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 March 31, 2000
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
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:
The number of shares outstanding of the issuer's classes of common stock,
as of May 8, 2000 is 340,989,149 shares, $.0001 par value.
<PAGE>
CLANCY SYSTEMS INTERNATIONAL, INC.
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION
Balance Sheet - September 30, 1999 and March 31, 2000 (unaudited) 2 and 3
Statement of Operations - For the Three Months Ended March 31, 1999
and 2000 (unaudited) 4
Statement of Operations - For the Six Months Ended March 31, 1999
and 2000 (unaudited) 5
Statement of Stockholders' Equity - For the Six Months Ended
March 31, 2000 (unaudited) 6
Statement of Cash Flows - For the Six Months Ended
March 31, 1999 and 2000 (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 11
1
<PAGE>
CLANCY SYSTEMS INTERNATIONAL, INC.
BALANCE SHEET
SEPTEMBER 30, 1999 AND MARCH 31, 2000
(Unaudited)
ASSETS
September March
--------- -----
Current assets:
Cash and cash equivalents $ 315,579 $ 233,613
Accounts receivable 277,155 339,725
Inventories (Note 2) 160,582 163,428
Prepaid expenses 9,167 3,667
---------- ----------
Total current assets 762,483 740,433
Furniture and equipment, at cost:
Office furniture and equipment 153,085 153,085
Equipment under service contrac 1,167,393 1,222,028
---------- ---------
1,320,478 1,375,113
Less accumulated depreciation 926,987 1,018,782
---------- ----------
Net furniture and equipment 393,491 356,331
Other assets:
Investment in partnership 435,535 446,809
Deposits and other 17,058 19,789
Software development costs 143,195 139,261
---------- ----------
Total other assets 595,788 605,859
---------- ----------
$1,751,762 $1,702,623
========== ==========
See accompanying notes.
2
<PAGE>
CLANCY SYSTEMS INTERNATIONAL, INC.
BALANCE SHEET
SEPTEMBER 30, 1999 AND MARCH 31, 2000
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
September March
--------- -----
Current liabilities:
Notes payable - related party (Note 4) $ 120,000 $ 95,000
Note payable - bank (Note 4) 240,000 160,000
Accounts payable 12,537 5,155
Income taxes payable 7,300 15,084
Deferred revenue 97,765 88,526
----------- ----------
Total current liabilities 477,602 363,765
Deferred tax liability (Note 3) 6,000 8,700
Stockholders' equity (Note 5):
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
in September 1999 and 340,989,149 shares issued and
outstanding in March 2000. 33,689 34,099
Additional paid-in capital 1,030,674 1,044,614
Retained earnings 203,797 251,445
----------- ----------
Total stockholders' equity 1,268,160 1,330,158
---------- ----------
$1,751,762 $1,702,623
========== ==========
See accompanying notes.
3
<PAGE>
CLANCY SYSTEMS INTERNATIONAL, INC.
INCOME STATEMENT
For the Three Months Ended March 31, 1999 and 2000
(Unaudited)
1999 2000
---- ----
Revenues:
Sales $ 44,428 $ 40,993
Service contract income 293,231 280,693
Parking ticket collections 79,088 50,599
------------ ------------
Total revenues 416,747 372,285
Costs and expenses:
Cost of sales 22,099 19,422
Cost of services 129,952 112,555
Cost of parking ticket collections 73,331 33,106
General and administrative 114,220 123,386
Stock compensation - 14,350
Research and development 11,327 17,575
------------ ------------
Total costs and expenses 350,929 320,394
------------ ------------
Income from operations 65,818 51,891
Other income (expense);
Interest income 367 878
Interest expense (8,180) (5,792)
------------ ------------
Total other income (expense) (7,813) (4,914)
------------ ------------
Income before provision for income taxes and gain
(loss) in equity-basis partnership 58,005 46,977
Provision for income taxes (21,500) (15,825)
Gain (loss) in equity basis partnership (net of tax
benefit of $11,000 -1999 and tax expense of
$1,959 -2000) (18,800) 3,315
------------ ------------
Net income $ 17,705 $ 34,467
Basic net income per common share $ * $ *
============ ============
Weighted average number of shares outstanding 336,900,000 337,600,000
============ ============
* Less than $.01 per share
See accompanying notes.
4
<PAGE>
CLANCY SYSTEMS INTERNATIONAL, INC.
INCOME STATEMENT
For the Six Months Ended March 31, 1999 and 2000
(Unaudited)
1999 2000
---- ----
Revenues:
Sales $ 146,992 $ 56,799
Service contract income 574,641 600,479
Parking ticket collections 163,330 96,002
------------ ------------
Total revenues 884,963 753,280
Costs and expenses:
Cost of sales 38,574 42,377
Cost of services 272,759 244,889
Cost of parking ticket collections 161,269 64,973
General and administrative 251,538 284,137
Stock compensation - 14,350
Research and development 23,373 29,502
------------ ------------
Total costs and expenses 747,513 680,228
------------ ------------
Income from operations 137,450 73,052
Other income (expense);
Interest income 960 1,286
Interest expense (15,008) (12,680)
------------ ------------
Total other income (expense) (14,048) (11,394)
------------ ------------
Income before provision for income taxes and gain
(loss) in equity-basis partnership 123,402 61,658
Provision for income taxes (44,500) (21,225)
Gain (loss) in equity basis partnership (net of tax
benefit of $15,500 -1999 and tax expense of
$4,059 -2000) (27,680) 7,215
------------ ------------
Net income $ 51,222 $ 47,648
============ ============
Basic net income per common share $ * $ *
============ ============
Weighted average number of shares outstanding 336,900,000 337,200,000
============ ============
* Less than $.01 per share
See accompanying notes.
5
<PAGE>
<TABLE>
CLANCY SYSTEMS INTERNATIONAL, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
For the Six Months Ended March 31, 2000
(Unaudited)
<CAPTION>
Additional
Common stock paid-in Retained
Shares Amount capital earnings
----------- ------- ---------- --------
<S> <C> <C> <C> <C>
Balance, September 30, 1999 336,889,149 $33,689 $1,030,674 $203,797
Issuance of stock services (Note 6) 4,100,000 410 13,940 -
Net income for the six months ended
March 31, 2000 - - - 47,648
----------- ------- ---------- --------
Balance, March 31, 2000 340,989,149 $34,099 $1,044,614 $251,445
=========== ======= ========== ========
</TABLE>
See accompanying notes.
6
<PAGE>
CLANCY SYSTEMS INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS
For the Six Months Ended March 31, 1999 and 2000
(Unaudited)
1999 2000
---- ----
Cash flows from operating activities:
Net income $ 51,222 $ 47,648
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 139,531 133,386
Deferred income tax (benefit) expense 5,000 2,700
Common stock issued for services - 14,350
Increase in accounts receivable (105,254) (62,570)
Decrease in inventories 2,614 (2,846)
Decrease in prepaid expenses - 5,500
Loss (gain) in equity basis partnership 43,180 (11,274)
Decrease in accounts payable (37,999) (7,382)
Decrease in income taxes refundable 16,000 -
Increase in income taxes payable 8,000 7,784
Increase (drease) in deferred revenue 2,435 (9,239)
-------- --------
Total adjustments 73,507 70,409
-------- --------
Net cash provided by operating activities 124,729 118,057
Cash flows from investing activities:
Acquisition of furniture and equipment - net (78,029) (54,635)
Increase in deposits and other - (14,127)
Increase in software development costs (25,331) (26,261)
Investment in partnership (122,500) -
-------- --------
Net cash used in investing activities (225,860) (95,023)
Cash flows from financing activities:
Payments on note payable - bank (25,000) (40,000)
Proceeds from note payable - related party 120,000 -
Payments on note payable - related party - (65,000)
-------- --------
Net cash provided by (used in) financing activities 95,000 (105,000)
------- --------
Decrease in cash and cash equivalents (6,131) (81,966)
Cash and cash equivalents at beginning of period 91,432 315,579
-------- --------
Cash and cash equivalents at end of period $ 85,301 $233,613
======== ========
See accompanying notes.
7
<PAGE>
CLANCY SYSTEMS INTERNATIONAL, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2000
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, 1999 and March 31, 2000,
and the results of operations and cash flows for the periods ended March 31,
1999 and 2000.
2. Inventories
Inventories consist of the following at:
September 30, March 31,
1999 2000
------------- ---------
Finished goods $ 7,160 $ 19,043
Work in process 1,052 56,150
Purchased parts and supplies 152,370 88,235
-------- --------
$160,582 $163,428
======== ========
3. Income taxes
The provision for income taxes for the three months ended March 31, 1999
and 2000 is based on the expected tax rate for the year.
As of September 30, 1999 and March 31, 2000, total deferred tax assets
and liabilities are as follows:
September 30, March 31,
1999 2000
Deferred tax assets $ 60,000 $ 67,800
Deferred tax liabilities (66,000) (76,500)
-------- --------
$ (6,000) $ (8,700)
======== =========
4. Notes payable
Related party:
During the year ended September 30, 1999, the Company executed five
notes payable from a major shareholder of the Company for a total of
$120,000. The notes bear interest at 8 and 9% annually, and mature through
August 31, 2000. The remaining balance at March 31, 2000 is $55,000.
8
<PAGE>
CLANCY SYSTEMS INTERNATIONAL, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2000
4. Notes payable (continued)
Bank:
In October 1999, the Company extended the due date of its note payable -
bank to October 15, 2000. The note bears interest at 9%, with interest
payable monthly and is secured by a certificate of deposit in the
name of two officers of the Company.
5. Letter of intent
In November 1999, the Company entered into a letter of intent to acquire
two website related businesses owned and developed by the Company's
president and major shareholder for 80,703,013 shares of the Company's
common stock. The businesses will be recorded by the Company at the
president's historical cost basis in those assets. This transaction is
expected to be consummated by September 30, 2000.
6. Stockholders' equity
During January 2000, the Company issued to a director, options to
purchase 3,000,000 shares of the Company's common stock. The options are
exercisable at $.0035 per share.
During March 2000, the Company issued 3,100,000 shares of common stock
to a director of the Company and 1,000,000 shares of common stock to two
employees of the Company for services performed valued at $14,350 ($.0035
per share).
9
<PAGE>
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Material Changes in Financial Condition
At March 31, 2000, the Company had working capital of $376,668
derived primarily from contract sales, as compared to working capital of
$284,881 at September 30, 1999. 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 March 31, 2000, 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.
Revenues during the quarter were lower than the prior year's quarter by
11% which is primarily due to the completion of the Maywood ticket
issuance contract which expired on September 30, 1999. Expenses decreased
by 9% under the prior year's quarter due to elimination of expenses
related to the Maywood contract. The Company reported a profit of
$34,468 for the 2000 quarter as compared to a net profit of $17,705 for
the prior year's quarter. The Company had expenses related to a product
build that began this quarter and will be completed and sold in the
next quarter.
Forward Looking Information
Statements of the Company's or management's intentions,
beliefs, anticipations, expectations and similar expressions concerning
future events contained in this document constitute "forward looking
statements" as defined in the Private Securities Litigation Reform Act of
1995. As with any future event, there can be no assurance that the
events described in the forward looking statements made in this report
will occur or that the results of future events will not vary materially
from those described in the forward looking statements in this document.
Important factors that could cause the Company's actual performance and
operating results to differ materially from the forward looking
statements include, but are not limited to, (i) the ability of the
Company to obtain new customers, (ii) the ability of the Company to
obtain sufficient financing for business opportunities, (iii) the
ability of the Company to reduce costs and thereby maintain adequate
profit margins.
Chat Room Disclaimer
This forum of exposure to publicly traded companies presents a venue for
the public to inquire about companies from other individuals as well
as post opinions.
The Company has no way to regulate postings nor monitor information
posed on these boards. Management can only provide accurate
information to shareholders and potential shareholders when
contacted directly and such information can only be provided when it
is based on fact and has been filed as required by law with the
Securities and Exchange Commission and other regulatory agencies.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
The Company has withdrawn its letter of intent with Jubilee
LLC and the transaction will not take place.
In January, 2000, the Company issued shares for services to 1 director
and 3 employees. This transaction is exempt from registration under Section
4 (2) of the Securities Act of 1933.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule (1)
(b) During the quarter ended March 31, 2000, the Registrant
has filed no reports on Form 8-K
(1) Filed herewith
11
<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: May 15, 2000 CLANCY SYSTEMS INTERNATIONAL, INC.
(Registrant)
By: /s/ Stanley J. Wolfson
Stanley J. Wolfson, President
and Chief Executive Officer
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACED
FROM FORM 10-QSB FOR PERIOD ENDED 3/31/00 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-QSB FOR PERIOD
ENDED 3/31/00
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 233,613
<SECURITIES> 0
<RECEIVABLES> 339,725
<ALLOWANCES> 0
<INVENTORY> 163,428
<CURRENT-ASSETS> 740,433
<PP&E> 1,375,113
<DEPRECIATION> 1,018,782
<TOTAL-ASSETS> 1,702,623
<CURRENT-LIABILITIES> 363,765
<BONDS> 0
0
0
<COMMON> 34,099
<OTHER-SE> 1,296,059
<TOTAL-LIABILITY-AND-EQUITY> 1,702,623
<SALES> 56,799
<TOTAL-REVENUES> 753,280
<CGS> 42,377
<TOTAL-COSTS> 680,228
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,680
<INCOME-PRETAX> 61,659
<INCOME-TAX> 21,225
<INCOME-CONTINUING> 47,648
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47,648
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
