SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For Quarter Ended: September 30, 1995
Commission File Number: 000-17129
Clark Melvin Securities Corporation
(Exact name of registrant as specified in its charter)
Delaware 52-0749204
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
170 Jennifer Road, Suite 270, Annapolis, Maryland 21401
(Address of principal executive offices) (Zip Code)
(410) 266-5250
(Registrant's telephone number, including area code)
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 [ ]
<PAGE>
The number of shares of the registrant's common stock, $.01 par
value per share, outstanding as of September 30, 1995 was
18,523,096.
<PAGE>
<TABLE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
CLARK MELVIN SECURITIES CORPORATION
STATEMENTS OF FINANCIAL POSITION
(Unaudited)
<CAPTION>
September 30, December 31,
1994 1995
ASSETS
<S> <C> <C>
Cash $ 216,168 $ 235,122
Receivables
Brokers and dealers 152,886 53,251
Employee advances/receivables 15,243 17,061
Other 10,874 19,295
Firm trading securities &
investments at market --- 4,800
Deposit with clearing broker 150,000 100,000
Office and transportation equipment
and leasehold improvements,
net of accumulated depreciation
and amortization of $317,051
and $290,995 58,328 88,142
Other 28,450 35,810
Total Assets $ 631,950 $ 553,481
LIABILITIES AND
STOCKHOLDERS' EQUITY
Payable to clearing broker $ 15,337 $ 11,283
Accounts payable and
accrued liabilities 124,038 103,347
Total liabilities $ 139,375 $ 114,630
<PAGE>
Stockholders' equity (note 3)
Cumulative, callable preferred
stock, prime rate plus 1%,
145,000 shares issued and
outstanding $ 145,000 $ 145,000
Common stock, $.01 par value;
40,000,000 shares authorized,
18,523,096 issued and
outstanding 185,231 185,231
Additional paid-in capital 2,888,028 2,888,028
Accumulated deficit (2,657,931) (2,648,190)
Treasury stock - preferred (35,000) (5,000)
Subscriptions and interest
receivable --- (126,218)
Current period profit $ (32,754) ---
Total stockholder's equity (note 3) $ 492,575 $ 438,851
Total liabilities &
stockholders' equity $ 631,950 $ 553,481
The accompanying notes are an integral part of these financial statements
</TABLE>
<PAGE>
<TABLE>
CLARK MELVIN SECURITIES CORPORATION
STATEMENT OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S>
Revenues: <C> <C> <C> <C>
Commissions $ 191,175 $ 57,738 $ 499,684 $ 523,202
Principal transactions 191,561 152,372 715,806 675,648
Advisory and fee income 117,025 332,188 271,486 591,109
Interest and other 41,953 67,791 112,888 173,150
Total Revenues $ 541,714 $ 610,089 $1,599,864 $1,963,309
Expenses:
Compensation and benefits $ 311,758 $ 392,427 $ 982,540 $1,136,783
Clearing and exchange fees 36,308 30,723 116,761 112,331
Occupancy and
equipment rent 69,030 87,168 222,076 246,953
Business development 5,042 (14,686) 69,417 108,312
Interest 1,289 7,605 4,986 18,127
Communications 54,283 72,738 152,163 185,347
Other 39,222 152,363 84,675 320,642
Total Expenses $ 516,932 $ 728,338 $1,632,618 $2,128,495
Profit (Loss) before income $ 24,782 $(118,249) $ (32,754) $ (165,386)
Income Taxes
Current tax expense 8,426 --- --- ---
Benefit of loss carryover (8,426) --- --- ---
Net profit (loss) $ 24,782 $(118,249) $ (32,754) $ (165,386)
Profit (Loss) per
common share $ 0.00 $ (0.01) $ (0.00) $ (0.01)
Accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
CLARK MELVIN SECURITIES CORPORATION
<TABLE>
STATEMENT OF CASH FLOWS
<CAPTION>
(Unaudited)
Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net profit (loss) (33,068) (165,386)
Adjustments to reconcile net profit (loss) to net
cash (used for) provided by operating activities:
Depreciation and amortization 40,278 56,693
(Increase) decrease in operating assets:
Receivables:
Brokers and dealers (99,635) 218,415
Employee advances 2,715 (12,208)
Other 7,523 (298,331)
Firm trading securities/investments 4,800 (356,209)
Securities sold short --- 220,245
Other (21,197) 4,307
Increase (decrease) in operating liabilities:
Payable to clearing broker 4,059 356,318
Accounts payable and accrued liabilities 20,686 113,433
NET CASH (USED FOR) PROVIDED BY OPERATIONS (73,839) 137,277
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of office equipment (4,189) (54,380)
Proceeds from sales of other investments (1,500) ---
NET CASH (USED FOR) PROVIDED BY INVESTING
ACTIVITIES (5,689) (54,380)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock (9,426) 86,073
Payment of preferred stock dividend (30,000) (7,646)
Redemption of preferred stock 100,000 (120,000)
Payment of subscriptions --- 100,000
NET CASH PROVIDED BY (USED FOR) FINANCING
ACTIVITIES 60,574 58,427
NET INCREASE (DECREASE)
IN CASH AND CASH EQUIVALENTS . (18,954) 141,324
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 235,122 263,911
CASH AND CASH EQUIVALENTS AT
END OF PERIOD 216,168 405,235
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Cash paid during the period for interest 1,489 6,387
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
CLARK MELVIN SECURITIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The statement of financial position as of September 30, 1995, the
statements of operations for the three month and nine month period
ended September 30, 1995, and 1994 and the statements of cash flows
for the nine month periods ended September 30, 1995 and 1994 have
been prepared by the Company without audit. In the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position at
September 30, 1995 and for all periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These
financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's
December 31, 1994 Annual Shareholder Report.
The results of operations for the period ended September 30, 1995
are not necessarily indicative of the operating results for the
full year.
2. Firm Trading Securities
There were no securities in the trading account during either
period.
3. Stockholders' Equity
On March 31, 1995 and on April 5, 1994 the Company received
$100,000 and $100,000, respectively, in payment of subscriptions
for common stock issued in the merger with Azimuth Capital
Corporation in April 1991.
The common stock warrants expired on July 22, 1995.
In August, 1995 the Company received $28,000, the interest on
subscriptions receivable.
<PAGE>
Profit (Loss) per share of common stock is calculated by dividing
net profit (loss), less the preferred stock dividend requirement by
the weighted average number of common shares outstanding during the
period, which was 18,523,096 shares.
4. Income Taxes
During 1992 the Company adopted Financial Accounting Statement No.
109, Accounting for Income Taxes. The Company recorded no benefit
from income taxes in 1994 and a valuation allowance was provided
for the deferred asset of $754,000.
Temporary differences between amounts reported for financial
reporting purposes and income tax purposes are insignificant.
5. Net Capital Requirements
The Company is subject to the Securities and Exchange Commission
Uniform Net Capital Rule (Rule 15c3 1), which requires the
maintenance of minimum net capital and requires that the ratio of
aggregate indebtedness to net capital, both as defined, shall not
exceed 15 to 1. The Rule also provides that equity capital may not
be withdrawn or cash dividends paid if the resulting net capital
ratio would exceed 10 to 1.
As of September 30, 1995 the Company has net capital of
approximately $379,542, which was approximately $279,542 in excess
of its required net capital and the Company's ratio of aggregate
indebtedness to net capital was .37. As of December 31, 1994 the
Company had net capital of approximately $270,877, which was
approximately $170,877 in excess of its required net capital and
the Company's ratio of aggregate indebtedness to net capital was
.42 to 1.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Revenues
Commission revenues increased by 231.1% for the third quarter of
1995 compared to the third quarter of 1994. The increase was due to
increases in all areas of equity and option transactions.
Principal revenues increased by 25% for the third quarter of 1995
over the same period in 1994. The quarterly increase is due to
increases in underwriting of government agencies and municipal
bonds.
Interest and other income decreased by 38.1% for the third quarter
and by 34.8% for the nine months ended September 30, 1995 due to
decreased inventory and interest on cash available for investment.
The 64.8% decrease for the third quarter and the 34.8% nine months
decrease in advisory and fee income over the same periods in 1994
is primarily due to decreased volume of activity.
Expenses
Compensation and benefits decreased 20.6% in the third quarter of
1995 and decreased 13.6% for the nine months ended September 30,
1995 over the same periods in 1994, primarily due to reduced
salaried personnel and decreases in commissions paid on fee income.
The 18.2% increase in the third quarter ending September 30, 1995
in clearing and exchange expenses is due to increased transactions
over the same period in 1994.
The 20.8% decrease for the third quarter and the 10.1% decrease for
the nine months ended September 30, 1995 in occupancy and equipment
rental over the same period in 1994 is due completion of a
lease/purchase agreement for furniture in Annapolis and the sublet
of excess space in Puerto Rico.
<PAGE>
The 134.3% decrease in business development expense for the third
quarter is due to the payment for certain promotional expenses
shared with other firms earlier in the year. The 35.9% decrease
for the nine months ended September 30, 1995 is due to decreases in
advertising and expenses related to the promotion and development
of the film fund.
The 25.4% decrease in communication expense for the third quarter
of 1995 and the 17.9% decrease for the nine months ended September
30, 1995 is due primarily to reductions of Telerate services of
28.9%. Reductions were offset by increases in telephone expense of
164.6% during the third quarter of 1995.
The 74.3% decrease in other expenses for the third quarter of 1995
and the 73.6% decrease for the nine months ended September 30, 1995
is due primarily to respective decreases of 92.9% and 94% in
trading account losses, related to a client settlement.
Financial Position, Liquidity, and Capital Resources
The Company is required to comply with the Uniform Net Capital Rule
of the Securities and Exchange Commission. The Rule is intended to
measure the general financial soundness and liquidity of broker
dealers. The Company has consistently exceeded the minimum net
capital requirement. As of September 30, 1995, the Company's net
capital was approximately $379,542, which was approximately
$279,542 in excess of its required net capital.
<PAGE>
PART II - OTHER INFORMATION
Item #6. Exhibits and Reports on Form 8-K
a. Exhibits
EX-27. Finanical Data Schedule
b. Reports on Form 8-K
None
<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.
Clark Melvin Securities Corporation
(Registrant)
By: Irene M. Harr
Chief Financial Officer
(signature)
By: Cesar A. Montilla, Jr.
President and CEO
(signature)
Date: October 20, 1995
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> BD
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<PERIOD-END> SEP-30-1995
<CASH> 216,168
<RECEIVABLES> 179,003
<SECURITIES-RESALE> 0
<SECURITIES-BORROWED> 0
<INSTRUMENTS-OWNED> 0
<PP&E> 58,328
<TOTAL-ASSETS> 631,950
<SHORT-TERM> 0
<PAYABLES> 139,375
<REPOS-SOLD> 0
<SECURITIES-LOANED> 0
<INSTRUMENTS-SOLD> 0
<LONG-TERM> 0
145,000
0
<COMMON> 185,231
<OTHER-SE> 162,343
<TOTAL-LIABILITY-AND-EQUITY> 631,950
<TRADING-REVENUE> 191,561
<INTEREST-DIVIDENDS> 41,953
<COMMISSIONS> 191,175
<INVESTMENT-BANKING-REVENUES> 0
<FEE-REVENUE> 117,025
<INTEREST-EXPENSE> 1,289
<COMPENSATION> 311,758
<INCOME-PRETAX> 24,782
<INCOME-PRE-EXTRAORDINARY> 24,782
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,782
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
