NOTE 2 – MANAGEMENT PLANS
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has incurred significant losses and experienced negative cash flow
from operations since inception. These conditions raise substantial doubt about the Company’s ability to continue as a going
concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The Company’s principal business objective for the next twelve
months and beyond such time will be to achieve long-term growth potential through a combination with a business rather than immediate,
short-term earnings. The Company will not restrict its potential candidate target companies to any specific business, industry
or geographical location and, thus, may acquire any type of business. The Company believes that its existing cash resources will
not be sufficient to sustain operations during the next twelve months. The Company’s management plans to engage in very limited
activities without incurring any significant liabilities that must be satisfied in cash until a source of funding is secured. Mr.
Gaoyang Liu, the major stockholder, CEO and director of the Company, has agreed to provide continued financial support to the Company.
The Company currently needs to generate revenue in order to sustain its operations. In the event that the Company cannot generate
sufficient revenue to sustain its operations, the Company will need to reduce expenses or obtain financing through the sale of
debt and/or equity securities. The issuance of additional equity would result in dilution to existing shareholders. If the Company
is unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to the Company,
the Company would be unable to execute upon the business plan or pay costs and expenses as they are incurred, which would have
a material, adverse effect on the business, financial condition and results of operations.
CLANCY CORP.
NOTES TO THE FINANCIAL STATEMENTS
OCTOBER 31, 2019
NOTE 3 – SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION.
The accompanying unaudited financial statements have been prepared
in accordance with the U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information
and with the instructions for Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying unaudited financial
statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report
on Form 10-K for the year ended July 31, 2019 as filed with the SEC. Operating results for the three months ended October 31, 2019
are not necessarily indicative of the results that may be expected for the year ending July 31, 2020.
Fiscal year end
The Company’s year end is July 31st.
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 Financial Accounting
Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts (“ASC
606”). 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.
Basic Income (Loss) Per Share
The Company computes income (loss) per share in accordance with
FASB ASC 260 “Earnings per Share”.
Basic loss per share is computed by dividing net income (loss) available to common shareholders 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.
As of October 31, 2019, and 2018, there were no potentially dilutive debt or equity instruments issued or outstanding.
Comprehensive Income
The Company follows FASB ASC 220 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. Since the Company has no items of other comprehensive
income, comprehensive loss is equal to net loss.
CLANCY CORP.
NOTES TO THE FINANCIAL STATEMENTS
OCTOBER 31, 2019
NOTE 3 – SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial Instruments
The Company’s financial instruments consist of loans from
related party. The carrying amount of this financial instrument approximates its fair value due to its relatively short maturity
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 Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, Leases
(Topic 842) and subsequent related updates. The core principle of Topic 842 is that a lessee should recognize the assets
and liabilities that arise from operating leases. The Company adopted the standard effective January 1, 2019 under the optional
transition method which allows the entity to apply the new lease standard at the adoption date and recognize a cumulative-effect
adjustment, if any, to the opening balance of retained earnings in the period of adoption. The standard had a material impact on
the balance sheet (see Note 4).
Recently Issued Accounting Pronouncements Not Yet Adopted
As of October 31, 2019, there are no recently issued accounting
standards not yet adopted which would have a material effect on the Company’s financial statements.
NOTE 4 – COMMITMENTS
AND CONTINGENCIES
The Company has entered into a one-year rental agreement for a $300
monthly fee, starting on September 1, 2016. Leased Premise with the area of 40 square meters is located at str. Vizantiou 28, Strovolos,
Lefkosia, Cyprus, 2006. This premise is used as a manufacturing area. The Company extended the lease agreement until September
1, 2019. The Company paid $0 for rent for the three months ended October 31, 2019 and $0 for rent for the three months ended October
31, 2018. The lease terminated as of September 1, 2019.
On October 19, 2017 the Company has
entered into a five-year rental agreement for a $540 monthly fee, starting on November 1, 2017. Leased Premise with the area of
74 square meters is located at 8 Stasinou Ave, Lefkosia 1060, Nicosia, Cyprus. The Company paid $0 for rent for the three months
ended October 31, 2019 and $0 for rent for the three months ended October 31, 2018.
Due to the adoption of the new lease standard under the optional
transition method which allows the entity to apply the new lease standard at the adoption date, the Company has capitalized the
present value of the minimum lease payments commencing August 1, 2019, using an estimated incremental borrowing rate of 6%. The
minimum lease payments do not include common area annual expenses which are considered to be non-lease components.
As of August 1, 2019, the operating lease right-of-use asset
and operating lease liability amounted to $17,951 with no cumulative-effect adjustment to the opening balance of accumulated deficit.
There are no other material operating leases. The Company has
elected not to recognize right-of-use assets and lease liabilities arising from short-term leases.
CLANCY CORP.
NOTES TO THE FINANCIAL STATEMENTS
OCTOBER 31, 2019
NOTE 4 – COMMITMENTS
AND CONTINGENCIES (CONTINUED)
Future minimum lease payments under the operating lease as
of October 31, 2019 are:
2019
|
$ 2,160
|
2020
|
6,480
|
2021
|
6,480
|
2022
|
5,940
|
Total Lease payments
|
21,060
|
Less imputed interest
|
3,109
|
Total
|
17,951
|
Total lease expense under operating leases for the three months
ended October 31, 2019 was $0.
NOTE 5 – LOAN
FROM DIRECTOR
Immediately prior to June 28, 2019, our then sole officer and director
had a loan outstanding from the Company in the amount of $23,334. This loan was unsecured, non-interest bearing and due on demand.
As part of change of control transaction which occurred on June 28, 2019, the outstanding balance was forgiven and written off.
As a result, the balance due to the former officer and director was $0 as of July 31, 2019. On that same date (June 28, 2019),
the Company also assigned all assets and liabilities to the former officer and director of the Company. In connection with the
change of control, the Company ceased its business operations and is now a “shell company” as defined under Rule 405
promulgated under the Securities Act of 1933, as amended. As of October 31, 2019, the new officer and director has loaned the Company
the sum of $13,889. This loan is unsecured, non-interest bearing and due on demand.
NOTE 6– INCOME
TAXES
Income tax expense was $0 for the three months ended October 31,
2019 and 2018.
As of August 1, 2019, the Company had no unrecognized tax benefits
and, accordingly, the Company did not recognize interest or penalties during the three months ended October 31, 2019 related to
unrecognized tax benefits. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was signed into law. This legislation reduced
the federal corporate tax rate from the previous 35% to 21%. There was no accrual for uncertain tax positions as of October 31,
2019. The tax year 2016 and thereafter are subject to examination by major tax jurisdictions.
There is no income tax benefit for the losses for the three months
ended October 31, 2019 and 2018, 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.
As a result of the change of control, the net operating loss will
be limited from that date forward.
Item 2. Management’s Discussion
and Analysis of Financial Condition and Results of Operations.
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 respect to an investment in
the Company. These risks include but are not limited to, those factors discussed in our Annual Report on Form 10-K for the fiscal
year ended July 31, 2019, filed with the Securities and Exchange Commission (“Commission”) on November 11, 2019. More
broadly, these factors include, but are not limited to:
|
●
|
We have incurred significant losses and expect to incur future losses;
|
|
●
|
Our current financial condition and immediate need for capital;
|
|
●
|
Potential significant dilution resulting
from the issuance of new securities for any funding, debt conversion
or any business combination; and
|
|
●
|
We are a “penny stock” company.
|
Description of
Business
Clancy Corp. (the
“Company”) was incorporated under the laws of the State of Nevada on March 22, 2016.
Effective June 28, 2019 (“Effective
Date”), a change of control occurred with respect to the Company. Pursuant to the terms of Stock Purchase Agreement, Gaoyang
Liu purchased 2,000,000 shares of Company issued and outstanding common stock from Iryna Kologrim, the then sole officer, director,
and majority shareholder of the Company. The 2,000,000 shares represented 64.4% of the shares of outstanding common stock of the
Company. In connection with the transaction, Mr. Liu became the sole officer and director of the Company and Ms. Kologrim resigned
in all capacities with respect to the Company. In addition, as of the Effective Date, the Company assigned all of the assets to
Ms. Kologrim and she waived all liabilities, including any outstanding loans, and claims against the Company. In connection with
the change of control, the Company ceased its business operation and is now a “shell company” as defined under Rule
405 promulgated under the Securities Act of 1933, as amended (the “Act”). Prior to such time, the Company produced
and sold organic soaps.
The Company is a shell company as
defined in Rule 504 of the Securities Act of 1933, as amended (the “Act”). Our principal business objective for the
next 12 months and beyond such time will be to achieve long-term growth potential through 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.
The Company currently does not engage
in any business activities that provide cash flow. During the next twelve months we anticipate incurring costs related
to:
(i) filing
Securities Exchange Act of 1942 (“Exchange Act”) reports, and
(ii) investigating,
analyzing and consummating an acquisition.
We believe we will be able to meet
these costs through deferral of fees by certain service providers and additional amounts, as necessary, to be loaned to or invested
in us by our stockholders, management or other investors. As of October 31, 2019, the Company has $0 in cash. There are no assurances
that the Company will be able to secure any additional funding as needed. Currently, our ability to continue as a going
concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet
our obligations and repay our liabilities arising from normal business operations when they come due. Our ability to
continue as a going concern is also dependent on our ability to find a suitable target company and enter into a possible reverse
merger with such company. Management’s plan includes obtaining additional funds by equity financing through a reverse merger
transaction and/or related party advances; however there is no assurance of additional funding being available.
The Company may consider acquiring
a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new
products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial
or operating difficulties and is in need of additional capital. In the alternative, a business combination may involve the acquisition
of, or merger with, a company which does not need substantial additional capital but which desires to establish a public trading
market for its shares while avoiding, among other things, the time delays, significant expense, and loss of voting control which
may occur in a public offering.
Our management has not entered into
any agreements with any party regarding a business combination. Any target business that is selected may be a financially
unstable company or an entity in its early stages of development or growth, including entities without established records of sales
or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable
and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity in an
industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a
particular target business, there can be no assurance that we will properly ascertain or assess all significant risks. Our
management anticipates that it will likely be able to effect only one business combination, due primarily to our limited financing
and the dilution of interest for present and prospective stockholders, which is likely to occur as a result of our management’s
plan to offer a controlling interest to a target business in order to achieve a tax-free reorganization. This lack of diversification
should be considered a substantial risk in investing in us, because it will not permit us to offset potential losses from one venture
against gains from another.
We will not acquire or merge with any entity
which cannot provide audited financial statements at or within a reasonable period of time after closing of the proposed transaction.
We are subject to all the reporting requirements included in the Exchange Act. Included in these requirements is our duty to file
audited financial statements as part of our Form 8-K to be filed with the Securities and Exchange Commission upon consummation
of a merger or acquisition, as well as our audited financial statements included in our annual report on Form 10-K. If such audited
financial statements are not available at closing, or within time parameters necessary to insure our compliance with the requirements
of the Exchange Act, or if the audited financial statements provided do not conform to the representations made by the target business,
the closing documents may provide that the proposed transaction will be voidable at the discretion of our present management.
A business combination with a target business
will normally involve the transfer to the target business of the majority of our common stock, and the substitution by the target
business of its own management and board of directors.
The Company anticipates that the selection
of a business combination will be complex and extremely risky. Because of general economic conditions, rapid technological advances
being made in some industries and shortages of available capital, our management believes that there are numerous firms seeking
the perceived benefits of becoming a publicly traded corporation. Such perceived benefits of becoming a publicly traded corporation
include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing
liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar
benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the like through the
issuance of stock. Potentially available business combinations may occur in many different industries and at various stages of
development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely
difficult and complex.
The Company’s ability to continue
as a going concern is dependent upon its ability to develop additional sources of capital, locate and complete a merger with another
company and ultimately achieve profitable operations. No assurances can be given that the Company will be successful in locating
or negotiating with any target company.
Results of Operations
No revenue has been generated by the Company during the three months
ended October 31, 2019 and 2018. It is unlikely the Company will have any revenues unless it is able to affect an acquisition
or merger with an operating company, of which there can be no assurance. It is management’ s assertion that
these circumstances may hinder the Company’s ability to continue as a going concern. The Company’s plan of operation
for the next twelve months shall be to continue its efforts to locate suitable acquisition candidates.
For the three months ended October 31,
2019 and 2018
During the three months ended October 31, 2019, the Company incurred
a net loss from continuing operations of $14,118, comprised of $12,737 in general and administrative expenses (which includes accounting,
and other professional service fees incurred in relation to the preparation and filing of the Company’s periodic reports
with the Commission) and $1,381 in amortization costs.
During the three months ended October 31, 2018, due to the discontinuation
of operations which occurred with the change of control on June 28, 2019 discussed above, the Company had a loss from discontinued
operations of $11,783.
Liquidity and Capital Resources
As of October 31, 2019 and July 31, 2019,
respectively, the Company had no current assets. As of October 31, 2019, the Company has an operating lease right of $16,570, resulting
in total assets of $16,570 and nil as of October 31, 2019 and 2018, respectively. The Company’s current liabilities as of
October 31, 2019 totaled $13,889 in related party loans and $5,520 in current lease liability. This compares with current liabilities
of $1,152 as of October 31, 2018. The Company can provide no assurance that it can continue to satisfy its cash requirements for
at least the next twelve months.
The following is a
summary of the Company’s cash flows provided by (used in) operating, investing, and financing activities for the three months
ended October 31, 2019 and 2018:
|
|
Three Months Ended
October 31,
2019
|
|
Three Months Ended
October 31,
2018
|
Net Cash Used in Operating Activities from Continuing Operating Activities
|
|
$
|
(12,737
|
)
|
|
$
|
—
|
|
Net Cash Used in Operating Activities from Discontinued Operations (net)
|
|
$
|
—
|
|
|
$
|
(8,421
|
)
|
Total Net Cash Used in Operating Activities
|
|
$
|
(12,737
|
)
|
|
$
|
(8,421
|
)
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Financing Activities
|
|
$
|
(12,737
|
)
|
|
$
|
—
|
|
Net Cash Provided by Financing Activities from Discontinued Operations (net)
|
|
$
|
—
|
|
|
$
|
(7,800
|
)
|
Total Net Cash Provided by Financing Activities
|
|
$
|
(12,737
|
)
|
|
$
|
(7,800
|
)
|
|
|
|
|
|
|
|
|
|
Net Change in Cash
|
|
$
|
—
|
|
|
$
|
(621
|
)
|
Operating Activities
During the three months ended October 31,
2019, the Company incurred a net loss of $14,118 and after adjusting for amortization of $1,381 resulted in a loss from continuing
operations of $12,737 compared with a net loss of $8,421 from discontinued operations the three months ended October 31, 2018.
Financing Activities
During the three months ended October 31,
2019, the Company received a total of $12,737 from financing activities by way of advances from a related party compared with a
$7,800 from financing activities from discontinued operations for the three months ended October 31, 2018.
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.
No assurances can be given that the Company will be successful in locating or negotiating with any target company or that the related
parties will continue to fund the Company’s working capital needs. As a result, there is substantial doubt about the Company’s
ability to continue as a going concern.
Off-Balance Sheet Arrangements
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.