Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended October 31, 2010
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ___________ to ___________
Commission file number 000-53048
Concrete Leveling Systems, Inc.
(Exact name of small business issuer as specified in its charter)
Nevada 28-0851977
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
5046 E. Boulevard, NW, Canton, OH 44718
(Address of principal executive officer)
(330) 966-8120
(Issuer's telephone number)
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the
Exchange Act).
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). YES [ ] NO [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. YES [ ] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 5,136,668
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Concrete Leveling Systems Inc.
Balance Sheets
October 31, 2010 and July 31, 2010
October 31 July 31
---------- ---------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
Cash in bank $ 557 $ 2,426
Accounts receivable 416 --
Current portion of notes receivable 18,431 17,815
Prepaid expense and other current assets 5,000 --
Inventory 465 613
--------- ---------
Total Current Assets 24,869 20,854
--------- ---------
PROPERTY, PLANT AND EQUIPMENT
Equipment 1,900 1,900
Less: Accumulated depreciation (1,541) (1,382)
--------- ---------
Total Property, Plant and Equipment 359 518
--------- ---------
OTHER ASSETS
Note receivable 44,742 47,246
Deposits 10 10
--------- ---------
44,752 47,256
--------- ---------
TOTAL ASSETS $ 69,980 $ 68,628
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 82,626 $ 63,782
Notes payable 29,690 17,000
Other accrued expenses 10,708 10,068
--------- ---------
Total Current Liabilites 123,024 90,850
--------- ---------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock (par value $0.001)
100,000,000 shares authorized:
5,136,668 shares issued and outstanding at
October 31, 2010 and July 31, 2010 5,137 5,137
Additional paid-in capital 168,363 168,363
(Deficit) accumulated during development stage (226,544) (195,722)
--------- ---------
Total Stockholders' Equity (Deficit) (53,044) (22,222)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 69,980 $ 68,628
========= =========
See notes to financial statements.
2
Concrete Leveling Systems Inc.
Statements of Income
For the Three Months Ended October 31, 2010 and 2009
(Unaudited)
2010 2009
----------- -----------
Equipment and parts sales $ 416 $ 45,000
Equipment rental -- --
----------- -----------
416 45,000
----------- -----------
Cost of Sales 183 26,543
----------- -----------
Gross Margin 233 18,457
----------- -----------
EXPENSES
Selling, general & administration 30,932 28,509
Depreciation & amortization 158 158
----------- -----------
Total Expenses 31,090 28,667
----------- -----------
(Loss) from Operations (30,857) (10,210)
OTHER (EXPENSE)
Interest income 954 66
Interest expense (919) (250)
----------- -----------
Total Other (Expense) 35 (184)
----------- -----------
Net (Loss) Before Income Taxes (30,822) (10,394)
Provision for Income Taxes -- --
----------- -----------
Net (Loss) $ (30,822) $ (10,394)
=========== ===========
Net (Loss) per Share - Basic and Fully Diluted $ (0.01) $ (0.00)
=========== ===========
Weighted average number of common
shares outstanding - basic and fully diluted 5,136,668 4,842,918
=========== ===========
See notes to financial statements.
3
Concrete Leveling Systems, Inc.
Statements of Cash Flows
For the Three Months Ended October 31, 2010 and 2009
(Unaudited)
2010 2009
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $(30,822) $(10,394)
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Depreciation and amortization 158 158
(Increase) Decrease in accounts receivable (416) (20,066)
Decrease (Increase) in inventory 148 15,888
(Increase) Decrease in prepaid expenses (5,000) 38
(Increase) Decrease in deposits -- --
Increase (Decrease) in accounts payable 18,844 9,270
Increase (Decrease) in other accrued expenses 640 864
-------- --------
Net cash from (used by) operating activities (16,448) (4,242)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments on notes receivable 1,889 --
-------- --------
Net cash (used by) investing activities 1,889 --
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Loans from stockholders 12,690 4,500
-------- --------
Net cash provided by financing activities 12,690 4,500
-------- --------
Net Increase (decrease) in cash (1,869) 258
Cash and equivalents - beginning 2,426 530
-------- --------
Cash and equivalents - ending $ 557 $ 788
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION
Interest $ 277 $ 201
======== ========
Income Taxes $ -- $ --
======== ========
Non-Cash Financing Activities. During October 2009, the Company converted
$20,000 of accounts receivable into a note receivable from the customer.
See notes to financial statements.
4
Concrete Leveling Systems, Inc.
Notes to Financial Statements
October 31, 2010
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information and with the instructions to Form 10?Q and
Article 8 of Regulation S-X. Accordingly, they do not include all the
information and footnotes required by accounting principles generally accepted
in the United States of America 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. For further
information, refer to the financial statements and footnotes thereto included in
the Concrete Leveling Systems, Inc. Form 10-K filing for the period ended July
31, 2010.
NOTE B - GOING CONCERN
As shown in the financial statements, the Company incurred a net loss of $30,822
for the three months ended October 31, 2010, and has incurred substantial net
losses since its inception. At October 31, 2010, current liabilities exceed
current assets by $98,155. These factors raise substantial doubt about the
Company's ability to continue as a going concern.The financial statements do not
include any adjustments relating to the recoverability and classification of
recorded assets, or the amounts and classification of liabilities that might be
necessary in the event the Company cannot continue existence.
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Concrete Leveling Systems, Inc. ("CLS" or "The Company") became an
operating company in the first calendar quarter of 2010, having received
revenues of $45,000 from the sale of a new concrete leveling service unit.
During the prior fiscal year, the Company experienced sales in excess of
$100,000. As a result of achieving this level of sales, CLS ceased being a shell
company as of September 23, 2010.
As of October 31, 2010, CLS has cash assets of $557 and outstanding notes
receivable from the sale of concrete leveling service units in the amount of
$63,173. The Company is currently carrying an inventory valued at $465.
The Company's cash flow is currently being maintained through the receipt
of monthly payments from the self-financed sale of its concrete leveling service
units. At the present time, the Company is not concentrating on closing sales of
its concrete leveling service units, since this is the off season for concrete
leveling in most portions of the United States and buyers are not currently
interested in making purchases until such time as they can utilize the units to
create cash flow. During this time of year, the Company is concentrating on
completing its first completely in-house fabricated service unit package. This
unit is in final punch list detailing and, upon final approval by CLS will be
delivered by its contract fabricator. The design and fabrication process saves
CLS money and eliminates production lead time from outside equipment vendors.
In anticipation of the upcoming season, CLS is preparing its 2011 marketing
program to start after the holiday season. The marketing program will be kicked
off in Las Vegas, Nevada, from January 17 - 21, 2011. At that time, CLS will be
exhibiting at the 2011 World of Concrete Trade Show. The Company has secured a
booth in the south hall of the convention center. It will be located at booth
number 13048. This tradeshow will provide national exposure for the Company's
product and it is anticipated that attendance at the tradeshow will generate
leads for potential customers.
In addition to attending the tradeshow, CLS is planning a large direct
national call program that will concentrate on existing concrete removal and
replacement contractors. The Company contemplates focusing its efforts on
selected areas that are currently not being serviced by concrete leveling
companies. It anticipates initiating the call program in house, using free
internet phone service that will require no capital expenditure. In addition,
CLS will be running print ads in national publications that focus on sales of
new and used construction equipment such as ROCK & DIRT and CONTRACTOR'S
HOTLINE.
The Company has been in discussion with two interested customers. It is
anticipated that one or both of the customers will be purchasing a concrete
leveling unit in Spring, 2011 after the Company performs an onsite demonstration
of its leveling equipment package. During the 2010 season, management
experienced some difficulty in selling its units to serious customers, due to
the fact that they were unable to obtain financing through conventional
channels. CLS is optimistic that the US financial market will free up in the
upcoming season and that proposed legislation containing tax breaks for small
businesses will enable its customers to purchase the concrete leveling packages.
CLS continues to have cash flow issues. As of October 31, 2010, it had
total current liabilities of $123,024. The majority of these current liabilities
represent accounts payable and other accrued expenses. In addition, it was
necessary for the Company to borrow funds in order to fabricate a concrete
leveling unit package to have an inventory for the upcoming season. Although the
Company continues to experience negative income figures for the quarter, its
continued effort in contacting potential customers and the high level of
interest shown by potential customers will create a more profitable scenario by
the end of this fiscal year.
There are no off balance sheet arrangements involving CLS at this time.
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Liquidity Issues. Since its inception, the Company has experienced
continued need for additional liquidity in order to provide for operating
expenses and to purchase components for the assembly of its product. The sale of
concrete leveling units on credit created a small amount of cash flow to the
Company during the quarter ended October 31, 2010. The amount received, however,
is not sufficient to sustain operations of the Company and the Company found it
necessary to borrow funds from the stock holders during the quarter in order to
pay operating expenses.
Capital Resources. CLS has made no material commitments for capital
expenditures as of the end of its fiscal quarter ending October 31, 2010 and
does not anticipate any immediate need for material capital expenditures over
the next quarter.
Result of Operations. During the three months ending October 31, 2010, CLS
made no sales of units. Although the Company has generated considerable interest
in its units, purchasers are finding it difficult to obtain financing to
purchase the units. Management of the Company believes that the demand for its
product is there, however, until the economy rebounds and credit is more readily
available, sales of its concrete leveling units will remain at a low level.
ITEM 4 - CONTROLS AND PROCEDURES
Disclosure Controls and Procedures. Pursuant to Rule 13a-15(b) of the
Securities Exchange Act of 1934 ("Exchange Act"), the Company carried out an
evaluation, with the participation of the Company's management, which
constitutes a single individual (who is both the Company's Chief Executive
Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the
Company's disclosure controls and procedures (as defined under Rule 13a-15(e) of
the Exchange Act) as of the end of the period covered by this report. Based upon
that evaluation, the Company's CEO/CFO concluded that the Company's disclosure
controls and procedures are effective to ensure that information required to be
disclosed by the Company in the reports that the Company files or submits under
the Exchange Act, is recorded, processed, summarized and reported, within the
time period specified by the United States Securities and Exchange Commission
rules and forms, and that such information is accumulated and communicated to
the Company's management, including the Company's CEO/CFO, as appropriate, to
allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting. Management has not
identified any change in the Company's internal control over financial reporting
in connection with the evaluation that management of the Company, including the
Company's CEO/CFO, that is required by paragraph (d) of Rule 13(a)-15 under the
Exchange Act of 1934 that occurred during the Company's last fiscal quarter.
ITEM 4T - CONTROLS AND PROCEDURES
CLS has not made any change in its internal controls over financial
reporting during its last fiscal quarter that has materially affected or is
reasonably likely to materially affect CLS's internal control over financial
reporting.
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PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
To the best of its knowledge, management of CLS is not aware of any legal
proceedings in which CLS is currently involved.
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
There were no unregistered sales of equity securities during the three
months ending October 31, 2010.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
There are no defaults upon any senior securities.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the past
quarter. However, the Annual Meeting of Shareholders was held on November 22,
2010. At the meeting, the Shareholders elected Directors. Three Directors were
elected to serve a period of one year. The individuals elected were Mrs. Suzanne
I. Barth, Mr. Edward A. Barth, and Mr. Eugene H. Swearengin. The Shareholders
also appointed Hobe & Lucas, Certified Public Accountants, Inc. to serve as the
Company's outside auditor for the fiscal year ending July 31, 2011.
ITEM 5 - OTHER INFORMATION
There are no items of information required to be disclosed pursuant to this
item at this time.
ITEM 6 - EXHIBITS
A. The following are filed as Exhibits to this report. The numbers refer to
the exhibit table of Item 601 of regulation S-K: Reference is hereby made to the
exhibits contained in the registration statement (Form SB-2) filed by Concrete
Leveling Systems, Inc.
Exhibit 31.1 - Rule 13a-14(a)/15d-14(a) - Certification
Exhibit 31.2 - Rule 13a-14(a)/15d-14(a) - Certification
Exhibit 32 - Section 1350 - Certification
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CONCRETE LEVELING SYSTEMS, INC.
Date: December 14, 2010 By: /s/ Edward A. Barth
---------------------------------------------
Edward A. Barth, Principal Executive Officer
Date: December 14, 2010 By: /s/ Suzanne I. Barth
---------------------------------------------
Suzanne I. Barth, Principal Financial Officer
