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.
CLANCY CORP.
NOTES TO THE FINANCIAL STATEMENTS
JANUARY 31, 2020
NOTE 2 – MANAGEMENT PLANS (CONTINUED)
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.
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 January
31, 2020 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.
CLANCY CORP.
NOTES TO THE FINANCIAL STATEMENTS
JANUARY 31, 2020
NOTE 3 – SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 January 31, 2020, 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.
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 the lessee should
be recognize the assets and liabilities that arise from the leases. The company adopted the standard effective August 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 January 31, 2020, 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 and six months ended January 31, 2020. The
lease terminated as of September 1, 2019.
On October 19, 2017 the Company 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 and six months ended January
31, 2020.
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.
CLANCY CORP.
NOTES TO THE FINANCIAL STATEMENTS
JANUARY 31, 2020
NOTE 4 – COMMITMENTS
AND CONTINGENCIES (CONTINUED)
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.
Future minimum lease payments under the
operating lease as of January 31, 2020 are:
2020
|
8,680
|
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 and six months ended January 31, 2020 was $0.
NOTE 5 – LOAN
FROM DIRECTOR
Immediately prior to June 28, 2019, the Company’
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 January 31, 2020, the new officer and director has
loaned the Company the sum of $40,609. This loan is unsecured, non-interest bearing and due on demand.
NOTE 6– INCOME
TAXES
Income tax expense was $0 for the three and
six months ended January 31, 2020 and 2019.
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 January 31, 2020
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 January
31, 2020. 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 and six months ended January 31, 2020 and 2019, 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 January 31, 2020, 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 January 31, 2020 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 January 31,
2020 and January 31, 2019
During the three months ended January 31, 2020,
the Company incurred a net loss from continuing operations of $15,723, comprised of $14,342 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 Securities and Exchange Commission) and $1,381 in amortization costs. As previously reported, the Company
effected a change of control effective June 28, 2019, and in connection with that event, it also ceased its business operations.
Therefore, for the three month period ended January 31, 2019, the Company had income from discontinued operations of $5,053.
For the six months ended January
31, 2020 and January 31, 2019
During the six months ended January 31, 2020,
the Company incurred a net loss from continuing operations of $29,841, comprised of $27,079 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 Securities and Exchange Commission) and $2,762 in amortization costs. As previously reported, the Company
effected a change of control effective June 28, 2019, and in connection with that event, it also ceased its business operations.
Therefore, for the six month period ended January 31, 2019, the Company had a loss from discontinued operations of $6,703.
Liquidity and Capital Resources
As of January 31,
2020 and July 31, 2019, respectively, the Company had current assets of $12,378 and nil. As of January 31, 2020, the Company has
an operating lease right of $15,189, resulting in total assets of $27,567 as of such date, and had no assets as of July 31, 2019.
The Company’s current liabilities as of January 31, 2020 totaled $40,609 in
related party advances and $8,280 in current lease liability. This compares with current liabilities of $1,152 as of July 31,
2019. 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 six months
ended January 31, 2020 and 2019:
|
|
Six Months Ended
January 31,
2020
|
|
Six Months Ended
January
31,
2019
|
Net Cash Used in Operating Activities from Continuing Operating Activities
|
|
$
|
(27,079
|
)
|
|
$
|
—
|
|
Net Cash Used in Operating Activities from Discontinued Operations (net)
|
|
$
|
—
|
|
|
$
|
(9,353
|
)
|
Total Net Cash Used in Operating Activities
|
|
$
|
(27,079
|
)
|
|
$
|
(9,353
|
)
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Financing Activities
|
|
$
|
39,457
|
|
|
$
|
—
|
|
Net Cash Provided by Financing Activities from Discontinued Operations (net)
|
|
$
|
—
|
|
|
$
|
8,700
|
|
Total Net Cash Provided by Financing Activities
|
|
$
|
39,457
|
|
|
$
|
8,700
|
|
|
|
|
|
|
|
|
|
|
Net Change in Cash
|
|
$
|
12,378
|
|
|
$
|
223
|
|
Operating Activities
During the six months
ended January 31, 2020, the Company incurred a net loss of $29,841 and after adjusting for amortization of $2,762 resulted in cash
used in continuing operations of $27,079 compared with a net loss of $9,353 from discontinued operations the six months ended January
21, 2019.
Financing Activities
During the six months
ended January 31, 2020, the Company received a total of $39,457 from financing activities by way of advances from a related party
compared with cash provided of $8,700 from financing activities from discontinued operations for the six months ended January 21,
2019.
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.