOSS)
PER COMMON SHARE $ .02 $ .02
</TABLE>
* Reclassification for comparative purposes
See accompanying notes to consolidated financial statements
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<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Deficiency)
FROM DECEMBER 31, 1992 THROUGH MARCH 31, 1996
<TABLE>
<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 - 12/31/92 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 Loss for period -- -- -- (22,717) -- (22,717)
Balance - 12/31/95 5,126,900 528 2,095,391 (1,112,266) (26,650) 957,003
Net Income for period -- -- -- 89,043 -- 89,043
Balance - 03/31/96 5,126,900 $ 528 $2,095,391 $(1,023,223) $ (26,650) $ 1,046,046
Shown on the accompanying Balance Sheet as follows: Issued: 5,276,900
Treasury Shares: ( 150,000)
5,126,900
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1996 1995
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Profit $ 89,043 $ 116,329
Adjustments to reconcile net income
to net cash (used in) provided by
operating activities:
Depreciation and amortization 914 832
(Gain) Loss on sale of marketable
securities ( 26,435) 98,459
Allowance for market decline
of securities ( 49,269) ( 153,014)
Purchase of marketable trading
securities ( 150,465) ( 89,960)
Proceeds from sale of marketable
trading securities 223,036 71,134
Changes in operating assets
and liabilities:
(Increase) decrease in trade
accounts receivable ( 17,492) 34,195
(Increase) decrease in inventory ( 597) 14,892
(Increase) decrease in accounts
receivable - Other ( 253) 2,223
(Increase) decrease in other assets ( 4,773) 667
Increase (decrease) in accounts
payable and accrued expenses ( 6,478) ( 16,368)
Increase in deferred revenue 72,165 12,572
Total adjustments 40,353 ( 24,368)
Net cash provided by (used in)
operating activities 129,396 91,961
CASH FLOWS FROM INVESTING ACTIVITIES:
Advances paid on notes receivable
- affiliate -- ( 50,000)
Purchase of property and
equipment ( 636) ( 690)
Net cash (used in) provided by
investing activities ( 636) ( 50,690)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 128,760 41,271
CASH AND CASH EQUIVALENTS -
Beginning of period 261,385 264,125
CASH AND CASH EQUIVALENTS -
End of period $ 390,145 $ 305,396
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
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<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENT
MARCH 31, 1996
(Unaudited)
NOTE 1 - FAIR PRESENTATION
The balance sheet as of March 31, 1996, the statement of
operations for the three months and ended March 31, 1996 and
1995, the statement of shareholders' equity as of March 31,
1996 and the statement of cash flows for the three months
ended March 31, 1996 and 1995, 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 March 31, 1996 and for all periods
presented have been made.
The condensed financial statements as of December 31, 1995,
1994 and 1993 have been derived from audited financial
statements.
The operations for the three months ended March 31, 1996,
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,
1995, 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 periods ended March 31, 1996 and 1995,
per share information was computed using the weighted
average number of common shares outstanding during the
periods.
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
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<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENT
MARCH 31, 1996
(Unaudited)
marketable trading securities amounts to $580,553 at March
31, 1996, and $588,830 at December 31, 1995. The cost of
these investments is $740,523 and $798,070 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 was named as a party defendant in an Illinois
action arising for the death of an individual at the hands
of a house arrest detainee. The complaint alleged that the
decedent's demise was a consequence of unspecified
"malfunction" of equipment previously marketed by the
Company. The lawsuit sought money damages in an unspecified
amount. The complaint was twice dismissed at the Company's
motion. The dismissal has been appealed. The Company's
litigation counsel is unable to estimate the outcome of this
matter. Management intends to continue to contest the suit
vigorously if required to do so. There have been no
developments in this litigation in this reporting period.
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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 March 31, 1996, the Company had
current assets of $1,234,661 as compared to $1,079,708 at December
31, 1995, total assets of $1,241,966 as compared to $1,087,236 at
December 31, 1995, current liabilities of $121,640 as compared to
$120,382 at December 31, 1995 and a current net worth of $1,046,046
as compared to $957,003 at December 31, 1995. The change in net
worth was attributable to the net profit incurred for the period
ended March 31, 1996.
(a)(1) Liquidity. In the three (3) months ended March 31,
1996, the Company had an increase in cash and cash equivalents of
$128,760 due principally to the proceeds from the sale of
marketable trading 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
three (3) months ending March 31, 1996 were $130,833 as compared to
$213,355 for the three (3) month period ended March 31, 1995. The
reduction in revenues was due to a decline in sales of new units.
Costs and expenses for the three (3) months ended March 31,
1996, amounted to $126,637, as compared to $159,778 for the period
ended March 31, 1995. Costs and expenses decreased in comparison
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<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
to the comparable three (3) month period in 1995, primarily due to
decreased cost of sales and decreased selling, general and
administrative expenses.
The Company realized a net profit of $ 89,043 for the three
(3) month period ended March 31, 1996 as compared to a net profit
of $116,329 for the three (3) month period ended March 31, 1995.
The decrease was primarily due to a reduction in the sale of new
units.
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
PART II - OTHER INFORMATION
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K
(b) The Registrant filed no Current Reports on Form 8-K
during this reporting period.
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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: May , 1996
Norman H. Becker, President
Date: May , 1996
Diane Martini, Secretary/Treasurer
Date: May , 1996
Frank R. Bauer, Vice President
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<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Balance
Sheets, Statement of Operations, Statement of Cash Flows and Notes thereto
incorporated in Part I., Item 1. of this Form 10-Q and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1996
<CASH> 390,145
<SECURITIES> 580,553
<RECEIVABLES> 108,441
<ALLOWANCES> (2,500)
<INVENTORY> 148,793
<CURRENT-ASSETS> 1,234,661
<PP&E> 174,067
<DEPRECIATION> 169,095
<TOTAL-ASSETS> 1,241,966
<CURRENT-LIABILITIES> 121,640
<BONDS> 0
528
0
<COMMON> 0
<OTHER-SE> 1,072,168
<TOTAL-LIABILITY-AND-EQUITY> 1,241,966
<SALES> 84,790
<TOTAL-REVENUES> 130,833
<CGS> 54,185
<TOTAL-COSTS> 126,637
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 89,043
<INCOME-TAX> 13,000
<INCOME-CONTINUING> 76,043
<DISCONTINUED> 0
<EXTRAORDINARY> 13,000
<CHANGES> 0
<NET-INCOME> 89,043
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
