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: March 31, 1997
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 March 31, 1997 was 18,523,096.
<PAGE>
PART 1: FINANCIAL INFORMATION
CLARK MELVIN SECURITIES CORPORATION
STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
(Unaudited)
March 31 December 31
1997 1996
<S> <C>
ASSETS
Cash & Savings $ 328,640 $ 405,609
Deposit with Clearing Broker 100,000 100,000
Broker & Dealer Receivable 181,520 130,414
Accounts Receivable 386,047 399,020
Firm Trading Securities & Investments 0 0
Prepaid Expenses 36,858 40,557
Other Assets 6,773 6,946
------------------ ------------------
Total Current Assets $ 1,039,838 $ 1,082,546
Furniture/Fixtures/Leasehold
(net of accum. depreciation and amortization) $ 37,020 $ 32,148
Subsidiaries 1,000 1,000
Organizational Expenses 13,506 6,506
------------------ ------------------
Total Long-Term Fixed Assets 51,526 39,654
Total Assets $ 1,091,364 $ 1,122,200
================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Payable to clearing broker $ 3,338 $ 12,317
Accounts payable and accrued liabilities 378,960 397,762
------------------ ------------------
Total Liabilities $ 382,298 $ 410,079
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 (2,471,137) (2,662,100)
Treasury stock - preferred (35,000) (35,000)
Current Period Profit / (Loss) (3,056) 190,962
------------------ ------------------
Total Stockholder's Equity $ 709,066 $ 712,121
Total Liabilities & Stockholders' Equity $ 1,091,364 $ 1,122,200
================== ==================
</TABLE>
<PAGE>
CLARK MELVIN SECURITIES CORPORATION
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
(Unaudited)
Three Months Ended
March 31,
1997 1996
<S> <C>
REVENUES
Commissions $ 526,608 $ 318,869
Advisory and Fee Income 99,114 87,697
Interest / Dividends 4,821 4,556
Margin 8,684 10,428
Trailer Fees 25,161 14,392
Miscellaneous 63,342 16,354
------------------ ------------------
Total Revenues $ 727,730 $ 452,296
EXPENSES
Compensation and Benefits $ 434,118 $ 248,667
Clearing Fees 65,659 41,196
Occupancy 34,710 34,320
Business Development 32,718 9,703
Interest 461 244
Communications 47,272 45,833
Other 115,848 80,582
------------------ ------------------
Total Expenses $ 730,786 $ 460,545
Profit / (Loss) Before Income Taxes $ (3,056) $ (8,249)
================== ==================
Income Taxes:
Current Tax Expense - -
Benefit of Loss Carryover - -
------------------ ------------------
Net Profit (Loss) $ (3,056) $ (8,249)
================== ==================
Profit (Loss) per common share $ (0.00) $ (0.00)
================== ==================
</TABLE>
Accompanying notes are an integral part of these financial statements.
<PAGE>
CLARK MELVIN SECURITIES CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
Three Months Ended
March 31,
<S> <C>
Increase (Decrease) in cash 1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net profit (loss) $ (3,056) $ (8,249)
Adjustments to reconcile net profit (loss) to net
cash (used for) provided by operating activities:
Depreciation and amortization 4,551 10,913
(Increase) decrease in operating assets:
Receivables:
Brokers and dealers (51,106) 187,227
Employee advances 1,928 (3,500)
Other 11,461 4,560
Firm trading securities/Investments (2,590)
Securities sold short
Other (3,129) 10,111
Increase (decrease) in operating liabilities:
Payable to clearing broker (8,979) (884)
Accounts payable and accrued liabilities (18,802) (138,950)
-------------- -------------
NET CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES $ (67,132) $ 58,638
============== =============
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of office equipment and leasehold improvements (9,423) (2,784)
Proceeds from sales of other investments
-------------- -------------
NET CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES $ (9,423) $ (2,784)
============== =============
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock
Payment of preferred stock dividend
Redemption of preferred stock
Payment of subscriptions
-------------- -------------
NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES $ 0 $ 0
============== =============
NET DECREASE IN CASH AND CASH EQUIVALENTS $ (76,555) $ 55,854
============== =============
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD $ 405,195 $ 265,243
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 328,640 $ 321,097
============== =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest $ 502 $ 244
</TABLE>
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 March 31, 1997, the statements of
operations for the three month period ended March 31, 1997, and 1996 and the
statements of cash flows for the three month period ended March 31, 1997 and
19961 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 March 31, 1997 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, 1996 Annual Shareholder Report.
The results of operations for the period ended March 31, 1997 are not
necessarily indicative of the operating results for the full year.
2. Firm Trading Securities
Firm trading securities consisted of the following:
March 31, December 31,
1997 1996
--------- ------------
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 1996 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 March 31, 1997 the Company has net capital of approximately $224,970 which
was approximately $124,970 in excess of its required net capital and the
Company's ratio of aggregate indebtedness to net capital was 1.70. As of
December 31, 1996 the Company had net capital of approximately $216,326, which
was approximately $116,326 in excess of its required net capital and the
Company's ratio of aggregate indebtedness to net capital was 1.90.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Results of Operations
Revenues
Total revenues increased 61% through the third quarter of 1997 compared to the
same period in 1996.
Commission increased by 65% due to increases in fixed income transactions.
The 13% increase for the first three months of 1997 in advisory and fee income
over the same period in 1996 is primarily due to increased activity in corporate
finance.
Interest and dividend income for the first quarter of 1997 are comparable to
those over the same period in 1996.
As of March 31, 1997, margin income decreased by 17% over the same period in
1996, primarily due to variations in margin deposit balances.
Trailer Fees increased by 75% through the third quarter of 1997 compared to the
same period in 1996 due to an increase in size of money market funds and mutual
funds.
Expenses
Overall, expenses increased 59% during the first quarter of 1997 compared to
that of 1996.
Compensation and benefits increased by 75% due to increases in fixed income
transactions.
The clearing fees through the first quarter of 1997 increased by 59% compared to
those in 1996 due to an increase in transactions.
Occupancy expense during the first quarter of 1997 are comparable to those over
the same period in 1996.
Business development expenses increased by 237% through the first quarter of
1997 compared to expenses made over the same period in 1996, primarily due to an
increase in marketing for the corporate finance division.
Communication expenses through the first quarter of 1997 are comparable to those
over the same period in 1996.
The 44% increase in other expenses for the first three months of 1997 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 March 31, 1997
the Company's net capital was approximately $224,970 which was approximately
$124,970 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
<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: May 5, 1997
<TABLE> <S> <C>
<ARTICLE> BD
<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> MAR-31-1997 DEC-31-1997
<CASH> 328,640 405,609
<RECEIVABLES> 567,567 529,434
<SECURITIES-RESALE> 0 0
<SECURITIES-BORROWED> 0 0
<INSTRUMENTS-OWNED> 0 0
<PP&E> 37,020 32,148
<TOTAL-ASSETS> 1,091,364 1,122,200
<SHORT-TERM> 1,039,838 1,082,546
<PAYABLES> 382,298 410,079
<REPOS-SOLD> 0 0
<SECURITIES-LOANED> 0 0
<INSTRUMENTS-SOLD> 0 0
<LONG-TERM> 0 0
145,000 145,000
0 0
<COMMON> 185,231 185,231
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 1,091,364 1,122,200
<TRADING-REVENUE> 0 0
<INTEREST-DIVIDENDS> 4,821 21,055
<COMMISSIONS> 526,608 1,063,243
<INVESTMENT-BANKING-REVENUES> 0 0
<FEE-REVENUE> 99,114 724,825
<INTEREST-EXPENSE> 461 5,916
<COMPENSATION> 434,118 1,411,957
<INCOME-PRETAX> (3,056) 190,962
<INCOME-PRE-EXTRAORDINARY> (3,056) 190,962
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (3,056) 190,962
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
