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, 1997
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 Number)
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 MAY 12,
1997, INCLUDING 150,000 SHARES HELD BY THE ISSUER IN TREASURY. 5,126,900
SHARES WERE OUTSTANDING AT MAY 12, 1997.
<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 1997 (Unaudited) and
December 31, 1996 (Audited).
Consolidated Statement of Operations - Three months ended
March 31, 1997 and 1996 (Unaudited).
Consolidated Statement of Shareholders' Equity - December 31,
1993 through March 31, 1997.
Consolidated Statement of Cash Flows - Three months ended
March 31, 1997 and 1996 (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
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 255,346 $ 336,678
Investment in marketable
trading securities - at
market 653,350 660,769
Accounts receivable - trade - net
of allowance for uncollectable
accounts of $2,500 in 1997 and 1996 32,455 62,710
Accounts receivable - other 8,379 7,701
Inventory 148,215 127,255
Other 9,618 4,804
TOTAL CURRENT ASSETS 1,107,363 1,199,917
PROPERTY AND EQUIPMENT - net of
accumulated depreciation of $135,902
in 1997 and $135,442 in 1996 2,481 2,941
Other 2,293 2,238
TOTAL ASSETS $1,112,137 $1,205,096
</TABLE>
See accompanying notes to consolidated financial statements.
-4(a)-
<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Continued)
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable and accrued
expenses - principally trade $ 53,741 $ 60,860
Deferred revenue 33,325 74,230
TOTAL CURRENT LIABILITIES 87,066 135,090
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock $.0001 par value;
10,000,000 shares authorized;
5,276,900 shares issued in
1997 and 1996; 5,126,900 shares
outstanding in 1997 and 1996 528 528
Additional paid-in capital 2,095,391 2,095,391
Accumulated deficit ( 1,044,198) ( 999,263)
1,051,721 1,096,656
Less treasury stock, 150,000
shares at cost in 1997 and 1996 ( 26,650) ( 26,650)
TOTAL SHAREHOLDERS' EQUITY 1,025,071 1,070,006
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 1,112,137 $ 1,205,096
</TABLE>
See accompanying notes to consolidated financial statements.
-4(b)-
<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1997 1996 *
(Unaudited) (Unaudited)
<S> <C> <C>
REVENUES:
Net sales $ 24,941 $ 84,790
Lease income 4,050 --
Repair and maintenance
fee income 44,537 46,043
73,528 130,833
COST AND EXPENSES:
Cost of sales (excluding
depreciation and
amortization) 49,299 54,185
Depreciation & amortization 459 914
Selling, general and
administrative expense 66,051 71,538
TOTAL OPERATING EXPENSES 115,809 126,637
INCOME (LOSS) FROM OPERATIONS (42,281) 4,196
OTHER INCOME (EXPENSE)
Interest and
dividend income 12,399 9,143
Realized and unrealized
gain (loss) on
marketable securities (15,067) 75,704
Other 14 -
NET INCOME (LOSS) $ (44,935) $ 89,043
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING 5,126,900 5,126,900
NET INCOME (LOSS)
PER COMMON SHARE $ (.01) $ .02
</TABLE>
*Reclassified 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, 1993 THROUGH March 31, 1997
<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 - 12/31/93 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 -- -- -- 113,003 -- 113,003
Balance - 12/31/96 5,126,900 528 2,095,391 ( 999,263) (26,650) 1,070,006
Net Loss for period -- -- -- ( 44,935) -- (44,935)
Balance - 03/31/97 5,126,900* $ 528 $2,095,391 $(1,044,198) $ (26,650) $ 1,025,071
* 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,
1997 1996
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Profit <Loss> $ (44,935) $ 89,043
Adjustments to reconcile net income
<loss> to net cash (used in)
provided by operating activities:
Depreciation and amortization 459 914
(Gain) Loss on sale of marketable
securities ( 35,912) ( 26,435)
Allowance for market decline
of securities 50,979 ( 49,269)
Purchase of marketable trading
securities ( 106,279) ( 150,465)
Proceeds from sale of marketable
trading securities 98,631
223,036
Changes in operating assets
and liabilities:
(Increase) decrease in trade
accounts receivable 30,255 ( 17,492)
(Increase) decrease in inventory ( 20,960) ( 597)
(Increase) decrease in accounts
receivable - Other ( 677) ( 253)
(Increase) decrease in other assets ( 4,869) ( 4,773)
Increase (decrease) in accounts
payable and accrued expenses ( 7,119) ( 6,478)
Increase (decrease) in deferred
revenue ( 40,905) 72,165
Total adjustments ( 36,397) 40,353
Net cash provided by (used in)
operating activities ( 81,332) 129,396
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment -- ( 636)
Net cash (used in) provided by
investing activities -- ( 636)
</TABLE>
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<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Contd..
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1997 1996
(Unaudited) (Unaudited)
<S> <C> <C>
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $( 81,332) $ 128,760
CASH AND CASH EQUIVALENTS -
Beginning of period 336,678 261,385
CASH AND CASH EQUIVALENTS -
End of period $ 255,346 $ 390,145
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
-7(b)-
<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENT
March 31, 1997
(Unaudited)
NOTE 1 - FAIR PRESENTATION
The balance sheet as of March 31, 1997, the statement of operations for the
three months ended March 31, 1997 and 1996, the statement of shareholders'
equity as of March 31, 1997 and the statement of cash flows for the three
months ended March 31, 1997 and 1996, 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, 1997 and for all periods
presented have been made.
The condensed financial statements as of December 31, 1996, 1995 and 1994 have
been derived from audited financial statements.
The operations for the three months ended March 31, 1997, 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, 1996, 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, 1997 and 1996, 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 marketable trading securities amounts
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<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENT
March 31, 1997
(Unaudited)
to $653,350 at March 31, 1997, and $660,769 at December 31, 1996. The
cost of these investments is $1,001,793 and $958,234 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 - INCOME TAXES
The Company does not provide for any income taxes since it has net operating
losses to offset any provision for income taxes. The Company has fully
reserved for the benefit of the net operating loss carryfowards.
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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, 1997, the Company had current
assets of $1,107,363 as compared to $1,199,917 at December 31, 1996, total
assets of $1,112,137 as compared to $1,205,096 at December 31, 1996, current
liabilities of $87,066 as compared to $135,090 at December 31, 1996 and a
current net worth of $1,025,071 as compared to $1,070,006 at December 31,
1996. The change in net worth was attributable to the net loss incurred for
the three months ended March 31, 1997.
(a)(1) Liquidity. During the three (3) months ended March 31, 1997, the
Company had an decrease in cash and cash equivalents of $81,332 due
principally to the net loss incurred for the period.
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. The Company continues to have no fixed
executory obligations.
(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. 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, 1997 were $73,528 as compared to $130,833 for the
three (3) month period ended March 31, 1996. 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, 1997, amounted
to $115,809, as compared to $126,637 for the period ended March 31, 1996.
Costs and expenses decreased in comparison to the comparable three (3) month
period in 1996, primarily due to decreased selling, general and administrative
expenses and decreased cost of sales.
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<PAGE>
CORRECTIONS SERVICES, INC. AND SUBSIDIARY
The Company realized a net loss of ($44,935) for the three (3) month
period ended March 31, 1997 as compared to a net profit of $89,043 for the
three (3) month period ended March 31, 1996. The decrease was primarily due
to a decrease in realized and unrealized gain on marketable trading securities
and a decline 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 13, 1997 /s/Norman H. Becker
Norman H. Becker, President
Date: May 13, 1997 /s/Diane Martini
Diane Martini, Secretary/Treasurer
Date: May ___, 1997
Frank R. Bauer, Vice President
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Balance
Sheet, Statement of Operations, Statements 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-31-1996
<PERIOD-END> MAR-31-1997
<CASH> 255,346
<SECURITIES> 653,350
<RECEIVABLES> 43,334
<ALLOWANCES> 2,500
<INVENTORY> 148,215
<CURRENT-ASSETS> 1,107,363
<PP&E> 138,383
<DEPRECIATION> 135,902
<TOTAL-ASSETS> 1,112,137
<CURRENT-LIABILITIES> 87,066
<BONDS> 0
0
0
<COMMON> 528
<OTHER-SE> 1,024,543
<TOTAL-LIABILITY-AND-EQUITY> 1,112,137
<SALES> 24,941
<TOTAL-REVENUES> 73,528
<CGS> 49,299
<TOTAL-COSTS> 115,809
<OTHER-EXPENSES> 15,067
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (44,935)
<INCOME-TAX> 0
<INCOME-CONTINUING> (44,935)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (44,935)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
