NOTE
2 – MANAGEMENT PLANS
The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Although
Beijing Clancy started 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 Companys
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.
Mr.
Meng, the majority stockholder, Chief Executive Officer and sole director of Company, verbally has agreed to provide continued financial
support to the Company.
The
Companys 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 Companys activities since Shanghai
Clancy has no activities and Beijing Clancy operations are limited to Beijing, PRC. The impact on the Companys 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.
Fiscal
year end
The
Companys year end is July 31.
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. Because
of short maturity of these investments, the carrying amounts approximate their fair values.
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
Companys 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 $23,693 as of October 31, 2021. The Company has not experienced any losses
in such accounts in the PRC.
Leases
The
Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (ROU)
assets and operating lease liabilities in the consolidated balance sheets. Finance leases are included in finance lease ROU assets and
finance lease liabilities in the consolidated balance sheets.
ROU
assets represent the Companys right to use an underlying asset for the lease term and lease liabilities represent the Companys
obligation to make lease payments arising from the lease. Operating lease and finance lease ROU assets and liabilities recognized at
October 31, 2021 based 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.
The
Company has elected not to recognize operating lease ROU assets and liabilities arising from short-term leases.
Reporting
Currency and Translation
The
financial statements of the Companys 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 States
dollar (USD or $).
The
Company has operations in China where the local currency of RMB is used to prepare the consolidated financial statements which are translated
into the Companys 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 Companys reporting currency, are partially responsible
for some of the periodic changes in the consolidated financial statements. Assets and liabilities of the Companys foreign operations
are translated into U.S. dollars at the spot rate in effect at the applicable reporting date. Revenues and expenses of the Companys
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, 2021 and 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 translate amounts in RMB to USD for the purposes of preparing the consolidated financial statements were as follows:
Schedule of exchange rates
|
|
October 31,
2021
|
|
|
October 31,
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 Companys 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, 2021 and 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 $1,195 for the three months ended October 31,
2021 compared to $1,824 for the three months ended October 31, 2020.
Financial
Instrument
The
carrying value of the Companys 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 Pronouncements
As
of October 31, 2021 and for the period then ended, there were no recently adopted accounting standards that had a material effect on
the Companys financial statements.
Recently
Issued Accounting Pronouncements Not Yet Adopted
As
of October 31, 2021, there was no recently issued accounting standards not yet adopted which would have a material effect on the Companys
consolidated financial statements.
NOTE
4 - OPERATING LEASE RIGHT-OF- USE ASSETS
As
of October 31, 2021, the total operating lease Right of Use assets were $97,260. The total operating lease cost was $16,508 and $15,437
for the three-month period ended October 31, 2021 and 2020.
NOTE
5 - LEASE LIABILITIES- OPERATING LEASE
Future
minimum lease payments under the operating lease as of October 31, 2021 are:
Schedule of Future Minimum Lease Payment
|
|
|
|
|
12 months ended October 31, 2021
|
|
$
|
81,147
|
|
12 months ended October 31, 2022
|
|
|
—
|
|
12 months ended October 31, 2023
|
|
|
—
|
|
Total Lease payments
|
|
|
81,147
|
|
Less Imputed Interest
|
|
|
(4,358
|
)
|
Net Lease liability
|
|
$
|
76,789
|
|
NOTE
6 - RELATED PARTY TRANSACTIONS
The
Companys 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 $41,017 and for the three months ended October 31, 2020, the
Company paid back to the major shareholder $57,206.
As
of October 31, 2021 and July 31, 2021, the balance owing to a related party was $265,529 and $222,738, respectively. The loan was interest
free and unsecured and had no stated terms of repayment.
NOTE
7 - RESEARCH AND DEVELOPMENT EXPENSE
The
Company incurred significant expenses in research and development (R&D). For the three months ended October 31, 2021 and 2020, the
R&D expenses were $70,481 and $39,531, respectively.
NOTE
8 - INCOME TAXES
Income
tax expense was $0 for the three months ended October 31, 2021 and 2020.
As
of July 31, 2021, the Company had no unrecognized tax benefits and, accordingly, the Company did not recognize interest or penalties
during the three months ended October 31, 2021 related to unrecognized tax benefits. There was no accrual for uncertain tax positions
as of October 31, 2021.
There
is no income tax benefit for the losses for the three months ended October 31, 2021 and 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.
Item
2. Managements 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 Companys 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, 2021, filed with the Securities and Exchange Commission (Commission)
on November 12, 2021. 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 on March 22, 2016 under 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.
On
April 24, 2020, Shanghai Clancy registered Beijing Clancy Information Technology Co., Ltd. (Beijing Clancy) in Beijing as its wholly-owned
subsidiary and a second tier subsidiary of the Company.
From
August 1, 2020 to 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.
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, 2021 and 2020, the company had revenues of $0 and 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, 2021 and 2020, the Company had cost of goods sold $0 and 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 $16,642 in lease expense,
$19,077 in general and administrative expenses and $70,481 in research and development expense. These amounts compare with total operating
expenses of $64,785, consisting of lease expense of $15,437 and general and administrative expense of $9,817 recorded in the three months
ended October 31, 2020. The increase of $41,415 was due in large part to research and develop costs associated with our recent business
developments.
Net
Loss
For
the three months ended October 31, 2021 and 2020, the Company had a net loss of $106,195 and $69,524, respectively, for the reasons discussed
above.
Liquidity
and Capital Resource
The
Company had $8,812 and $54,375, respectively in cash and cash equivalents as of October 31, 2021 and July 31, 2021.
As
of October 31, 2021 and July 31, 2021, the Company had working capital deficit of $349,814 and $256,136, respectively. The increase in
working capital deficit was due to net loss for the current period.
The
Company can provide no assurances that it can continue to satisfy its cash requirements for at least the next twelve months.
The
following is a summary of the Companys cash flows from operating and financing activities for the three months ended October 31, 2021
and 2020:
|
|
Three Month
Ended
|
|
|
Three
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
|
|
Operating
Activities
During
the three month ended October 31, 2021, the Company had a net loss of $106,195 and after adjusting for lease expense, research and development
expense, prepaid expense and increase in accounts payable, a net cash used in operating activities of $86,710 was recorded. By comparison,
during the three month period ended October 31, 2020, the Company had a net loss of $69,524 and 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 $41,017 in advances from the Companys major shareholder, which resulted
in $41,017 in total net cash provided by financing activities for the period. By comparison, during the three months ended October 31,
2020, the Company repaid $57,206 in advances from the Companys majority shareholder offset by $83,348 in advances received from
loans to two non-affiliates, which resulted in $26,142 in 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 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
Companys 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.