The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Although
Beijing Clancystarted business operation and had generated revenue for the three months ended October 31, 2021, the Company incurred loss, an accumulated deficit and experienced negative cash flow from operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The Company's business objective for the next twelve month and beyond such time will be to expand business operations and increase revenue. The Company will focus on product management, digital marketing, refined user operations, performance optimization, after-sales service, etc. to provide customers with more convenient and high- quality service experience. The Covid-19 pandemic presents novel challenges and a chaotic business environment globally. The duration and intensity of the impact of the Covid-19 to business entities differ geographically. Covid-19 has a limited impact on the Company's activities since Shanghai Clancy has no activities and
Beijing Clancyoperations are limited to Beijing, PRC. The impact on the Company's result of operation and the financial statements was immaterial as of October 31, 2021.
NOTE 3 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation The consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in
the United States of America("US GAAP") and include the accounts of Clancy Corp.and its wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. F-5 Table of Contents Fiscal year end
The end of the Company’s financial year is
Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. Income Taxes Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. Revenue Recognition The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts. The core principle of ASC 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognizes revenue in accordance with that core principle by applying the following steps: Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. Cash and Cash Equivalents
Cash and cash equivalents consist of all cash balances and highly liquid investments with original maturities of three months or less. Due to the short maturity of these investments, the carrying values approximate their fair value.
Concentration of Credit Risk The Company is exposed to credit risk in the normal course of business, primarily related to cash and cash equivalents. A portion of the Company's cash and cash equivalents are deposited with Industrial and Commercial Bank of China Limited in the PRC, which is not insured or otherwise protected. The Company had deposits of
$23,693as of October 31, 2021. The Company has not experienced any losses in such accounts in the PRC. Leases
The Company determines if an agreement is an early lease. Operating leases are included in the assets of the right to use operating leases (“ROU”) and operating lease debts in the consolidated balance sheets. Finance leases are included in ROU finance lease assets and finance lease liabilities on the consolidated balance sheets.
ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease and finance lease ROU assets and liabilities recognized at
October 31, 2021based on the present value of lease payments over the lease term discounted using the rate implicit in the lease. In cases where the implicit rate is not readily determinable, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Lease expense for lease payments is recognized on a straight-line basis over the
lease term. F-6 Table of Contents
The Company has elected not to recognize the assets and liabilities of the operating lease ROU arising from short-term leases.
Currency of declaration and conversion
The financial statements of the Company's foreign subsidiaries are measured using the local currency, Renminbi ("RMB"), as the functional currency; whereas the functional currency of
Clancy Corp.and reporting currency of the Company is the United Statesdollar ("USD" or "$"). The Company has operations in Chinawhere the local currency of RMB is used to prepare the consolidated financial statements which are translated into the Company's reporting currency, U.S.dollars. The local currency of RMB is the functional currency for the operations outside the United States. Changes in the exchange rates between this currency and the Company's reporting currency, are partially responsible for some of the periodic changes in the consolidated financial statements. Assets and liabilities of the Company's foreign operations are translated into U.S.dollars at the spot rate in effect at the applicable reporting date. Revenues and expenses of the Company's foreign operations are translated at the average exchange rate during the applicable period. The resulting unrealized cumulative translation adjustment is recorded as a component of accumulated other comprehensive income (loss) in stockholders' deficit. Realized and unrealized transaction gains and losses generated by transactions denominated in a currency different from the functional currency of the applicable entity are recorded in general and administrative expense in the period in which they occur. For the three months period ended October 31, 2021and 2020 there were no realized or unrealized transaction gains and losses generated by transactions denominated in a currency different from the functional currency of the applicable entities.
The exchange rates used to convert RMB amounts to USD for the purposes of preparing the consolidated financial statements were as follows:
Schedule of exchange rates October 31, October 31, 2021 2020 Period end USD: RMB exchange rate 6.39 6.69 Average USD: RMB exchange rate 6.45 6.83 Foreign Operations All of the Company's operations and assets are located in
Beijing China. The Company may be adversely affected by possible political or economic events in this country. The effect of these factors cannot be accurately predicted. Basic Income (Loss) Per Share The Company computes income (loss) per share in accordance with FASB ASC 260 "Earnings per Share". Basic income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. In the three months ended October 31, 2021and 2020, there were no potentially dilutive equity instruments issued or outstanding. Comprehensive Income The Company follows Financial Accounting Standards Board Accounting Standards Codification ("FASB ASC") 220, "Comprehensive Income," in reporting comprehensive income. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. The Company has one item of other comprehensive loss, consisting of a currency translation adjustment of $1,195for the three months ended October 31, 2021compared to $1,824for the three months ended October 31, 2020. F-7 Table of Contents Financial Instrument
The carrying value of the Company's short-term financial instruments, such as accounts payable and advances, approximates their fair values because of their short maturities. Stock-Based Compensation
Stock-based compensation is accounted for at fair value in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has
not granted any stock options.
Recently adopted accounting position papers
Recently published accounting position papers not yet adopted
October 31, 2021, there was no recently issued accounting standards not yet adopted which would have a material effect on the Company's consolidated financial statements.
NOTE 4 – RIGHT OF USE GOODS UNDER OPERATIONAL LEASE
NOTE 5 – LEASE LIABILITIES – OPERATIONAL LEASE
Future minimum payments under the operating lease from
Schedule of future minimum lease payments
12 months ended
October 31, 2021 $ 81,14712 months ended October 31, 2022- 12 months ended October 31, 2023- Total Lease payments 81,147 Less Imputed Interest (4,358 ) Net Leaseliability $ 76,789
NOTE 6 – TRANSACTIONS BETWEEN RELATED PARTIES
The Company's major shareholder has orally agreed to loan funds to the Company for its operations on an as needed basis. For the three months ended
October 31, 2021, the major shareholder loaned the Company $41,017and for the three months ended October 31, 2020, the Company paid back to the major shareholder $57,206.
NOTE 7 – RESEARCH AND DEVELOPMENT COSTS
The Company incurred significant expenses in research and development (R&D). For the three months ended
October 31, 2021and 2020, the R&D expenses were $70,481and $39,531, respectively. F-8 Table of Contents NOTE 8 - INCOME TAXES
The income tax expense was
There is no income tax benefit for the losses for the three months ended
October 31, 2021and 2020, since management has determined that the realization of the net tax deferred asset is not assured and has created a valuation allowance for the entire amount of such benefits. NOTE 9 - SUBSEQUENT EVENTS Management has evaluated subsequent events through the date of filing the financial statements with the Securities and Exchange Commission, the date the financial statements were available to be issued. Management is not aware of any reportable events that occurred subsequent to the balance sheet date up to
the date of filing this report. F-9 Table of Contents
Point 2. Discussion and analysis by management of the financial situation and operating results
Forward-Looking Statements Certain statements made in this quarterly report on Form 10-Q are "forward-looking statements" in regard to the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the registrant to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company's plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements included in this quarterly report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the registrant or any other person that the objectives and plans of the registrant will be achieved.
Substantial risks exist with regard to an investment in the Company. These risks include, but are not limited to, the factors discussed in our annual report on Form 10-K for the year ended.
? We have incurred significant losses and expect to incur future losses;
? Our current financial situation and our immediate need for capital;
? Potential significant dilution resulting from the issuance of new securities
for any financing, debt conversion or any business combination; and
? We are a “penny stock” company.
Description of Business
Clancy Corp.("the Company") was incorporated on March 22, 2016under the laws of the State of Nevada, USA. The Company initially was formed for the purpose of producing and selling handcrafted soaps. On April 13, 2020, the Company registered Shanghai Clancy Enterprise Management Co., Ltd.(Shanghai Clancy) as a wholly foreign-owned entity and as a wholly owned subsidiary in Shanghai, China. Shanghai Clancy had no business activity from inception through October 31, 2021.
August 1, 2020to April 30, 2021, the Company business centered on providing IT services to a small number of clients. In May 2021, the Company ceased its IT services and re-focused its operations to provide marketing services to small and median sized businesses. Clancy is now a product marketing consulting firm that provides product marketing consulting services to clients. The Company will develop marketing programs and strategies in line with customer needs. Our marketing programs will provide clients with detailed analysis on the market data in their industry, including historical data. We also will assist clients expand their marketing communication channels including but not limited to advertisements in the business journals, electronical communication tools such as WeChat marketing programs, etc. We charge an agreed upon fee based on technical difficulties and the marketing reach of the programs. -3- Table of Contents Results of Operations
While we commenced limited operations during the first fiscal quarter last year, at the present time, the Company still is considered a shell company as defined in Rule 504 of the Act. One of our principal business objective for the next 12 months and beyond such time will be to achieve meaningful business operations. Alternatively, if we are unable to successfully develop our business, we may seek a combination with a business rather than immediate, short-term earnings. The Company will not restrict our potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire
any type of business. Revenues For the three months ended
October 31, 2021and 2020, the company had revenues of $0and 14,516, respectively. As mentioned above, we ceased our IT business in May 2021, and we have embarked on a new business model of providing marketing services to clients. We did not receive any revenues from our new business model during the current three month period. The revenues for the 2020 period were from our technology related business conducted through our WOFE, Shanghai Clancy and its subsidiary, Beijing Clancy, which business has now ceased. Cost of Goods Sold For the three month ended October 31, 2021and 2020, the Company had cost of goods sold $0and 19,255, respectively. Cost of goods sold includes salaries and benefits of IT technicians. The decrease in cost of goods sold is due to the termination of our IT business which ceased in May 2021. We did not have any cost of goods sold for our new business operations during the same period of the three months ended October 31, 2021. Operating Expenses For the three months ended October 31, 2021, the Company had total operating expenses of $106,200, consisting of $16,642in lease expense, $19,077in general and administrative expenses and $70,481in research and development expense. These amounts compare with total operating expenses of $64,785, consisting of lease expense of $15,437and general and administrative expense of $9,817recorded in the three months ended October 31, 2020. The increase of $41,415was due in large part to research and develop costs associated with our recent
business developments. Net Loss
For the three months ended
Liquidity and capital resources
The Company had
The Company cannot guarantee that it will be able to continue to meet its cash requirements for at least the next twelve months.
The following is a summary of the Company’s cash flows from operating and financing activities for the quarter ended.
Three Month Three Ended Month Ended October 31, 2021 October 31, 2020 Total Net Cash Used by Operating Activities $ (86,710 ) $ (14,230 ) Total Net Cash Provided by Financing Activities 41,017 26,142 Effects of Exchange rate Changes on Cash
129 740 Net Change in Cash $ (45,564 ) $ 12,652 -4- Table of Contents Operating Activities During the three month ended
October 31, 2021, the Company had a net loss of $106,195and after adjusting for lease expense, research and development expense, prepaid expense and increase in accounts payable, a net cash used in operating activities of $86,710was recorded. By comparison, during the three month period ended October 31, 2020, the Company had a net loss of $69,524and after adjusting for lease expense, research and development expense, prepaid expense and increase in accounts payable, the Company incurred net cash used in operating activities of $14,230. Financing Activities During the three months ended October 31, 2021, the Company received $41,017in advances from the Company's major shareholder, which resulted in $41,017in total net cash provided by financing activities for the period. By comparison, during the three months ended October 31, 2020, the Company repaid $57,206in advances from the Company's majority shareholder offset by $83,348in advances received from loans to two non-affiliates, which resulted in $26,142in total net cash provided by financing activities for the period. Our financial statements reflect the fact that we do not have enough revenue to cover expenses. We are at present under-capitalized. The Company is dependent upon the receipt of capital investment or other financing to fund its ongoing operations and to execute its business plan of seeking a combination with a private operating company. In addition, the Company is dependent upon certain related parties to provide continued funding and capital resources. If continued funding and capital resources are unavailable at reasonable terms, the Company may not be able to implement its plan of operations.
Off-balance sheet provisions
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors. Contractual Obligations None.
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