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: June 30, 1996
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
The number of shares of the registrant's common stock, $.01 par value per share,
outstanding as of June 30, 1996 was 18,523,096.
<PAGE>
PART 1: FINANCIAL INFORMATION
CLARK MELVIN SECURITIES CORPORATION
STATEMENT OF FINANCIAL POSITION
(Unaudited)
June 30 December 31
1996 1995
ASSETS
Cash & Savings $ 247,928 $ 265,243
Deposit with Clearing Broker 109,497 125,979
Broker & Dealer Receivable 111,213 201,123
Accounts Receivable 21,248 90,753
Firm Trading Securities & Investments 0 0
Prepaid Expenses 27,750 26,627
Total Current Assets $ 517,636 $ 709,725
Furniture/Fixtures/Leasehold
(net of accum. depreciation and amortization) $ 41,241 $ 54,426
Organizational Expenses 0 803
Total Long-Term Fixed Assets 41,241 55,229
Total Assets $ 558,877 $ 764,954
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Payable to clearing broker $ 2,751 $ 6,095
Accounts payable and accrued liabilities 99,345 227,369
Total Liabilities $ 102,096 $ 233,464
Stockholders' equity
Common stock, 40,000,000 shares
18,523,096 issued & outstanding $ 185,231 $ 185,231
Preferred stock, 145,000 shares 145,000 145,000
Additional Paid-in Capital 2,888,028 2,888,028
Retained Earnings (2,656,899) (2,660,671)
Treasury stock - preferred (35,000) (35,000)
Current Period Profit / (Loss) (69,579) 8,902
Total Stockholder's Equity $ 456,781 $ 531,490
Total Liabilities & Stockholders' Equity $ 558,877 $ 764,954
<PAGE>
CLARK MELVIN SECURITIES CORPORATION
STATEMENT OF OPERATIONS
(Unaudited)
Six Months Ended
June 30,
1996 1995
REVENUES
Commissions $ 669,271 $ 833,634
Advisory and Fee Income 167,660 154,745
Interest / Dividends 10,083 8,772
Margin 21,291 13,105
Trailer Fees 31,309 22,823
Miscellaneous 21,884 25,072
Total Revenues $ 921,498 $ 1,058,151
EXPENSES
Compensation and Benefits $ 515,673 $ 669,491
Clearing Fees 72,967 69,377
Occupancy 69,344 87,992
Business Development 32,415 62,627
Interest 2,833 1,077
Communications 96,023 100,354
Other 201,822 124,769
Total Expenses $ 991,077 $ 1,115,687
Profit / (Loss) Before Income Taxes $ (69,579) $ (57,536)
Income Taxes:
Current Tax Expense - -
Benefit of Loss Carryover - -
Net Profit (Loss) $ (69,579) $ (57,536)
Profit (Loss) per common share $ (0.00) $ (0.00)
Accompanying notes are an integral part of these financial statements.
<PAGE>
CLARK MELVIN SECURITIES CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
Increase (Decrease) in cash 1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net profit (loss) $ (69,579) $ (57,536)
Adjustments to reconcile net profit (loss) to net
cash (used for) provided by operating activities:
Depreciation and amortization 16,772 25,819
(Increase) decrease in operating assets:
Receivables:
Brokers and dealers 166,821 (249,166)
Employee advances (9,500) (103)
Other (405) 8,703
Firm trading securities/Investments (76,150)
Securities sold short
Other 17,857 7,146
Increase (decrease) in operating liabilities:
Payable to clearing broker (2,632) 95,737
Accounts payable and accrued liabilities (128,737) 65,011
NET CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES $ (9,403) $ (180,539)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of office equipment and leasehold improvements (2,784) (1,775)
Proceeds from sales of other investments (1,500)
NET CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES $ (2,784) $ (3,275)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock
Payment of preferred stock dividend (5,130) (6,685)
Redemption of preferred stock
Payment of subscriptions 100,000
NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES $ (5,130) $ 93,315
NET DECREASE IN CASH AND CASH EQUIVALENTS $ (17,317) $ (90,499)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD $ 265,243 $ 235,122
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 247,926 $ 144,623
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest $ 2,589 $ 1,077
The accompanying notes are an integral part of these financial statements.
<PAGE>
CLARK MELVIN SECURITIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The statement of financial position as of June 30, 1996, the statements of
operations for the six month period ended June 30, 1996, and 1995 and the
statements of cash flows for the six month period ended June 30, 1996 and 1995
have been prepared by the Company without audit. In the opinion of management,
all adjustments (which include only normal recurring adjustments) necessary to
fairly present the financial position at June 30, 1996 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, 1995 Annual Shareholder Report.
The results of operations for the period ended June 30, 1996 are not necessarily
indicative of the operating results for the full year.
2. Firm Trading Securities
Firm trading securities consisted of the following:
June 30, December 31,
1996 1995
Corporate Equities $ 0.00 $ 0.00
3. Stockholders' Equity
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 1995 and a valuation allowance was provided for the deferred asset of
$751,000.
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 June 30, 1996 the Company has net capital of approximately $362,026 which
was approximately $262,026 in excess of its required net capital and the
Company's ratio of aggregate indebtedness to net capital was .28. As of December
31, 1995 the Company had net capital of approximately $358,274, which was
approximately $258,274 in excess of its required net capital and the Company's
ratio of aggregate indebtedness to net capital was .65 to 1.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Results of Operations
Revenues
Total revenues decreased 13% through the second quarter of 1996 compared to the
same period in 1995.
Commission decreased by 20% due to decreases in all areas of equity and fixed
income transactions.
The 8% increase for the first six months of 1996 in advisory and fee income over
the same period in 1995 is primarily due to increased volume of activity.
Interest and dividend income increased by 15% for the first six months of 1996
compared to that of 1995, primarily due an increase of cash available for
investment.
As of June 30, 1996, margin income increased by 62% over the same period in
1995, primarily due to increased activity in this area.
Expenses
Overall, expenses decreased 11% during the first six months of 1996 compared to
that of 1995.
Compensation and benefits decreased by 23% due to decreases in all areas of
equity and fixed income transactions.
The clearing and exchange expenses through the second quarter of 1996 are
comparable to those during the same period in 1995.
The 21% decrease through the second quarter in occupancy expenses over the same
period in 1995 is due to a move made by the Annapolis office to smaller quarters
as well as a drop in equipment leasing expenses resulting from the completion of
a lease-purchase agreement.
Business development expenses decreased by 48% during the second quarter of 1996
compared to expenses made over the same period in 1995. The 1995 first quarter
expenses included a prepayment of advertising expenses related to promotion of
tax credit seminars which was not repeated during the first quarter in 1996.
The 4% decrease in communication expenses through the second quarter of 1996 is
due to continuing cost-cutting measures.
The 62% increase in other expenses for the first six months of 1996 is due
primarily to ongoing accounting reclassifications.
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 June 30, 1996,
the Company's net capital was approximately $362,026 which was approximately
$242,026 in excess of its required net capital.
<PAGE>
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The company's annual meeting of stockholders was held on May 28, 1996, at which
the following directors were elected by the votes indicated:
For Withhold
--- --------
Aurelio Emanuelli All
James Finn All
Guillermo L. Martinez All
Cesar Montilla, Jr. All
Pedro R. Vasquez All
<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: /s/ Irene M. Harr
_______________________
Irene M. Harr
Chief Financial Officer
Date: August 8, 1996
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 247,928
<RECEIVABLES> 132,461
<SECURITIES-RESALE> 0
<SECURITIES-BORROWED> 0
<INSTRUMENTS-OWNED> 0
<PP&E> 41,241
<TOTAL-ASSETS> 558,877
<SHORT-TERM> 517,636
<PAYABLES> 102,096
<REPOS-SOLD> 0
<SECURITIES-LOANED> 0
<INSTRUMENTS-SOLD> 0
<LONG-TERM> 0
145,000
0
<COMMON> 185,231
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 558,877
<TRADING-REVENUE> 0
<INTEREST-DIVIDENDS> 10,083
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<INTEREST-EXPENSE> 2,833
<COMPENSATION> 515,673
<INCOME-PRETAX> (69,579)
<INCOME-PRE-EXTRAORDINARY> (69,579)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (69,579)
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