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EX-32 - Concrete Leveling Systems Incex32.txt
EX-31.1 - Concrete Leveling Systems Incex31-1.txt

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

                     For the fiscal year ended July 31, 2016

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

          For the transition period from _____________ to _____________

                       Commission file number 000-1414382

                         Concrete Leveling Systems, Inc.
             (Exact name of registrant as specified in its charter)

             Nevada                                              26-0851977
  (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
              (Registrant's telephone number, including area code)

          Securities registered pursuant to Section 12(b) of the Act:

(Title of each class)                (Name of each exchange on which registered)
---------------------                -------------------------------------------

           Securities registered pursuant to section 12(g) of the Act:

                          $.001 par value common stock
                                (Title of class)

Indicate by check mark if the  registrant  is  well-known  seasoned  issuer,  as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate  by  check  mark if the  registrant  is not  required  to file  reports
pursuant to Section 13 of Section 15(d) of the Act. Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
requested  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 has submitted  electronically  and
posted on its corporate Website, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (Section  232.405
of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes [X] No [ ]

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated file, a non-accelerated  filer, or a smaller reporting company.  See
the definitions of "large accelerated  filer,"  "accelerated file," and "smaller
reporting company" 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]

The aggregate market value of the voting and non-voting common equity held by
non-affiliates is $2,277,039. This value is based upon the bid price as of the
last business day of the registrant's most recently completed second quarter.

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of October 21, 2015.

6,395,418 $0.001 par value common shares

                    DOCUMENTS TO BE INCORPORATED BY REFERENCE

Form SB-2 with exhibits filed January 16, 2008.

TABLE OF CONTENTS Number Item in Form 10-K Page No. ------ ----------------- -------- 1 Business 3 2 Properties 4 3 Legal Proceedings 4 5 Market for Registrant's Common Equity, Related Stock holder Matters and Issuer Purchases of Equity Securities 4 7 Management's Discussion and Analysis of Financial Condition and Results of Operation 4 8 Financial Statements and Supplementary Data 6 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 15 9A Controls and Procedures 15 10 Directors and Executive Officers of the Registrant 15 11 Executive Compensation 16 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 17 13 Certain Relationships and Related Transactions, and Director Independence 18 14 Principal Accountant Fees and Services 18 15 Exhibits and Financial Statement Schedules 19 Signatures 19 2
PART I ITEM 1. BUSINESS Concrete Leveling Services, Inc. "CLS" was incorporated on August 28, 2007 in the State of Nevada. The Company's principal offices are located at 5046 East Boulevard Northwest, Canton, Ohio 44718. In Ohio, the Company does business under the trade name of CLS Fabricating, Inc. Its telephone number is (330) 966-8120. CLS has never declared bankruptcy, it has never been in receivership, and it has never been involved in any legal action or proceedings. Since becoming incorporated, CLS has made no significant purchases that would create a future liability for the Company. It has not sold any assets nor has it been involved in any mergers, acquisitions or consolidations. CLS is an operating company that fabricates and markets a concrete leveling service unit utilized in the concrete leveling industry. This unit secures to the back of a truck and consists of a mixing device to mix lime with water and a pumping device capable of pumping the mixture under pressure into pre-drilled holes in order to raise the level of any flat concrete surface. There are other concrete leveling service units of a similar nature, currently being manufactured in the United States. Although CLS believes that the design changes it has made to the units create a superior unit and, therefore, competitive in the market, CLS recognizes that there is a limited market for these units and there are existing manufacturers in the market that have more experience in the marketing of these units. CLS management has, however, been directly involved in the concrete leveling business for the past 14 years and, therefore, has direct knowledge as to the operations of the concrete leveling service unit, as well as the variety of applications to which it can be used. Effective July 31, 2009, the Company entered into a Marketing Agreement with Stark Concrete Leveling, Inc. to become the exclusive distributor for the CLS service unit. Stark Concrete Leveling, Inc. ("Stark") is owned and operated by Mr. Edward A. Barth. Mr. Barth is President of CLS. Under the terms of the Marketing Agreement, Stark will receive a commission equal to 30% of the sales price of any unit sold. Stark has waived its commissions on sales since July 31, 2013. Stark is responsible for all costs of marketing, and the training of buyer's agent in the use of the units. Stark intends to continue to market the service unit through placing ads in construction equipment trade journals throughout the United States. The majority of the components of the concrete leveling service units are readily available from several manufacturers, as stock items. The Company has negotiated with the manufacturers of key components to be classified as an OEM manufacturer, thus receiving a reduced cost for its components. Certain items require custom fabrication. The Company has identified a metal fabricator who can specially fabricate the components to the Company's specifications. Competitive fabricators are available within the Company's geographic area, should it become necessary to seek another fabricator. None of the components utilized in fabricating the concrete leveling units are subject to patents, trademarks, licenses, franchises or other royalty agreements. In addition, there is no need for any governmental approval for the manufacture or sale of the concrete leveling service units. The Company is unaware of any cost or effects resulting from required compliance with any federal, state or local environmental laws. CLS has three full time employees, Mrs. Suzanne I. Barth (the majority shareholder, a director and the Company's CEO), Mr. Edward A. Barth, the Company's President and Mr. Eugene H. Swearengin, the Company's Secretary. On July 31, 2013 the Officers forgave all compensation accrued from August 1, 2012 through July 31, 2013 and have agreed to work without compensation beginning August 1, 2013, until such time as the Company's sales increase to a point that cash is available to pay salaries. All other services required by the Company are performed by independent contractors under the direction of Mr. and Mrs. Barth. 3
ITEM 2. PROPERTIES The Company is currently occupying the commercial space from which it is conducting its operations from Mr. Edward A. Barth. The Company is occupying this space on a month-to-month basis. It is occupying approximately 2,500 square feet of space. On July 31, 2013 Mr. Barth forgave all rent accrued from August 1, 2012 through July 31, 2013 and have agreed to lease the space rent free beginning August 1, 2013. ITEM 3. LEGAL PROCEEDINGS None PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION ON COMMON STOCK. The Company's stock commenced trading on the Over the Counter Bulletin Board (OTCBB) under the trading symbol CLEV on June 25, 2010. There have been no dividends issued by the Company. The volume of shares sold since trading began has been very small. To the best of the Company's knowledge, all trades have involved actual sales and not inter-broker transactions. As of the end of the Company's fiscal year, there are approximately 8 holders of CLS's common shares. CLEV shares are currently quoted on the OTC Market. The following demonstrates the price of the Company's common stock for the last two fiscal years: Fiscal Year Ended July 31 2015 2016 ---------------- ---------------- High Low High Low ---- --- ---- --- First Quarter $ 0.12* $ 0.12* $ 2.75* $ 0.50* Second Quarter $ 0.12* $ 0.12* $ 1.74* $ 1.25* Third Quarter $ 0.13* $ 0.13* $ 2.50* $ 1.57* Fourth Quarter $ 0.40* $ 0.35* $ 3.04* $ 2.00* * The figures reflected in this table are bid prices. SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS. At present, the Company has not set aside any securities for the purpose of providing compensation to any of the Company's employees. Although no plan exists, the Board of Directors have issued common shares to the Company's officers in satisfaction of salary and rental obligations of the Company. All such shares were issued at the share's fair market value on the date of authorization. Details of the transactions appear below. RECENT SALE OF EQUITY SECURITIES NOT REGISTERED UNDER THE SECURITIES ACT. During the Company's fiscal year, it issued no additional securities. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION The purpose of this discussion and analysis is to enhance the understanding and evaluation of the results of operations, financial positions, cash flows, indebtedness and other key financial information of CLS for the fiscal years 2015 and 2016. For a more complete understanding of this discussion please read the Notes to Financial Statements included in this report. 4
LIQUIDITY AND CAPITAL RESOURCES. The Company foresees a need for liquidity over the next twelve months. The Company is of the opinion that funds being received from installment sales of its service units will provide a low level of cash flow. The Company, however, lacks funds to establish inventory in the form of completed service units, due to the lack of liquidity. At present, the Company borrows funds from its shareholders to meet liquidity demands and plans to continue this practice over the next year. The Company's intention is to maintain an inventory of at least one partially completed service unit, the Company will fabricate a completed service unit upon receipt of a signed Purchase Order. It is the Company's practice to require a fifty percent (50%) down payment on all purchase orders, therefore, should additional units be ordered, the Company will receive sufficient liquidity from the down payment to fabricate the service unit for the customer. At present, Management does not anticipate the need for any significant capital expenditures during the next 12 months. All fabrication for the service units are performed by outside contractors. Final assembly will be completed at the Company's facility by Company employees. However, these tasks will not require additional capital expenditures. RESULTS OF OPERATIONS. CLS became an operating company during fiscal year ended July 31, 2010. During the last fiscal year, CLS sold no new units and otherwise had negligible sales for the year. The Company continues to receive payments on the self-financed portion of the service units sold during the fiscal year ending July 31, 2010 and the last fiscal year. However, CLS has established allowances for the potential uncollectability of it notes receivable. CLS continues to incur substantial operating losses, due to lack of new product sales. Management is encouraged by the positive feedback received from its customers who have operated the units, however there are no current negotiations for new units. The Company can now produce the unit at a reduced cost, due to the fact that it has been recognized as an OEM manufacturer by the manufacturer of the purchased components, thus enabling the Company to purchase these components at a reduced rate. CLS has now sold a total of four new service units. The largest factor the Company experiences in failing to sell more service units is the inability of purchasers to obtain capital necessary to purchase the units. Over the past fiscal year, marketing of the Company's product has suffered as the result of a lack of capital. During the fiscal year ending July 31, 2009, management changed its position with regard to the marketing and sales of the concrete leveling service units. Instead of bearing the cost of marketing the units and the cost of training the purchasers with regard to the operation of the units, management has contracted with Stark Concrete Leveling, Inc. ("Stark") to become its exclusive distributor. Stark is owned by Mr. Edward A. Barth, the Company's President. It is through Mr. Barth's effort that the companies' sales were secured. Under the terms of the Distribution Agreement, Stark is responsible for the cost of all marketing of the concrete leveling service units. In addition, it is responsible for the onsite training for the purchasers in the operation of the service units. The past sales of the Company's concrete leveling service unit have created positive feedback from the purchasers. For the short time that the servicing units have been in operation, the purchasers have recognized the market for such services in their area and immediately commence to receive revenues. Management is currently investigating alternative methods of marketing its product. Now that the concrete service units have been in the field for several years, the Company has verified the quality of its product. As the economy improves, the Company is looking forward to the easing of credit for entrepreneurs who wish to enter into the concrete leveling business. OFF BALANCE SHEET ARRANGEMENTS. There are no off balance sheet arrangements involving the Company at this time. 5
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Hobe & Lucas Certified Public Accountants, Inc.____________________________________________ 4807 Rockside Road, Suite 510 Phone: (216) 524.8900 Independence, Ohio 44131 Fax: (216) 524.8777 http://www.hobe.com REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Concrete Leveling Systems, Inc. Canton, Ohio We have audited the accompanying balance sheets of Concrete Leveling Systems, Inc. as of July 31, 2016 and 2015, and the related statements of income, stockholders' equity (deficit), and cash flows for each of the years in the two-year period ended July 31, 2016. Concrete Leveling Systems, Inc.'s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Concrete Leveling Systems, Inc. as of July 31, 2016 and 2015, and the results of its operations and its cash flows for each of the years in the two-year period ended July 31, 2016, in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming Concrete Leveling Systems, Inc. will continue as a going concern. As discussed in Note 1 to the financial statements, the nature of the industry in which the Company operates raises substantial doubt about the Company's ability to continue as a going concern. Management's plans regarding this matter are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Hobe & Lucas ------------------------------------------ Hobe & Lucas Certified Public Accountants, Inc. Independence, Ohio October 20, 2016 6
Concrete Leveling Systems, Inc. Balance Sheets July 31, 2016 and 2015 2016 2015 ---------- ---------- ASSETS CURRENT ASSETS Cash in bank $ 104 $ 116 Accounts receivable, net of allowance for doubtful accounts of $0 and $4,046 at July 31, 2016 and 2015 217 449 Current portion of notes receivable, net of allowance for loan losses of $2,391 and $39,050 at July 31, 2016 and 2015 -- 13,423 Interest receivable, net of collectability allowance of $242 and $3,922 at July 31, 2016 and 2015 26 1,910 Inventory 23,607 17,379 Prepaid expenses and other current assets 485 352 ---------- ---------- Total Current Assets 24,439 33,629 ---------- ---------- PROPERTY, PLANT AND EQUIPMENT Equipment 700 700 Less: Accumulated depreciation (700) (700) ---------- ---------- Total Property, Plant and Equipment -- -- ---------- ---------- OTHER ASSETS Notes receivable, net of current portion and allowance for loan losses of $21,860 and $0 at July 31, 2016 and 2015 2,695 5,618 ---------- ---------- TOTAL ASSETS $ 27,134 $ 39,247 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable $ 33,559 $ 36,317 Accounts payable - stockholders 35,486 35,654 Advances - stockholders 89,400 74,300 Notes payable - stockholders 62,750 62,750 Accrued interest - stockholders 15,139 15,139 Other accrued expenses 15,828 12,350 ---------- ---------- Total Current Liabilities 252,162 236,510 ---------- ---------- STOCKHOLDERS' EQUITY (DEFICIT) Common stock (par value $0.001) 100,000,000 shares authorized: 6,395,418 shares issued and outstanding at July 31, 2016 and 2015 6,395 6,395 Additional paid-in capital 405,355 405,355 Retained (deficit) (636,778) (609,013) ---------- ---------- Total Stockholders' (Deficit) (225,028) (197,263) ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ 27,134 $ 39,247 ========== ========== See notes to financial statements. 7
Concrete Leveling Systems, Inc. Statements of Income For the Years Ended July 31, 2016 and 2015 2016 2015 ---------- ---------- Parts sales $ 3,620 $ 545 ---------- ---------- Cost of Sales 2,744 308 ---------- ---------- Gross Margin 876 237 ---------- ---------- EXPENSES Selling, general and administrative 29,075 47,388 (Loss) from Operations (28,199) (47,151) OTHER INCOME (EXPENSE) Interest income 1,391 1,822 Interest expense (957) (927) ---------- ---------- Total Other Income (Expense) 434 895 ---------- ---------- Net (Loss) Before Income Taxes (27,765) (46,256) Provision for Income Taxes -- -- ---------- ---------- Net (Loss) $ (27,765) $ (46,256) ========== ========== Net (Loss) per Share - Basic and Fully Diluted $ (0.00) $ (0.01) ========== ========== Weighted average number of common shares outstanding - basic and fully diluted 6,395,418 6,395,418 ========== ========== See notes to financial statements. 8
Concrete Leveling Systems, Inc. Statements of Stockholders' Equity (Deficit) For the Years Ended July 31, 2016 and 2015 Total Additional Stockholders' Issued Par Paid-in Accumulated Equity Shares Value Capital (Deficit) (Deficit) ------ ----- ------- --------- --------- Balance July 31, 2014 6,395,418 $ 6,395 $ 405,355 $(562,757) $(151,007) --------- ------- --------- --------- --------- Net (Loss) -- -- -- (46,256) (46,256) --------- ------- --------- --------- --------- Balance July 31, 2015 6,395,418 6,395 405,355 (609,013) (197,263) --------- ------- --------- --------- --------- Net (Loss) -- -- -- (27,765) (27,765) --------- ------- --------- --------- --------- Balance July 31, 2016 6,395,418 $ 6,395 $ 405,355 $ (636,778) $(225,028) ========= ======= ========= ========= ========= See notes to financial statements. 9
Concrete Leveling Systems, Inc. Statements of Cash Flows For the Years Ended July 31, 2016 and 2015 2016 2015 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) $(27,765) $(46,256) Adjustments to reconcile net (loss) to net cash used in operating activities: Allowance for loan losses (14,799) 9,725 Allowance for doubtful accounts (4,046) 1,798 Allowance for uncollectable interest (3,680) 1,737 Decrease in accounts receivable 4,278 480 Decrease (Increase) in interest receivable 8,803 (1,359) Decrease (Increase) in inventory 529 (1,783) (Increase) Decrease in prepaid expenses (133) 84 Decrease in deposits -- 10 (Decrease) Increase in accounts payable (2,926) 4,974 Increase in other accrued expenses 3,478 3,821 -------- -------- Net cash (used in) operating activities (36,261) (26,769) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Payments on notes receivable 21,149 1,592 -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Advances from stockholders 15,100 24,700 -------- -------- Net (decrease) in cash (12) (477) Cash and equivalents - beginning 116 593 -------- -------- Cash and equivalents - ending $ 104 $ 116 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION Interest $ 957 $ 927 ======== ======== Income Taxes $ -- $ -- ======== ======== Non-Cash Investing Activities: During the year ended July 31, 2016, a leveling unit was repossessed and returned to inventory in satisfaction of a note receivable of $6,415 and interest receivable of $342. Also during the year ended July 31, 2016, a note receivable was refinanced and interest receivable of $2,818 was capitalized. See notes to financial statements. 10
Concrete Leveling Systems, Inc. Notes to Financial Statements July 31, 2016 and 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies of Concrete Leveling Systems, Inc. (hereinafter the "Company"), is presented to assist in understanding the financial statements. The financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements. NATURE OF OPERATIONS The Company manufactures for sale specialized equipment for use in the concrete leveling industry. The Company's product is sold primarily to end users. REVENUE RECOGNITION The Company recognizes revenue when product is shipped or picked up by the customer. ACCOUNTS RECEIVABLE The Company grants credit to its customers in the ordinary course of business. The Company provides for an allowance for uncollectable receivables based on prior experience. The allowance was $0 and $4,046 at July 31, 2016 and 2015, respectively. ADVERTISING AND MARKETING Advertising and marketing costs are charged to operations when incurred. Advertising costs were $-0- for the years ended July 31, 2016, and 2015. INVENTORIES Inventories, which consist of parts and work in progress, are recorded at the lower of first-in first-out cost or fair market value. USE OF ESTIMATES The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America 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 of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. GOING CONCERN The Company was formed on August 28, 2007 and was in the development stage through July 31, 2009. The year ended July 31, 2010 was the first year during which it was considered an operating company. The Company has sustained substantial operating losses since its inception. In addition, the Company has used substantial amounts of working capital in its operations. Further, at July 31, 2016, current liabilities exceed current assets by $227,723, and total liabilities exceed total assets by $225,028. 11
Concrete Leveling Systems, Inc. Notes to Financial Statements July 31, 2016 and 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) GOING CONCERN (CONTINUED) The Company is of the opinion that funds being received from installment sales of its service units will provide a certain level of cash flow. Success will be dependent upon management's ability to obtain future financing and liquidity, and success of its future operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments that might result from the outcome of this uncertainty. NOTE 2 - FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amount of cash, accounts receivable and liabilities approximates the fair value reported on the balance sheet. NOTE 3 - NEW ACCOUNTING PROCEDURES There are no new accounting procedures that impact the Company. NOTE 4 - PROPERTY, PLANT, AND EQUIPMENT Property, plant, and equipment are recorded at cost. Depreciation is provided for by using the straight-line and accelerated methods over the estimated useful lives of the respective assets. Maintenance and repairs are charged to expense as incurred. Major additions and betterments are capitalized. When items of property and equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the determination of net income. NOTE 5 - NOTES RECEIVABLE Interest rates on notes receivable range from 6.00% to 8.00% and are due at varying dates through April 2026. Management has established an estimated allowance for loan losses and uncollectable interest income based on its experience with specific debtors, including payment history, condition and location of collateral, and estimated cost of resale. The allowances totaled $24,493 and $42,972 at July 31, 2016 and 2015 respectively. NOTE 6 - OPERATING SEGMENT The Company operates in one reportable segment, concrete leveling systems sales. 12
Concrete Leveling Systems, Inc. Notes to Financial Statements July 31, 2016 and 2015 NOTE 7 - INCOME TAXES Income taxes on continuing operations at July 31 include the following: 2016 2015 -------- -------- Currently payable $ 0 $ 0 Deferred 0 0 -------- -------- Total $ 0 $ 0 ======== ======== A reconciliation of the effective tax rate with the statutory U.S. income tax rate at July 31 is as follows: 2016 2015 ------------------- ------------------ % of % of Pretax Pretax Income Amount Income Amount ------ ------ ------ ------ Income taxes per statement of operations $ 0 0% $ 0 0% Loss for financial reporting purposes without tax expense or benefit (9,400) (34) (15,700) (34) -------- ------- -------- ------- Income taxes at statutory rate $ (9,400) (34)% $(15,700) (34)% ======== ======= ======== ======= The components of and changes in the net deferred taxes were as follows: 2016 2015 ---------- ---------- Deferred tax assets: Net operating loss carryforwards $ 167,700 $ 145,700 Allowances for uncollectable accounts 8,600 15,900 Compensation and miscellaneous 5,300 17,100 ---------- ---------- Deferred tax assets 181,600 178,700 ---------- ---------- Valuation Allowance (181,600) (178,700) ---------- ---------- Net deferred tax assets: $ 0 $ 0 ========== ========== 13
Concrete Leveling Systems, Inc. Notes to Financial Statements July 31, 2016 and 2015 NOTE 7 - INCOME TAXES (CONTINUED) Deferred taxes are provided for temporary differences in deducting expenses for financial statement and tax purposes. The principal source for deferred tax assets are net operating loss carryforwards and accrued compensation. No deferred taxes are reflected in the balance sheet at July 31, 2016 or 2015 due to a valuation allowance, which increased by $2,900 and $15,600 in 2016 and 2015, respectively. The Company has incurred losses that can be carried forward to offset future earnings if conditions of the Internal Revenue Code are met. These losses are as follows: Expiration Year of Loss Amount Date ------------ -------- --------- Period Ended July 31, 2008 $ 62,107 2029 Period Ended July 31, 2009 $ 68,766 2030 Period Ended July 31, 2010 $ 25,311 2031 Period Ended July 31, 2011 $ 96,481 2032 Period Ended July 31, 2012 $113,260 2033 Period Ended July 31, 2014 $ 29,399 2035 Period Ended July 31, 2015 $ 33,483 2036 Period Ended July 31, 2016 $ 50,290 2037 Tax periods ended July 31, 2012 through 2016 are subject to examination by major taxing authorities. There are no interest or tax penalty expenses reflected in the Balance Sheets or Statements of Operations. NOTE 8 - RELATED PARTIES The Company uses warehouse and office space belonging to one of its stockholders. The stockholder does not charge the Company rent or other fees for the use of these facilities. On July 31, 2009 the Company entered into a distribution agreement with another company owned by one of the Company's stockholders. The agreement gives the related party exclusive distribution rights for the Company's products. Commission expense totaled $-0- for the years ended July 31, 2016 and 2015. The amount payable to the related party was $35,486 and $35,654 at July 31, 2016 and 2015. Four stockholders of the Company loaned a total of $62,750 to the Company at various times during the years ended July 31, 2010 through 2012. The loans carry interest rates from 8.00% to 12.00% and are due on demand. The balances on the loans are $62,750 at both July 31, 2016 and 2015. Effective July 31, 2013, further interest accrual was waived by the noteholders. Two stockholders of the Company advanced a total of $89,400 to the Company at various times between November 2012 and July 2016. The balances on the advances are $89,400 and $74,300 at July 31, 2016 and 2015, respectively. The advances carry no interest. NOTE 9 - SUBSEQUENT EVENTS The Company has evaluated all subsequent events through October 20, 2016, the date the financial statements were available to be issued. There are no events to report. 14
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A. 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 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. MANAGEMENTS ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING. Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rules 13a-15(f) and 15d - 15(f). Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of its internal controls over financial reporting based on the frame work in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commissions ("COSO"). Based on this evaluation, management has concluded that our internal control over financial reporting was effective as of July 31, 2016. 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 year. This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The Executive Officers and Directors and their respective ages as of July 31, 2016 are as follows: DIRECTORS Name of Director: Age: ----------------- ---- Suzanne I. Barth 55 Edward A. Barth 58 Eugene H. Swearengin 62 15
EXECUTIVE OFFICERS Executive Officer: Age: Office: ------------------ ---- ------- Suzanne I. Barth 55 Chief Executive Officer and Chief Financial Officer Edward A. Barth 58 President Eugene H. Swearengin 62 Secretary Suzanne I. Barth, age 55, is the Founder, CEO, CFO and Director of CLS. Mrs. Barth received an AAS degree in Business Management from Stark Technical College in 1983. Over the past 27 years, Mrs. Barth has been involved as an office manager for various businesses in the construction industry. Edward A. Barth, age 58 is the President. Mr. Barth received a Bachelor of Science degree in civil engineering technology from Youngstown State University in 1984. He has been employed by the City of North Canton, Ohio, Michael Baker Engineering Corporation and in 1990 returned to the family construction business where he served as President of Barth Construction Co., Inc. In August 2001 Mr. Barth changed the name of the corporation to Stark Concrete Leveling, Inc. and presides as President of the leveling and concrete rehabilitation business. Mr. Barth continues to be employed by Stark Concrete Leveling, Inc. He resides in Canton, Ohio. Eugene H. Swearengin, age 62, is Secretary and Director of the Corporation. Mr. Swearengin started his career as an apprentice carpenter. He successfully obtained his journeyman's card in 1977. In 1978 he purchased a 50% interest in Callahan Door Sales, Inc. Mr. Swearengin has managed a successful career in the garage and entrance door business for the past 38 years. He resides in North Canton, Ohio. TERM OF OFFICE: The Directors of CLS are appointed for a period of one year or until such time as their replacements have been elected by the Shareholders. The Officers of the Corporation are appointed by the Board of Directors and hold office until they are removed by the Board. ITEM 11. EXECUTIVE COMPENSATION The table below summarizes all compensation awarded to, earned by, or paid to the executive officers of CLS by any person for all services rendered in any capacity to CLS for the present fiscal year. Other Securities Name and Annual Restricted Underlying All Other Principal Compen- Stock Options/ LTIP Compen- Position Year Salary($) Bonus sation($) Award(s)($) SARs($) Payouts($) sation($) -------- ---- --------- ----- --------- ----------- ------- ---------- --------- Suzanne I. Barth, 2015 $ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 President, CEO Suzanne I. Barth, 2016 $ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 President, CEO Edward A. Barth, 2015 $ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 President Edward A. Barth, 2016 $ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 President 16
Eugene H. Swearengin, 2015 $ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Secretary Eugene H. Swearengin, 2016 $ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Secretary Due to the lack of sales in the Company, the Officers of the Company have agreed to waive any compensation for services that they rendered to the Company for the last fiscal year. All of the Officers have agreed to continue to provide services to the Company without compensation, until such time as the Company's sales increase to a point that cash is available to pay salaries. For the fiscal year ending July 31, 2012, the Company was unable to pay Mrs. Barth for her services and her management fee was accrued. In July 2012, pursuant to an action of the Board, Mrs. Barth agreed to capitalize the accrued management fee owed to her through July 31, 2012. Mrs. Barth received 300,000 shares of the Company's $0.001 par value common stock, valued at $0.10 per share, in exchange for the $30,000 of accrued and unpaid management fee. All of the shares issued are considered restricted shares and the value of the shares issued in 2012 were determined based upon the bid price for the Company's shares on July 13, 2012. For the fiscal year ending July 31, 2012 the Company was unable to pay Mr. Edward A. Barth for his services and his management fee was accrued. In addition the Company was unable to pay rent to Mr. Barth for the same time period. In July 2012, pursuant to an action of the Board, Mr. Barth agreed to capitalize the accrued management fee and rent owed to him through July 31, 2012. Mr. Barth received 390,000 shares of the Company's $0.001 par value common stock, valued at $0.10 per share, in exchange for accrued rent of $15,000 and accrued management fee owed through July 31, 2012. All of the shares issued are considered restricted shares and the value of the shares issued in 2012 were determined based upon the bid price for the Company's shares as of July 13, 2012. For the fiscal year ending July 31, 2012 the Company was unable to pay its Secretary, Mr. Eugene H. Swearengin his management fee of $12,000 for the current fiscal year. In July 2012, pursuant to an action of the Board, Mr. Swearengin agreed to capitalize the accrued management fee owed to him through July 31, 2012. Mr. Swearengin received 120,000 shares of the Company's $0.001 par value common stock, valued at $0.10 per share, in exchange for accrued management fee owed through July 31, 2012. All of the shares issued are considered restricted shares. The value of the shares issued in 2012 were based upon the bid price for the Company's shares as of July 13, 2012. The Company currently has three Directors, Mrs. Suzanne I. Barth, Mr. Edward A. Barth and Mr. Eugene H. Swearengin, who are serving as Directors without compensation. The Corporation does not have written employment agreements or consulting agreements with any of the Company's officers. All of the Company's officers work on a part-time basis for the Company without compensation. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table provides the names and addresses of each person known to own directly or beneficially more than a 5% of the outstanding common stock as of July 31, 2016 and by the officers and directors, individually and as a group. Except as otherwise indicated, all shares are owned directly. 17
Amount of Name and address beneficial Percent of Class of Stock of beneficial owner ownership class -------------- ------------------- --------- ----- Common stock Suzanne I. Barth 2,951,667 59.90% Director, Chief Executive + 879,167 (owned Officer and Chief Financial directly by her spouse, Officer Edward A. Barth) 5046 East Boulevard NW Total Shares 3,782,084 Canton, OH 44718 Common stock Edward A. Barth 879,167 59.90% Director and President +2,951,667 (owned 5046 East Boulevard NW directly by his spouse, Canton, OH 44718 Suzanne I. Barth) Total shares 3,782,084 Common stock Eugene H. Swearengin 185,000 2.89% Director and Secretary 7855 Freedom Ave., NW North Canton, OH 44720 Common stock: All Officers and Directors as a group that consist of three individuals as of July 31, 2016 directly owned 4,015,834 shares directly and beneficially, equaling 62.79% of the outstanding shares of common stock. The percent of class is based on 6,395,418 shares of common stock issued and outstanding as of July 31, 2016. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE There are no related party transactions required to be disclosed that took place during the past fiscal year. At the present time there are no independent directors of the Company. The Shareholders of the Company recognizes the need to have independent directors to review various matters. As the Company expands to the point that it is receiving purchase orders on a consistent basis, it intends to expand the Board of Directors to include independent Directors. Further, the Company has no audit or compensation committee. All matters are currently reviewed by the Directors of the Company, Mrs. Suzanne I. Barth and Mr. Eugene H. Swearengin, who are not independent. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The following is a list of the principal accountant fees and services for the past year. 2016 2015 -------- -------- A. Audit Fees - $ 22,740 $ 23,440 B. Audit-Related Fees - $ 0 $ 0 C. Tax Fees - $ 490 $ 500 D. Other Fees - $ 0 $ 0 All of the above auditor's fees were approved by the Directors of the Company. The Company has no audit committee and the Directors of the Board, evaluate and approve all accountant fees. 18
PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES A. Financial Statements. 2016 audited financial statements B. Exhibits. Exhibit 3.1 Articles of Incorporation* Exhibit 3.2 Bylaws* Exhibit 31.1 Rule 13a - 14(a)/15d - 14(a) Certification Exhibit 32 Section 1350 Certification Exhibit 101 Interactive Data Files Pursuant to Rule 405 of Regulation S-T ---------- * This Exhibit incorporated by reference to Form SB-2 filed January 16, 2008. SIGNATURES Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Concrete Leveling Systems, Inc. By: /s/ Suzanne I. Barth ------------------------------------ Suzanne I. Barth, CEO By: /s/ Edward A. Barth ------------------------------------ Edward A. Barth, President Date: October 26, 2016 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacity and on the date indicated. Concrete Leveling Systems, Inc. By: /s/ Suzanne I. Barth ------------------------------------ Suzanne I. Barth, its Principal Executive Officer, its Principal Financial Officer, and its Principal Accounting Officer and Director By: /s/ Edward A. Barth ------------------------------------ Edward A. Barth, its President By: /s/ Eugene H. Swearengin ------------------------------------ Eugene H. Swearengin, Director Date: October 26, 2016 1