FORM 10-QSB
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
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)
(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 CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
336,889,149 common shares were outstanding as of February 13, 1998.
<PAGE>
CLANCY SYSTEMS INTERNATIONAL, INC.
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION
- -----------------------------
Balance Sheet - September 30, 1997 and December 31, 1997 2 and 3
Income Statement - For the Three Months Ended
December 31, 1996 and 1997 4
Statement of Stockholders' Equity - For the Nine Months
Ended December 31, 1997 5
Statement of Cash Flows - For the Nine Months Ended
December 31, 1996 and 1997 6
Notes to Unaudited Financial Statements 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION 8
1
<PAGE>
CLANCY SYSTEMS INTERNATIONAL, INC.
BALANCE SHEET
September 30, 1996 and December 31, 1998
(Unaudited)
ASSETS
------
September December
--------- --------
Current assets:
Cash and cash equivalents $ 199,195 $ 326,477
Accounts receivable 196,646 247,382
Inventories (Note 2) 210,608 206,534
Income taxes refundable 1,970 1,970
Deferred tax asset (Note 3) 1,000 -
------------ ---------
Total current assets 609,419 782,363
Furniture and equipment, at cost:
Office furniture and equipment 228,680 228,680
Equipment under service contracts 1,182,632 1,263,212
------------ ---------
1,411,312 1,491,892
Less accumulated depreciation 994,732 1,040,542
------------ ---------
Net furniture and equipment 416,580 451,350
Other assets:
Deposits and other 26,835 26,835
Software licenses 16,882 16,882
Software development costs 286,763 304,723
------------ --------
330,480 348,440
Less accumulated amortization 167,41 180,667
------------ --------
Net other assets 163,065 167,773
------------ --------
$1,189,064 $1,401,486
============ ==========
See accompanying notes.
2
<PAGE>
CLANCY SYSTEMS INTERNATIONAL, INC.
BALANCE SHEET
September 30, 1997 and December 31, 1997
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
September December
--------- --------
Current liabilities:
Note payable - bank $ - $ 190,000
Other accrued expenses 2,286 -
Warranty reserve 400 -
Income taxes payable - 6,000
Deferred revenue 52,026 56,519
-------- ---------
Total current liabilities 54,712 252,519
Deferred tax liability (Note 3) 2,000 2,000
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 67,989 82,604
--------- ---------
Total stockholders' equity 1,132,352 1,146,967
--------- ---------
$1,189,064 $1,401,486
========== ==========
See accompanying notes.
3
<PAGE>
CLANCY SYSTEMS INTERNATIONAL, INC.
INCOME STATEMENT
For the Three Months Ended December 31, 1996 and 1997
(Unaudited)
1996 1997
---- ----
Revenues:
Sales $ 16,278 $ 83,003
Service contract income 288,587 230,228
Parking ticket collections 239,310 5,415
--------- ---------
Total revenues 544,175 318,646
Costs and expenses:
Cost of sales 15,387 36,377
Cost of services 135,666 126,226
Cost of parking ticket collections 255,685 20,719
General and administrative 98,590 101,459
Research and development 6,283 14,325
-------- -------
Total costs and expenses 511,611 299,106
-------- --------
Income from operations 32,564 19,540
Other income (expense):
Interest income 429 2075
Interest expense (8,136) -
--------- -------
Total other income (expense) (7,707) 2,075
--------- --------
Income before provision for income taxes 24,857 21,615
Provision for income taxes (Note 3) 7,000 7,000
--------- --------
Net income $ 17,857 $ 14,615
========== =========
Net income per common share $ * $ *
========== =========
Weighted average numer of shares 336,900,000 336,900,000*
outstanding
less than $.01 per share
See accompanying notes
4
<PAGE>
CLANCY SYSTEMS INTERNATIONAL, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
For the Nine Months Ended December 31, 1997
(Unaudited)
Additional
Common Stock Paid-in Retained
Shares Amount capital earnings
------------------ ---------- -----------
Balance, 336,889,149 $33,689 $1,030,674 $ 67,989
September 30, 1997
Net income for the
three months ended
December 31, 1997 - - - 14,615
------------ ------- --------- ---------
Balance 336,889,149 $33,689 $1,030,674 $ 82,604
December 31, 1997 =========== ======= ========== =========
See accompanying notes.
5
<PAGE>
CLANCY SYSTEMS INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS
For the Three Months Ended December 31, 1996 and 1997
(Unaudited)
1996 1997
---- ----
Cash flows from operating activities:
Net income $17,857 $14,615
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 256,238 59,062
Deferred Income Tax Expense 7,000 7,000
Increase in accounts receivable (9,128) (50,736)
Decrease (increase) in inventories (9,867) 4,074
Decrease in accounts payable (15,046) -
Decrease in accrued expenses - (2,286)
Increase in income taxes payable - 6,000
Increase (decrease) in deferred revenue (24,554) 4,493
Decrease in warranty reserve (900) (400)
-------- -------
Total adjustments 203,743 21,207
-------- -------
Net cash provided by operating activities 221,600 35,822
Cash flows from investing activities:
Acquisition of furniture and equipment (46,224) (80,580)
Increase in software license and software
development costs (24,663) (17,960)
Decrease in deposits and other assets 29,860 -
-------- --------
Net cash used in investing activities (41,027) (98,540)
Cash flows from financing activities:
Proceeds from note payable - bank - 190,000
Repayment of notes payable - bank (113,000) -
-------- -------
Net cash provided by (used in)
financing activities (113,000) 190,000
--------- -------
Increase (decrease) in cash equivalents 65,573 127,282
Cash and cash equivalents at begging period 90,510 199,195
-------- -------
Cash and cash equivalents at end of period $ 158,083 $326,477
========= ========
See Accompanying Notes
6
<PAGE>
CLANCY SYSTEMS INTERNATIONAL, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
December 31, 1997
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, 1997 and
December 31, 1997, and the results of operations and cash flows for
the periods ended December 31, 1996 and 1997.
2. Inventories
Inventories consist of the following at:
September 30, December 31
1997 1997
------------- ------------
Finished goods $ - $ 10,326
Work in process 13,570 41,307
Purchased parts and supplies 197,038 154,901
------- --------
$210,608 $206,534
======== ========
3. Income taxes
The provision for income taxes for the quarter ended December 31,
1997 is based is based on the expected tax rate for the year.
As of September 30, 1997 and December 31, 1997, total deferred tax
assets and liabilities are as follows:
September 30, December 31,
1997 1997
------------ -----------
Deferred tax assets $ 1,000 $ -
Deferred tax liabilities (2,000) (2,000)
--------- ----------
$ (1,000) $(2,000)
========= ===========
7
<PAGE>
Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Material Changes in Financial Condition
- ---------------------------------------
At December 31, 1997 the Company had working capital of $529,844
derived primarily from contract sales, as compared to working
capital of $554,707 at September 30, 1997. 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 December 31, 1997 the Company generated
revenues from contract sales to the City of Oklahoma City, the
Hertz Corporation, Berkeley California, Yonkers NY, and other
professional service contracts. Berkeley, CA each represents
revenues in excess of 5% of total revenues. New clients added to
customer base during this period include Southwest Texas State
University, Parking Control Service, Regional Parking and Maywood,
Illinois.
Revenues for the 1997 quarter were lower than the prior year's
quarter. The Company reported a net profit of $14,615 for the 1997
quarter as compared to net profit of $17,857 for the prior year's
quarter.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(b) During the quarter ended June 30, 1997 the Registrant has
filed no reports on Form 8-K.
8
<PAGE>
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: February 13, 1998 Clancy Systems International, Inc.
(Registrant)
By: /s/ Stanley J. Wolfson
----------------------
Stanley J. Wolfson, President
and Chief Executive Officer
By: /s/ Lizabeth M. Wolfson
-------------------------
Lizabeth M. Wolfson, Secretary-
Treasurer and Chief Financial
and Chief Accounting Officer
9
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM FORM 10-QSB FOR PERIOD ENDED 12/31/97
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FOR 10-QSB FOR PERIOD ENDED 12/31/97
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 326,477
<SECURITIES> 0
<RECEIVABLES> 247,382
<ALLOWANCES> 0
<INVENTORY> 206,534
<CURRENT-ASSETS> 782,363
<PP&E> 1,491,892
<DEPRECIATION> 1,040,542
<TOTAL-ASSETS> 1,401,486
<CURRENT-LIABILITIES> 252,519
<BONDS> 0
0
0
<COMMON> 33,689
<OTHER-SE> 1,113,278
<TOTAL-LIABILITY-AND-EQUITY> 1,401,486
<SALES> 83,003
<TOTAL-REVENUES> 318,646
<CGS> 36,377
<TOTAL-COSTS> 183,322
<OTHER-EXPENSES> 115,784
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 21,615
<INCOME-TAX> 7,000
<INCOME-CONTINUING> 14,615
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,615
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
