SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2009
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934
From the transition period from ___________ to ____________.
Commission File Number 333-138111
KINGDOM KONCRETE, INC.
(Exact name of small business issuer as specified in its charter)
| Nevada | | 20-5587756 |
| (State or other jurisdiction of incorporation or organization) | | (IRS Employer Identification No.) |
4232 E. Interstate 30, Rockwall, Texas 75087
(Address of principal executive offices)
(972) 771-4205
(Issuer's telephone number)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (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, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” 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 a check mark whether the company is a shell company (as defined by Rule 12b-2 of the Exchange Act: Yes [ ] No [ X ].
As of April 29, 2009, there were 5,441,900 shares of Common Stock of the issuer outstanding.
TABLE OF CONTENTS
| | PART I FINANCIAL STATEMENTS | |
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| Management’s Discussion and Analysis or Plan of Operation | |
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| | PART II OTHER INFORMATION | |
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| Default upon Senior Securities | |
| Submission of Matters to a Vote of Security Holders | |
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| Exhibits and Reports on Form 8-K | |
| KINGDOM KONCRETE, INC. Consolidated Balance Sheets As of March 31, 2009 and December 31, 2008 |
| | | As of March 31, 2009 (Unaudited) | | | As of December 31, 2008 (Audited) | |
| Assets | |
| Current Assets | | | | | | |
| Cash | | $ | 87,037 | | | $ | 125,926 | |
| Inventory | | | 1,047 | | | | 250 | |
| Other Current Assets | | | 3,500 | | | | 0 | |
| Total Current Assets | | | 91,584 | | | | 126,176 | |
| Fixed Assets: | | | | | | | | |
| Equipment | | | 156,406 | | | | 156,406 | |
| Leasehold Improvements | | | 7,245 | | | | 7,245 | |
| Office Equipment | | | 675 | | | | 675 | |
| Less: Accumulated Depreciation | | | (128,021 | ) | | | (123,521 | ) |
| Total Fixed Assets | | | 36,305 | | | | 40,805 | |
| | | | | | | | | |
| Total Assets | | $ | 127,889 | | | $ | 166,981 | |
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| Liabilities and Shareholders’ Equity | |
| | | | | | | | | |
| Current Liabilities | | | | | | | | |
| Accounts Payable | | $ | 2,000 | | | $ | 4,305 | |
| Accrued Expenses | | | 1,558 | | | | 1,570 | |
| Due to Shareholder | | | 86,956 | | | | 108,656 | |
| Note Payable Equipment | | | 6,938 | | | | 10,337 | |
| Total Current Liabilities | | | 97,452 | | | | 124,868 | |
| | | | | | | | | |
| Total Liabilities | | | 97,452 | | | | 124,868 | |
Shareholders’ Equity: | | | | | | | | |
Preferred stock, $.001 par value, 20,000,000 shares authorized, -0- shares issued and outstanding | | | - | | | | - | |
Common stock, $.001 par value, 50,000,000 shares authorized, 5,441,900 and 5,441,900 shares issued and outstanding respectively | | | 5,442 | | | | 5,442 | |
| Additional Paid In Capital | | | 240,389 | | | | 240,362 | |
| Accumulated Deficit | | | (215,367 | ) | | | (203,691 | ) |
| Total Shareholders’ Equity | | | 30,437 | | | | 42,113 | |
| Total Liabilities and Shareholders’ Equity | | $ | 127,889 | | | $ | 166,981 | |
| | | | | | | | | |
See accompanying summary of accounting policies and notes to financial statements.
| KINGDOM KONCRETE, INC. Consolidated Statement of Operations For the Three Months Ended March 31, 2009 and 2008 (Unaudited) |
| | | Three Months Ended | |
| | | March 31, 2009 | | | March 31, 2008 | |
| | | | | | | |
| Revenue | | | | | | |
| Revenue | | $ | 29,931 | | | $ | 35,201 | |
| Cost of Sales | | | 14,198 | | | | 20,879 | |
| Gross Profit | | | 15,733 | | | | 14,322 | |
| | | | | | | | | |
| Operating Expenses: | | | | | | | | |
| Depreciation and Amortization | | | 4,500 | | | | 5,146 | |
| General and Administrative | | | 22,838 | | | | 35,363 | |
| Total Operating Expenses | | | 27,338 | | | | 40,509 | |
| | | | | | | | | |
| Net Operating Income | | | (11,605 | ) | | | (26,187 | ) |
| | | | | | | | | |
| Other Income (Expense) | | | | | | | | |
| Interest Income | | | 79 | | | | 731 | |
| Interest Expense | | | (150 | ) | | | (371 | ) |
| Total Other Income (Expense) | | | (71 | ) | | | 360 | |
| | | | | | | | | |
| Net Loss | | $ | (11,676 | ) | | $ | (25,827 | ) |
| | | | | | | | | |
| | | | | | | | | |
| Basic and Diluted Earnings (Loss) per share | | $ | 0.00 | | | $ | 0.00 | |
| | | | | | | | | |
| Weighted Average Shares Outstanding: | | | | | | | | |
| Basic and Diluted | | | 5,441,900 | | | | 5,367,207 | |
See accompanying summary of accounting policies and notes to financial statements.
| KINGDOM KONCRETE, INC. | |
| Consolidated Statement of Shareholders' Equity | |
| For the Three Months Ended March 31, 2009 (Unaudited) and the Year Ended December 31, 2008 (Audited) | |
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| | | | | | | | | Additional | | | | | | | |
| | | Common | | | Paid-in | | | Accumulated | | | | |
| | | Shares | | | Par Value | | | Capital | | | Deficit | | | Totals | |
| | | | | | | | | | | | | | | | |
| January 1, 2008 | | | 5,199,500 | | | $ | 5,199 | | | $ | 119,105 | | | $ | (140,559 | ) | | $ | (16,255 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Shares issued for Cash | | | 220,400 | | | | 221 | | | | 110,279 | | | | | | | | 110,500 | |
| | | | | | | | | | | | | | | | | | | | | |
| Shares issued for Services | | | 22,000 | | | | 22 | | | | 10,978 | | | | | | | | 11,000 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net loss | | | | | | | | | | | | | | | (63,132 | ) | | | (63,132 | ) |
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| December 31, 2008 | | | 5,441,900 | | | $ | 5,442 | | | $ | 240,362 | | | $ | (203,691 | ) | | | 42,113 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net Loss | | | | | | | | | | | | | | | (11,676 | ) | | | (11,676 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| March 31, 2009 | | | 5,441,900 | | | $ | 5,442 | | | $ | 240,362 | | | $ | (215,367 | ) | | $ | 30,437 | |
See accompanying summary of accounting policies and notes to financial statements.
| KINGDOM KONCRETE, INC. Consolidated Statements of Cash Flows (Unaudited) |
| | | Three Months Ended March 31, 2009 | | | Three Months Ended March 31, 2008 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | |
| Net loss | | $ | (11,676 | ) | | $ | (25,827 | ) |
Adjustments to reconcile net deficit to cash used by operating activities: | | | | | | | | |
| Depreciation and amortization | | | 4,500 | | | | 5,146 | |
| Change in assets and liabilities: | | | | | | | | |
| Shares issued in exchange for services | | | 0 | | | | 11,000 | |
| (Increase) Decrease in inventory | | | (797 | ) | | | 46 | |
| (Increase) in other assets | | | (3,500 | ) | | | (9,499 | ) |
| Increase (Decrease) in accounts payable | | | (2,305 | ) | | | 9,887 | |
| Increase (Decrease) in accrued expenses | | | (12 | ) | | | 1,418 | |
| CASH FLOWS (USED) IN OPERATING ACTIVITIES | | | (13,790 | ) | | | (7,829 | ) |
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| CASH FLOWS USED IN INVESTING ACTIVITIES | | | | | | | | |
| Purchase of fixed assets | | | 0 | | | | (15,000 | ) |
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| CASH FLOWS USED IN INVESTING ACTIVITIES | | | 0 | | | | (15,000 | ) |
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| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | |
| Payments on notes | | | (3,399 | ) | | | (3,178 | ) |
| Proceeds from sale of common stock | | | 0 | | | | 94,150 | |
| Payments on amounts due to shareholder | | | (21,700 | ) | | | (1,400 | ) |
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| CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES | | | (25,099 | ) | | | 89,572 | |
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| NET INCREASE IN CASH | | | (38,889 | ) | | | 66,743 | |
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| Cash, beginning of period | | | 125,926 | | | | 82,099 | |
| Cash, end of period | | $ | 87,037 | | | $ | 148,842 | |
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| SUPPLEMENTAL CASH FLOW INFORMATION | | | | | | | | |
| Interest paid | | $ | 150 | | | $ | 371 | |
| Income taxes paid | | $ | 0 | | | $ | 0 | |
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See accompanying summary of accounting policies and notes to financial statements.
KINGDOM KONCRETE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
NOTE 1 – NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Activities, History and Organization:
Kingdom Koncrete, Inc. (The “Company”) operates a ‘carry and go’ concrete business. The Company is located in Rockwall, Texas and was incorporated on August 22, 2006 under the laws of the State of Nevada.
Kingdom Koncrete Inc. is the parent company of Kingdom Concrete, Inc. (“Kingdom Texas”), a company incorporated under the laws of the State of Texas. Kingdom Texas was established in 2003 and for the past three years has been operating a single plant in Texas.
On August 22, 2006, Kingdom Koncrete, Inc. ("Koncrete Nevada"), a private holding company established under the laws of Nevada, was formed in order to acquire 100% of the outstanding common stock of Kingdom Texas. On September 30, 2006, Koncrete Nevada issued 5,000,000 shares of common stock in exchange for a 100% equity interest in Kingdom Texas. As a result of the share exchange, Kingdom Texas became the wholly owned subsidiary of Koncrete Nevada. As a result, the shareholders of Kingdom Texas owned a majority of the voting stock of Koncrete Nevada. The transaction was regarded as a reverse merger whereby Kingdom Texas was considered to be the accounting acquirer as its shareholders retained control of Koncrete Nevada after the exchange, although Koncrete Nevada is the legal parent company. The share exchange was treated as a recapitalization of Koncrete Nevada. As such, Kingdom Texas (and its historical financial statements) is the continuing entity for financial reporting purposes. The financial statements have been prepared as if Koncrete Nevada had always been the reporting company and, on the share exchange date, changed its name and reorganized its capital stock.
Unaudited Interim Financial Statements:
The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States and applicable Securities and Exchange Commission (“SEC”) regulations for interim financial information. These financial statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring accruals) necessary to present fairly the balance sheets, statements of operations and statements of cash flows for the periods presented in accordance with accounting principles generally accepted in the United States. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to SEC rules and regulations. It is presumed that users of this interim financial information have read or have access to the audited financial statements and footnote disclosure for the preceding fiscal year contained in the Company’s Annual Report on Form 10-K. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2009.
Significant Accounting Policies:
The Company’s management selects accounting principles generally accepted in the United States of America and adopts methods for their application. The application of accounting principles requires the estimating, matching and timing of revenue and expense. It is also necessary for management to determine, measure and allocate resources and obligations within the financial process according to those principles. The accounting policies used conform to generally accepted accounting principles which have been consistently applied in the preparation of these financial statements.
The financial statements and notes are representations of the Company’s management which is responsible for their integrity and objectivity. Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company's system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.
Management believes that all adjustments necessary for a fair statement of the results of the three months ended March 31, 2009 and 2008 have been made.
Basis of Presentation:
The Company prepares its financial statements on the accrual basis of accounting. All intercompany balance and transactions are eliminated. Investments in subsidiaries are reported using the equity method.
Reclassification:
Certain prior year amounts have been reclassified in the consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flows to conform to current period presentation. These reclassifications were not material to the consolidated financial statements and had no effect on net earnings reported for any period.
Use of Estimates:
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Recently Issued Accounting Pronouncements:
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
Cash and Cash Equivalents:
Cash and cash equivalents includes cash in banks with original maturities of three months or less and are stated at cost which approximates market value, which in the opinion of management, are subject to an insignificant risk of loss in value.
Inventory:
Inventory is comprised of gravel, the primary raw material used to make concrete. The Company uses the weighted average method for inventory tracking and valuation and calculates inventory at each month end. Inventory is stated at the lower of cost or market value.
Revenue Recognition:
The Company recognizes revenue from the sale of products in accordance with the Securities and Exchange Commission Staff Accounting Bulletin No. 104, "Revenue Recognition in Financial Statements" ("SAB 104"). Revenue will be recognized only when all of the following criteria have been met.
1. Persuasive evidence of an arrangement exists;
2. Ownership and all risks of loss have been transferred to buyer, which is generally upon shipment;
3. The price is fixed and determinable; and
4. Collectability is reasonably assured.
Revenue is recorded net any of sales taxes charged to customers.
Cost of Goods Sold:
Cost of Goods Sold consists primarily of gravel, which is used to make concrete. Due to large space requirements, the Company orders gravel approximately every four to six weeks and expenses all purchases when made. At each month end, the Company approximates the amount of gravel remaining and includes it as inventory based upon the weighted average method.
Income Taxes:
The Company has adopted SFAS No. 109, which requires the use of the liability method in the computation of income tax expense and the current and deferred income taxes payable.
Advertising:
Advertising costs are expensed as incurred. These expenses were $2,222 and $1,379 for the three months ended March 31, 2009 and 2008, respectively.
Property and Equipment:
Property and equipment are stated at cost less accumulated depreciation. Major renewals and improvements are capitalized; minor replacements, maintenance and repairs are charged to current operations. Depreciation is computed by applying the straight-line method over the estimated useful lives which are generally five to seven years.
Earnings per Share:
Earnings per share (basic) is calculated by dividing the net income (loss) by the weighted average number of common shares outstanding for the period covered. As the Company has no potentially dilutive securities, fully diluted earnings per share is identical to earnings per share (basic).
Comprehensive Income:
SFAS No. 130 “Reporting Comprehensive Income”, establishes standards for reporting and display of comprehensive income and its components in a full set of general purpose financial statements. For the quarters ended March 31, 2009 and 2008, the Company had no items of other comprehensive income. Therefore, the net loss equals the comprehensive loss for the periods then ended.
Fair Value of Financial Instruments:
In accordance with the reporting requirements of SFAS No. 157, Disclosures About Fair Value of Financial Instruments, the Company calculates the fair value of its assets and liabilities which qualify as financial instruments under this statement and includes this additional information in the notes to the financial statements when the fair value is different than the carrying value of those financial instruments. The estimated fair value of the notes payable approximate their carrying amounts due to the short maturity of this instrument. At March 31, 2009, the Company did not have any other financial instruments.
NOTE 2 – FIXED ASSETS
Fixed assets at March 31, 2009 and December 31, 2008 are as follows:
| | | March 31, 2009 | | | December 31, 2008 | |
| Equipment | | $ | 156,406 | | | $ | 156,406 | |
| Office Equipment | | | 675 | | | | 675 | |
| Leasehold Improvements | | | 7,245 | | | | 7,245 | |
| Less: Accumulated Depreciation | | | (128,021 | ) | | | (123,521 | ) |
| Total Fixed Assets | | $ | 36,305 | | | $ | 40,805 | |
Depreciation expense for the three month periods ended March 31, 2009 and 2008 was $4,500 and $5,146 respectively.
NOTE 3 – NOTE PAYABLE
The Company acquired machinery and equipment through an SBA loan on September 12, 2003 in the amount of $70,000 with an interest rate of 6.59%. The monthly payment is $1,183 including principal and interest for 71 months, due August 12, 2009. Balances at March 31, 2009 are as follows:
| | | Balance remaining | | | Current portion | | | Long- Term | |
| SBA loan | | $ | 6,938 | | | $ | 6,938 | | | $ | 0 | |
Interest expense was $150 and $371 for the three month periods ended March 31, 2009 and 2008 respectively.
NOTE 4 – COMMON STOCK
The Company is authorized to issue 50,000,000 common shares at a par value of $0.001 per share. These shares have full voting rights
The Company issued 222,400 shares during 2008 at a price of $.50 per share. The Company issued 22,000 common shares for consulting services that were rendered.
At March 31, 2009 there were 5,441,900 common shares outstanding . There are no stock option plans or outstanding warrants as March 31, 2009.
NOTE 5 – INCOME TAXES
The Company has adopted SFAS No. 109, which requires the use of the liability method in the computation of income tax expense and the current and deferred income taxes payable (deferred tax liability) or benefit (deferred tax asset). Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
Deferred tax assets at March 31, 2009 and December 31, 2008 consisted of the following:
| | | 2009 | | | 2008 | |
| Net Operating Loss Carryforward | | $ | 53,842 | | | $ | 50,923 | |
| Less: Valuation Allowance | | | (53,842 | ) | | | (50,923 | ) |
| Net Deferred Tax Asset | | $ | 0 | | | $ | 0 | |
The net deferred tax asset generated by the loss carryforward has been fully reserved. The cumulative net operating loss carry-forward is approximately $215,367 at March 31, 2009 and $203,691 at December 31, 2008, and will expire in the years 2025 through 2029.
The difference in the income tax benefit not shown in the consolidated statements of operations and the amount that would result if the U.S. Federal statutory rate of 25% were applied to pre-tax loss for 2009 and 2008 is attributable to the valuation allowance.
The realization of deferred tax benefits is contingent upon future earnings and is fully reserved at March 31, 2009 and December 31, 2008.
NOTE 6 – ADVANCE FROM SHAREHOLDER
The Company is obligated to a shareholder for funds advanced to the Company for start up expenses and working capital. The advances are unsecured and are to be paid back as the Company has available funds to do so. No interest rate or payback schedule has been established. There has been no interest paid on these advances.
NOTE 7 – COMMITMENTS AND CONTINGENCIES
The Organization leases an office and operational facilities on a month to month basis. Rent expense was $3,250 and $3,150 for the three months ended March 31, 2009 and 2008.
NOTE 8 – FINANCIAL CONDITION AND GOING CONCERN
Kingdom Koncrete, Inc. has an accumulated deficit through March 31, 2009 totaling $215,367 and had working capital of $5,868. Because of this accumulated loss, Kingdom Koncrete, Inc. will require additional working capital to develop its business operations. Kingdom Koncrete, Inc. intends to raise additional working capital either through private placements, public offerings, bank financing and/or shareholder funding. There are no assurances that Kingdom Koncrete, Inc. will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings, bank financing and/or shareholder funding necessary to support Kingdom Koncrete, Inc.'s working capital requirements. To the extent that funds generated from any private placements, public offerings, bank financing and/or shareholder funding are insufficient, Kingdom Koncrete, Inc. will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to Kingdom Koncrete, Inc.. If adequate working capital is not available Kingdom Koncrete, Inc. may not be able to continue its operations.
Management believes that the efforts it has made to promote its business will continue for the foreseeable future. These conditions raise substantial doubt about Kingdom Koncrete, Inc.'s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should Kingdom Koncrete, Inc. be unable to continue as a going concern.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
General
Kingdom Koncrete, Inc. specializes in providing pre-mixed concrete into our mobile mixer trailers which are then towed by one of our customers to a job site of their choosing. Kingdom Concrete serves contractors and homeowners in the North Texas area with transit-mix trailers for small-pour concrete jobs. This process saves time, money and labor on a homeowners or small business’ ready-mix cement project. Large concrete companies generally don’t like small jobs as they are inherently unprofitable due to the small amount of concrete delivered. In addition, large concrete companies add a delivery fee for less than a full load and additional fees if the load cannot be unloaded immediately. Hand-mixing seems less expensive until all the costs are added up. Sufficient ready-mix sacks for one yard of concrete costs more than $110. Hand mixing is also back-breaking labor that results in an uneven distribution of moisture and aggregate.
We sell concrete on small, manageable, mobile mixing trailers to help complete a smaller project. The result is less cost and a better product. One trailer can mix from ¼ to 1¼ yards for patios, sidewalks, slabs, fence posts or other concrete work. We sell to companies, municipalities, subcontractors and homeowners. Our transit-mix trailers are a completely different concept. In the past, with other types of pre-mixed concrete, the mix would settle out and begin to set as it was being delivered to the job site, giving a limited range and an inferior product that was difficult to work with. Our trailers mix on the way to the job, just like the “big” trucks. The concrete arrives ready for the job.
Our pricing is competitive with hardware store ready-mix sacks and much easier to manage physically. Compared to cement truck prices for small-pours, we provide an economic benefit in that the customer pays only for what they use and need. Pricing is structured on a residential, contractor, and multiple load basis. As of March 31, 2009, our general pricing structure was as follows:
| | ¼ yard | ½ yard | ¾ yard | 1 yard | 1 ¼ yard |
| 4 bag | $71 | $87 | $102 | $118 | $134 |
| 5 bag | $73 | $90 | $108 | $125 | $143 |
| 6 bag | $74 | $93 | $112 | $131 | $150 |
'4 bag', '5 bag', '6 bag' refer to the proportion of cement in the mix. The higher the bag count, the higher the PSI (strength) of the concrete. We provide flexibility in that a customer can order the appropriate mix for the project, for example:
· 4 bag mix: Fence posts
· 5 bag mix: Sidewalks, slabs, or footers
· 6 bag mix: Driveways
As of March 31, 2009, we had 5 portable ready-mixed concrete trailers and one batch plant. Our operations consist principally of formulating, preparing and delivering ready-mixed concrete to the trailers at our batch plant in Rockwall, Texas. Our marketing efforts primarily target general contractors, developers and home builders whose focus is on price, flexibility, and convenience.
Industry Overview
General
Ready-mixed concrete is a highly versatile construction material that results from combining coarse and fine aggregates, such as gravel, crushed stone and sand, with water, various admixtures and cement. Ready-mixed concrete can be manufactured in thousands of variations, which in each instance may reflect a specific design use. Manufacturers of ready-mixed concrete generally maintain only a few days’ inventory of raw materials and must coordinate their daily materials purchases with the time-sensitive delivery requirements of their customers.
The quality of ready-mixed concrete is time-sensitive, as it becomes difficult to place within 90 minutes after mixing. Many ready-mixed concrete specifications do not allow for its placement beyond that time. Consequently, the market for a permanently installed ready-mixed concrete plant generally is limited to an area within a 25-mile radius of its location. Concrete manufacturers produce ready-mixed concrete in batches at their plants and use mixer and other trucks to distribute and place it at the job sites of their customers. These manufacturers generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform.
Concrete manufacturers generally obtain contracts through local sales and marketing efforts they direct at general contractors, developers and home builders. As a result, local relationships are very important.
Four major segments of the construction industry accounted for the following approximate percentages of the total volume of ready-mixed concrete produced in the United States in 2005:
| Residential construction | | | 34 | % |
| Commercial and industrial construction | | | 19 | % |
| Street and highway construction and paving | | | 18 | % |
| Other public works and infrastructure construction | | | 29 | % |
Historically, barriers to the start-up of a new ready-mixed concrete manufacturing operation were low. During the past several years, public concerns about dust, process water runoff, noise and heavy mixer and other truck traffic associated with the operation of ready-mixed concrete plants and their general appearance have made obtaining the permits and licenses required for new plants more difficult. Delays in the regulatory process, coupled with the substantial capital investment that start-up operations entail, have raised the barriers to entry for those operations.
Our Business Strategy
Our objectives are to become the leading provider of ready-mixed concrete in our primary market and to further expand the geographic scope of our business and, on a select basis, to integrate our operations vertically through acquisitions of aggregates supply sources that support our ready-mixed concrete operations. We plan to achieve this objective by continuing to implement our business strategy, which includes the primary elements we discuss below.
Operations
Our ready-mixed concrete plant consists of a fixed facilities that produces ready-mixed concrete in primarily wet batches. Our fixed-plant facilities produce ready-mixed concrete that is transported to a job sites by our mixer trailers
Our wet batch plant serves a local market that we expect will have consistently high demand as opposed to dry batch plants that will serve markets that we expect will have a less consistent demand.
Employees
We currently employ one employee, the President.
RESULTS FOR THE QUARTER ENDED March 31, 2009
Our quarter ended on March 31, 2009. Any reference to the end of the fiscal quarter refers to the end of the first quarter for the period discussed herein.
REVENUE. Revenue for the three months ended March 31, 2009, was $29,931 compared to $35,201 for the period ended March 31, 2008. The decrease in revenue is attributed to the overall decline in the economy, and the slow down of construction related projects.
GROSS PROFIT. Gross profit for the three months ended March 31, 2009 was $15,733 compared to $14,322 for the three month period ended March 31, 2008. Margins improved in the quarter ended March 31, 2009 versus the same period in 2008 from 41% to 53%. The improvement is attributable to product mix as costs have remained constant since the we saw increases earlier in the year and a modest price increase in the middle of 2008 which contributed approximately 1% point of additional margin.
OPERATING EXPENSES. Total operating expenses for the three months ended March 31, 2009, were $22,838 compared to expenses for the period ended March 31, 2008 of $35,363. The decrease is mainly attributed to a decrease in professional services and contract fees of $11,000 related to investment and financing services; and $1,500 for a reduction in repairs and maintenance. The above expenses do not include depreciation which was $4,500 and $5,146 for the three months ended March 31, 2009 and 2008, respectively.
NET INCOME (LOSS). Net loss for the three months ended March 31, 2009 was $11,676 compared to the period ended March 31, 2008 of $25,827. The aforementioned changes in expenses and margins were the reasons for the improvement.
LIQUIDITY AND CAPITAL RESOURCES. Kingdom Koncrete filed on Form SB-1, a registration statement with the U.S. Securities & Exchange Commission in order to raise funds to develop their business. The registration statement became effective in July 2007 and Kingdom Koncrete has raised funds under that registration statement at $0.50 per share. As of March 31, 2009, Kingdom Koncrete has raised $210,950 by selling 421,900 shares.
Employees
At March 31, 2009, the Company had one employee.
Item 3: Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of March 31, 2009. This evaluation was accomplished under the supervision and with the participation of our chief executive officer / principal executive officer, and chief financial officer / principal financial officer who concluded that our disclosure controls and procedures are not effective to ensure that all material information required to be filed in the quarterly Form 10-Q has been made known to them.
For purposes of this section, the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act (15 U.S.C. 78a et seg.) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure, controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by in our reports filed under the Securities Exchange Act of 1934, as amended (the "Act") is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Based upon an evaluation conducted for the period ended March 31, 2009, our Chief Executive and Chief Financial Officer as of March 31, 2009 and as of the date of this Report, has concluded that as of the end of the periods covered by this report, we have identified the following material weakness of our internal controls:
| | · | Reliance upon independent financial reporting consultants for review of critical accounting areas and disclosures and material non-standard transaction. |
| | · | Lack of sufficient accounting staff which results in a lack of segregation of duties necessary for a good system of internal control. |
In order to remedy our existing internal control deficiencies, as our finances allow, we will hire additional accounting staff.
Changes in Internal Controls over Financial Reporting
We have not yet made any changes in our internal controls over financial reporting that occurred during the period covered by this report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II
Items No. 1, 2, 3, 4, 5 - Not Applicable.
Item No. 6 - Exhibits and Reports on Form 8-K
(a) None
(b) Exhibits
Exhibit Number Name of Exhibit
31.1 Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer and Chief Financial Officer, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
In accordance with the requirements 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.
Kingdom Koncrete, Inc.
By /s/ Edward Stevens
Edward Stevens, President, CFO
Date: May 8, 2009
