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 December 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.
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(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
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(Address of principal executive offices and Zip Code)
(303) 753-0197
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(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:
X Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of the issuer's classes of common stock,
as of February 12, 2001 is 344,128,623 shares, $.0001 par value.
CLANCY SYSTEMS INTERNATIONAL, INC.
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Balance Sheet - September 30, 2000 and December
31, 2000 (unaudited) 2 and 3
Statement of Operations - For the Three Months
Ended December 31, 1999 and 2000 (unaudited) 4
Statement of Stockholders' Equity - For the Three
Months Ended December 31, 2000 (unaudited) 5
Statement of Cash Flows - For the Three Months Ended
December 31, 1999 and 2000 (unaudited) 6
Notes to Unaudited Financial Statements 8
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION 10
1
CLANCY SYSTEMS INTERNATIONAL, INC.
BALANCE SHEET
September 30, 2000 and December 31, 2000
(Unaudited)
ASSETS
September December
--------- --------
Current assets:
Cash and cash equivalents $ 435,238 $ 363,782
Accounts receivable 294,521 345,998
Inventories (Note 2) 164,252 175,360
Prepaid expenses 12,100 8,616
---------- ----------
Total current assets 906,111 893,756
Furniture and equipment, at cost:
Office furniture and equipment 154,285 154,285
Equipment under service contract 1,270,655 1,310,943
---------- ----------
1,424,940 1,465,228
Less accumulated depreciation (1,096,481) (1,132,458)
---------- ----------
Net furniture and equipment 328,459 332,770
Other assets:
Investment in partnership 432,801 435,999
Note receivable - employe 10,618 10,587
Deposits and other 3,769 3,625
Software development cost 128,693 133,468
---------- ----------
Total other assets 575,881 583,679
---------- ----------
$1,810,451 $1,810,205
========== ==========
See accompanying notes.
2
CLANCY SYSTEMS INTERNATIONAL, INC.
BALANCE SHEET
September 30, 2000 and December 31, 2000
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
September December
---------- ---------
Current liabilities:
Notes payable - shareholder (Note 4) $ 45,000 $ 45,000
Note payable - bank (Note 4) - 70,000
Accounts payable 9,496 -
Income taxes payable 46,000 205
Deferred revenue 124,170 132,573
---------- ----------
Total current liabilities 224,666 247,778
Long-term note payable - bank 90,000 -
Deferred tax liability (Note 3) 11,000 14,000
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, 334,128,623 shares issued
and outstanding 34,413 34,413
Additional paid-in capital 1,045,175 1,045,175
Retained earnings 405,197 468,839
---------- ----------
Total stockholders' equity 1,484,785 1,548,427
---------- ----------
$1,810,451 $1,810,205
========== ==========
See accompanying notes.
3
CLANCY SYSTEMS INTERNATIONAL, INC.
INCOME STATEMENT
For the Three Months Ended December 31, 1999 and 2000
(Unaudited)
1999 2000
---- ----
Revenues:
Sales $ 15,806 $ 13,537
Service contract income 319,786 369,122
Parking ticket collections 45,403 23,919
----------- -----------
Total revenues 380,995 406,578
Costs and expenses:
Cost of sales 22,955 33,281
Cost of services 132,334 119,846
Cost of parking ticket collections 31,867 28,632
General and administrative 160,751 130,817
Research and development 11,927 10,423
------------ ------------
Total costs and expenses 359,834 322,999
Income from operations 21,161 83,579
Other income (expense):
Interest income 408 3,748
Interest expense (6,888) (2,818)
------------ ------------
Total other income (expense) (6,480) 930
------------ ------------
Income before provision for income taxes
and gain in equity-basis partnership 14,681 84,509
Provision for income taxes (5,400) (22,914)
Gain in equity basis partnership (net of tax
expense of $2,100 -1999 and $1,151 -2000) 3,900 2,047
------------ ------------
Net income $ 13,181 $ 63,642
============ ============
Basic net income per common share $ * $ *
============ ============
Weighted average number of shares
outstanding 334,100,000 337,600,000
=========== ===========
* Less than $.01 per share
See accompanying notes.
4
>
CLANCY SYSTEMS INTERNATIONAL, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
For the Three Months Ended December 31, 2000
(Unaudited)
Additional
Common stock paid-in Retained
Shares Amount capital earnings
------ ------ ---------- --------
Balance, September 30, 2000 344,128,623 $34,413 $1,045,175 $405,197
Net income for the three months
ended December 31, 2000 - - - 63,642
----------- ------- ---------- --------
Balance, December 31, 2000 344,128,623 $34,413 $1,045,175 $468,839
=========== ======= ========== ========
See accompanying notes.
5
CLANCY SYSTEMS INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS
For the Three Months Ended December 31, 1999 and 2000
(Unaudited)
1999 2000
---- ----
Cash flows from operating activities:
Net income $ 13,181 $ 63,642
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 60,846 49,527
Deferred income tax (benefit) expense (1,350) 3,000
Changes in assets and liabilities:
Accounts receivable (20,157) (51,477)
Inventories 5,251 (11,108)
Prepaid expenses 2,751 3,484
Gain in equity basis partnership (6,000) (3,198)
Accounts payable (11,244) (9,496)
Income taxes payable 8,850 (45,795)
Deferred revenue 13,619 8,403
--------- ---------
Total adjustments 52,566 (56,660)
--------- ---------
Net cash provided by operating
activities 65,747 6,982
Cash flows from investing activities:
Acquisition of furniture and equipment - net (29,803) (40,288)
Receipts from note receivable - 31
Increase in software development costs (21,666) (18,181)
--------- ---------
Net cash used in investing activities (51,469) (58,438)
Cash flows from financing activities:
Payments on note payable - bank (40,000) (20,000)
Payments on note payable - shareholder (55,000) -
--------- ---------
Net cash used in financing activities (95,000) (20,000)
--------- ---------
Decrease in cash and cash equivalents (80,722) (71,456)
Cash and cash equivalents at beginning of
period 315,579 435,238
--------- ---------
Cash and cash equivalents at end of period $ 234,857 $ 363,782
========= =========
See accompanying notes.
6
CLANCY SYSTEMS INTERNATIONAL, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
December 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, 2000 and December 31, 2000,
and the results of operations and cash flows for the periods ended December
31, 1999 and 2000.
2. Inventories
Inventories consist of the following at:
September 30, December 31,
2000 2000
---- ----
Finished goods $ 7,800 $ 43,840
Work in process - 43,840
Purchased parts and supplies 156,452 87,680
-------- --------
$164,252 $175,360
======== ========
3. Income taxes
The provision for income taxes for the three months ended December 31,
1999 and 2000 is based on the expected tax rate for the year.
As of September 30, 2000 and December 31, 2000, total deferred tax assets
and liabilities are as follows:
September 30, December 31,
2000 2000
---- ----
Deferred tax assets $ 74,000 $ 77,000
Deferred tax liabilities (85,000) (91,000)
-------- --------
$(11,000) $(14,000)
======== ========
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. During the year
ended September 30, 2000, the due dates of two of the remaining notes for
a total of $45,000 were extended to May 1 and June 30, 2001.
7
4. Notes payable (continued)
Bank:
In October 2000, the Company extended the due date of its note payable -
bank to October 15, 2001. 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 shares of the Company's common stock
valued at $255,344 (17,489,315 shares of common stock at $.0146 per
share). The businesses will be recorded by the Company at the president's
historical cost basis in the trademarks and proprietary technology
related to the websites which approximates the par value of the
shares to be issued of $1,748. The shares are to be issued during 2001.
8
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Material Changes in Financial Condition
At December 31, 2000, the Company had working capital of $645,978
derived primarily from contract sales, as compared to working capital
of $681,445 at September 30, 2000. 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 December 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 higher than the prior year's quarter
by 7% which is primarily due to obtaining new professional services
contracts. Expenses decreased by 10% under the prior year's quarter
due to elimination of expenses related to the Maywood contract. The
Company reported a profit of $63,642 for the 2000 quarter as compared
to a net profit of $13,181 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.
9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On December 18, 2000 the Company entered into a settlement
agreement with Michael Yardich who had posted several
chat room boards as GasAttack and Anthrax3. Under the
settlement Yardich paid a monetary penalty, posted a
statement of retraction on Ragion Bull Chat Board, and
agreed to cease posting or discussing the Company in
any manner in the future.
On September 19, 2000 the Company filed an action
in Suffolk County Superior Court against John Short,
Syracuse, NY, who posted on Darth4, MrDarth4 and
possible other aliases on Raging Bull and other chat
room boards. Relief sought includes monetary damages
for harm done to the Company and its officers in an
amount not yet determined, retraction of false and
damaging statements and for the subject to cease
and desist posting or discussing the Company, its
officers and any activities related thereto. The
company is currently pursuing identities of and
subsequent action against several other John Does.
Item 2. Changes in Securities and Use of Proceeds
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1Financial Data Schedule (1)
(b) During the quarter ended December 31, 2000, the Registrant has
filed no reports on Form 8-K
(1) Filed herewith
10
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: February 14, 2001 CLANCY SYSTEMS INTERNATIONAL, INC.
(Registrant)
By: /s/ Stanley J. Wolfson, President
and Chief Executive Officer
11