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 June 30, 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 August 9, 2000 is 344,128,623 shares, $.0001 par value.
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CLANCY SYSTEMS INTERNATIONAL, INC.
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION
Balance Sheet - September 30, 1999 and June 30, 2000
(unaudited) 2 and 3
Statement of Operations - For the Three Months Ended June
30, 1999 and 2000 (unaudited) 4
Statement of Operations - For the Nine Months Ended June
30, 1999 and 2000 (unaudited) 5
Statement of Stockholders' Equity - For the Nine Months
Ended June 30, 2000 (unaudited) 6
Statement of Cash Flows - For the Nine Months Ended
June 30, 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
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CLANCY SYSTEMS INTERNATIONAL, INC.
BALANCE SHEET
September 30, 1999 and June 30, 2000
(Unaudited)
ASSETS
September June
--------- ----
Current assets:
Cash and cash equivalents $ 315,579 $ 393,402
Accounts receivable 277,155 340,851
Inventories (Note 2) 160,582 158,080
Prepaid expenses 9,167 -
--------- ---------
Total current assets 762,483 892,333
urniture and equipment, at cost:
Office furniture and equipment 153,085 154,285
Equipment under service contracts 1,167,393 1,247,287
--------- ---------
1,320,478 1,401,572
Less accumulated depreciation 926,987 1,060,122
--------- ---------
Net furniture and equipment 393,491 341,450
Other assets:
Investment in partnership 435,535 480,256
Note receivable - employee - 10,638
Deposits and other 17,058 19,646
Software development costs 143,195 135,259
--------- ---------
Total other assets 595,788 645,799
--------- ---------
$1,751,762 $1,879,582
========== ==========
See accompanying notes.
2
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CLANCY SYSTEMS INTERNATIONAL, INC.
BALANCE SHEET
September 30, 1999 and June 30, 2000
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
September June
--------- ----
Current liabilities:
Notes payable - related party (Note 4) $ 120,000 $ 45,000
Note payable - bank (Note 4) 240,000 140,000
Accounts payable 12,537 1,292
Income taxes payable 7,300 85,361
Deferred revenue 97,765 90,879
--------- ---------
Total current liabilities 477,602 362,532
Deferred tax liability (Note 3 6,000 10,050
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 344,128,623 shares issued and
outstanding in June 2000. 33,689 34,413
Additional paid-in capital 1,030,674 1,045,175
Retained earnings 203,797 427,412
--------- ---------
Total stockholders' equity 1,268,160 1,507,000
---------- ---------
$1,751,762 $1,879,582
========== ==========
See accompanying notes.
3
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CLANCY SYSTEMS INTERNATIONAL, INC.
INCOME STATEMENT
For the Three Months Ended June 30, 1999 and 2000
(Unaudited)
1999 2000
---- ----
Revenues:
Sales $ 49,331 $ 70,291
Service contract income 268,980 312,438
Parking ticket collections 216,978 201,237
-------- --------
Total revenues 535,289 583,966
Costs and expenses:
Cost of sales 38,668 24,178
Cost of services 168,638 137,661
Cost of parking ticket collections 70,041 19,451
General and administrative 158,309 154,934
Stock compensation - 875
Research and development 14,443 15,558
-------- --------
Total costs and expenses 450,099 352,657
-------- --------
Income from operations 85,190 231,309
Other income (expense):
Interest income 565 3,620
Interest expense (10,108) (5,241)
-------- --------
Total other income (expense) (9,543) (1,621)
-------- --------
Income before provision for income taxes and gain
(loss) in equity-basis partnership 75,647 229,688
Provision for income taxes (19,000) (75,127)
Gain (loss) in equity basis partnership (net of
tax benefit of $4,200 -1999 and tax expense of
$12,041 -2000) 7,300 21,406
-------- ---------
Net income $ 63,947 $ 175,967
======== =========
Basic net income per common share $ * $ *
======== =========
Weighted average number of shares outstanding 336,900,000 340,200,000
=========== ===========
* Less than $.01 per share
See accompanying notes.
4
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CLANCY SYSTEMS INTERNATIONAL, INC.
INCOME STATEMENT
For the Nine Months Ended June 30, 1999 and 2000
(Unaudited)
1999 2000
---- ----
Revenues:
Sales $ 196,323 $ 127,090
Service contract income 843,621 912,917
Parking ticket collections 380,308 297,239
--------- ---------
Total revenues 1,420,252 1,337,246
Costs and expenses:
Cost of sales 77,242 66,555
Cost of services 441,397 382,550
Cost of parking ticket collections 231,310 84,424
General and administrative 409,847 439,071
Stock compensation - 15,225
Research and development 37,816 45,060
--------- ---------
Total costs and expenses 1,197,612 1,032,885
--------- ---------
Income from operations 222,640 304,361
Other income (expense);
Interest income 1,525 4,906
Interest expense (25,116) (17,921)
--------- ---------
Total other income (expense) (23,591) (13,015)
--------- ---------
Income before provision for income taxes and gain
(loss) in equity-basis partnership 199,049 291,346
Provision for income taxes (63,500) (96,352)
Gain (loss) in equity basis partnership (net of tax
benefit of $9,500 -1999 and tax expense of
$16,100 -2000) (20,380) 28,621
--------- ---------
Net income $ 115,169 $ 223,615
========= =========
Basic net income per common share $ * $ *
========= =========
Weighted average number of shares outstanding 336,900,000 339,100,000
=========== ===========
* Less than $.01 per share
See accompanying notes.
5
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<TABLE>
CLANCY SYSTEMS INTERNATIONAL, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
For the Nine Months Ended June 30, 2000
(Unaudited)
<CAPTION>
Additional
Common stock paid-in Retained
Shares Amount capital earnings
------ ------ ---------- ---------
<C> <C> <C> <C>
Balance, September 30, 1999 336,889,149 $ 33,689 $1,030,674 $203,797
Issuance of stock for services 4,350,000 435 14,790 -
Net income for the nine months ended
June 30, 2000 - - - 223,615
Exercise of stock options by exchange of
mature shares previously held by director 2,889,474 289 (289) -
----------- -------- ---------- --------
Balance, June 30, 2000 344,128,623 $ 34,413 $1,045,175 $427,412
=========== ======== ========== ========
</TABLE>
See accompanying notes.
6
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CLANCY SYSTEMS INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS
For the Nine Months Ended June 30, 1999 and 2000
(Unaudited)
1999 2000
---- ----
Cash flows from operating activities:
Net income $ 115,169 $ 223,615
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 207,158 179,188
Deferred income tax expense 5,000 4,050
Issuance of common stock for services - 15,225
Increase in accounts receivable (147,718) (63,696)
Increase in notes receivable - (10,638)
Decrease in inventories 6,169 2,502
Decrease in prepaid expenses - 9,167
Loss (gain) in equity basis partnership 29,880 (44,721)
Decrease in accounts payable (37,999) (11,245)
Decrease in income taxes refundable 16,000 -
Increase in income taxes payable 33,000 78,061
Increase (drease) in deferred revenue 46,872 (6,886)
--------- ---------
Total adjustments 158,362 151,007
--------- ---------
Net cash provided by operating activities 273,531 374,622
Cash flows from investing activities:
Acquisition of furniture and equipment - net (91,789) (81,095)
Increase in deposits and other - (2,875)
Increase in software development costs (32,071) (37,829)
Investment in partnership (135,500) -
--------- --------
Net cash used in investing activities (259,360) (121,799)
Cash flows from financing activities:
Payments on note payable - bank (25,000) (100,000)
Proceeds from note payable - related party 120,000 -
Payments on note payable - related party - (75,000)
--------- ---------
Net cash provided by (used in) financing
activities 95,000 (175,000)
--------- ---------
Increase in cash and cash equivalents 109,171 77,823
Cash and cash equivalents at beginning of period 91,432 315,579
--------- ---------
Cash and cash equivalents at end of period $ 200,603 $ 393,402
========= =========
See accompanying notes.
7
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CLANCY SYSTEMS INTERNATIONAL, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 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 June 30, 2000, and the results of operations and cash flows for the
periods ended June 30, 1999 and 2000.
2. Inventories
Inventories consist of the following at:
September June 30,
30, 1999 2000
-------- ----
Finished goods $ 7,160 $ 7,904
Work in process 1,052 71,136
Purchased parts and supplies 152,370 79,040
--------- --------
$ 160,582 $ 158,080
========= =========
3. Income taxes
The provision for income taxes for the three months ended June 30,
1999 and 2000 is based on the expected tax rate for the year.
As of September 30, 1999 and June 30, 2000, total deferred tax
assets and liabilities are as follows:
September June 30,
30, 1999 2000
--------- ----
Deferred tax assets $ 60,000 $ 71,700
Deferred tax liabilities (66,000) (81,750)
-------- --------
$ (6,000) $ (10,050)
======== =========
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 June 30, 2000 is
$45,000.
8
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CLANCY SYSTEMS INTERNATIONAL, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 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 May 2000, the director
exercised these options by providing the Company with 110,526 shares of
common stock previously held in payment of the purchase price of the
stock.
During the six months ended June 30, 2000,the Company issued 3,100,000
shares of common stock to a director of the Company and 1,250,000
shares of common stock to two employees of the Company for services
performed valued at $15,225 ($.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 June 30, 2000, the Company had working capital of $529,801
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 June 30, 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. New contracts added
during the quarter include ACE Parking, Allright Binghampton, LaCrosse WI,
and Utah State University.
Revenues during the quarter were lower than the prior year's quarter by
9% which is primarily due to the completion of the Maywood ticket
issuance contract which expired on September 30, 1999. Expenses decreased
by 22% under the prior year's quarter due to elimination of
expenses related to the Maywood contract. The Company reported a profit
of $175,967 for the 2000 quarter as compared to a net profit of $63,947
for the prior year's 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.
10
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
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 May 2000, the director
exercised these options by providing the Company with 110,526 shares of
common stock previously held in payment of the purchase price of the
stock.
During the six months ended June 30, 2000, the Company issued
3,100,000 shares of common stock to a director of the Company and
1,250,000 shares of common stock to two employees of the Company for
services performed valued at $15,225 ($.0035 per share).
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule (1)
(b) During the quarter ended June 30, 2000, the Registrant
has filed no reports on Form 8-K
(1) Filed herewith
11
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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: August 14, 2000 CLANCY SYSTEMS INTERNATIONAL, INC.
(Registrant)
By: /s/ Stanley J. Wolfson
Stanley J. Wolfson, President
and Chief Executive Officer
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