FORM 10-QSB
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 0R 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: Act No. 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)
(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:
Indicated the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
336,889,147 common shares were outstanding as of February 9, 1996.
CLANCY SYSTEMS INTERNATIONAL, INC.
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Balance Sheet - September 30, 1995 and December 31, 1995 2 and 3
Statement of Operations - For the Three Months Ended
December 31, 1994 and 1995 4
Statement of Stockholders' Equity - For the Three Months
Ended December 31, 1995 5
Statement of Cash Flows - For the Three Months Ended
December 31, 1994 and 1995 6
Notes to Unaudited Financial Statements 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION 8
CLANCY SYSTEMS INTERNATIONAL, INC.
BALANCE SHEET
SEPTEMBER 30, 1995 AND DECEMBER 31, 1995
(Unaudited)
ASSETS
September December
---------- ----------
Current assets:
Cash, including interest bearing
accounts of $166,616 (September)
and $167,978 (December) $ 236,404 $ 200,630
Accounts receivable, less allowance
for doubtful accounts of $0 175,281 171,313
Inventories (Note 2) 178,154 173,498
Income taxes refundable 12,000 17,000
Deferred tax asset (Note 3) 5,000 5,000
Other current assets - 2,768
---------- ---------
Total current assets 606,839 570,209
Furniture and equipment, at cost:
Office furniture and equipment 98,278 119,748
Equipment under service contracts 1,207,529 1,206,434
---------- ----------
1,305,807 1,326,182
Less accumulated depreciation 848,617 844,099
---------- ----------
Net furniture and equipment 457,190 482,083
Other assets:
Deposits and other 19,947 21,927
Software licenses 16,882 16,882
Software development costs 205,692 211,227
---------- ----------
242,521 250,036
Less accumulated amortization 147,237 156,468
---------- ----------
Net other assets 95,284 93,568
$1,159,313 $1,145,860
========== ==========
CLANCY SYSTEMS INTERNATIONAL INC.
Balance Sheet
September 30, 1995 and December 31, 1995
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
September December
---------- ----------
Current liabilities:
Warranty reserve $ 7,300 $ 6,900
Deferred revenue 62,521 63,786
---------- ----------
Total current liabilities 69,821 70,686
Deferred tax liability (Note 3) 9,000 9,000
Stockholders' equity:
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 33,689 33,689
Additional paid-in capital 1,030,674 1,030,674
Retained earnings 16,129 1,811
---------- ----------
Total stockholders' equity 1,080,492 1,066,174
---------- ----------
$1,159,313 $1,145,860
========== ==========
CLANCY SYSTEMS INTERNATIONAL, INC.
STATEMENT OF OPERATIONS
For the Three Months Ended December 31, 1994 and 1995
(Unaudited)
1994 1995
---- ----
Revenues $ 268,826 $ 257,416
Costs and expenses:
Cost of sales 4,983 20,564
Contract support costs 45,024 50,229
General and administrative 101,072 128,667
Depreciation and amortization 61,445 56,755
Research and development 6,157 17,328
Loss on disposal of fixed assets - 4,552
---------- ----------
Total costs and expenses 218,681 278,095
Income (loss) from operations 50,145 (20,679)
Other income (expense)
Interest income 305 1,361
Interest expense (206) -
---------- ----------
Total other income (expense) 99 1,361
Income (loss) before income taxes
provision for income taxes 50,244 (19,318)
Current income tax expense (benefit)
(Note 3) - (5,000)
---------- ----------
Net income (loss) $ 50,244 $ (14,318)
========== ==========
Net income (loss) per share $ * $ (*)
Weighted average number of shares
outstanding 336,900,000 336,900,000
=========== ===========
* less than $.01 per share
CLANCY SYSTEMS INTERNATIONAl, INC.
STATEMENT OF STOCKHOLDER'S EQUITY
For the Three Months Ended December 31, 1995
(Unaudited)
Additional
Common Stock paid-in Retained
Shares Amount capital earnings
-------------------- ---------- ----------
Balance, September
30, 1995 336,889,149 $33,689 $1,030,674 $ 16,129
Net loss for the
three months ended
December 31, 1995 - - - (14,318)
------------ ---------- ---------- ----------
Balance December
31, 1995 336,889,149 $33,689 $1,030,674 $ 1,811
=========== ========= ========== ==========
CLANCY SYSTEMS INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS
For the Three Months Ended December 31, 1994 and 1995
(Unaudited)
1994 1995
---- ----
Cash flows from operating activities:
Net income (loss) $ 50,244 $(14,318)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 61,445 56,755
Increase (decrease) in deferred
revenue (28,732) 1,265
Decrease in accounts receivable 97,117 3,968
Decrease in inventories 4,818 4,656
Increase in income taxes refundable - (5,000)
Increase in other current assets - (3,690)
Decrease in accounts payable (7,580) -
Decrease in accrued expenses (2,000) -
Decrease in warranty reserve - (400)
Loss on disposal of fixed assets - 4,552
---------- ----------
Total adjustments 125,068 62,106
---------- ----------
Net cash provided by operating activities 175,312 47,788
Cash flows from investing activities:
Acquisition of furniture and equipment
and software development costs and
patent costs (27,535) (81,582)
Increase in deposits and other (1,445) (1,980)
---------- ----------
Net cash used in investing activities (28,980) (83,562)
---------- ----------
Cash flows from financing activities:
Repayment of notes payable (59,530) -
---------- ----------
Net cash used in financing activities (59,530) -
---------- ----------
Increase (decrease) in cash 86,802 (35,774)
Cash at beginning of period 44,705 236,404
---------- ----------
Cash at end of period $131,507 $200,630
========== ==========
CLANCY SYSTEMS INTERNATIONAL, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
December 31, 1995
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, 1995 and
December 31, 1995, and the results of operations and cash flows for
the periods ended December 31, 1994 and 1995.
2. Inventories
Inventories consist of the following at:
September 30, December 31,
1995 1995
---------- ------------
Finished goods $ 8,800 $ 8,675
Work in process 2,587 26,025
Purchased parts and supplies 166,767 138,798
---------- ----------
$178,154 $173,498
========== ==========
3. Income taxes
The provision for income taxes for the quarter ended December 31,
1995 is based on the expected tax rate for the year.
As of September 30, 1995 and December 31, 1995, total deferred tax
assets and liabilities are as follows:
September 30, December 31,
1995 1995
---------- ----------
Deferred tax assets $ 3,000 $ 3,000
Deferred tax assets resulting
from loss carryforward 2,000 2,000
Deferred tax liabilities (9,000) (9,000)
---------- ----------
$ (4,000) $ (4,000)
========== ==========
Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Material Changes in Financial Condition
At December 31, 1995 the Company had working capital of $499,523
derived primarily from contract sales, as compared to working
capital of $537,018 at September 30, 1995. 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, 1995 the Company generated
revenues from contract sales to the City of Oklahoma City, the
Hertz Corporation, New Orleans, Berkeley California, Auraria Higher
Education Center, Richmond Virginia and other professional service
contract installations. Hertz Corporation, Oklahoma City, OK and
Berkeley, CA each represented in excess of 5% of total revenues.
New clients added to customer base during this period are Yonkers,
NY; Naperville, IL; Piedmont Triad Airport in Greensboro, NC;
Burnaby BC, and South Carolina State University in Orangeburg, SC.
Revenue for the 1995 quarter was lower than the prior year's
quarter, due to lower sales volume as a result of a weather-related
decline of ticket issuance by several clients. The Company
reported a net loss of $14,318 for the 1995 quarter as compared to
net income of $50,244 for the prior year's quarter as a result of
increased R & D expenses, increased travel expenses, and weather-related
decline of ticket issuance by several clients.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The registrant reported in its annual report filed on Form 10-KSB
for the fiscal year ended September 30, 1995 under Item 3 Legal
Proceedings a lawsuit filed by the Registrant on November 4, 1995
in the United States District Court for the District of Colorado
naming Symbol Technologies, Inc. as defendant, alleging patent
infringement. See the Form 10-KSB for more complete description of
such lawsuit.
Item 6. Exhibits and Reports on Form 8-K
(b) During the quarter ended December 31, 1995 the Registrant
has filed no reports on Form 8-K.
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 12, 1996 Clancy Systems International, Inc.
(Registrant)
By: /s/ Stanley J. Wolfson
Stanley J. Wolfson, President
and Chief Executive Officer
By: /s/ Lizabeth M. Wolfson
Lizabeth M. Wolfson, Secretary-
Treasurer and Chief Financial
and Chief Accounting Officer