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, 2009
[ ] 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 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
(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 [X] No [ ]
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 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]
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of
the last business day of the registrant's most recently completed second fiscal
quarter.
Not currently traded.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
4,842,918 $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
4 Submission of Matters to a Vote of Security Holders 4
5 Market for Registrant's Common Equity, Related Stockholder
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 20
2
PART I
ITEM 1. BUSINESS
CLS was incorporated on August 28, 2007 in the State of Nevada. The
Corporation's principal offices are located at 5046 East Boulevard Northwest,
Canton, Ohio 44718. 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 a developmental stage 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 8
1/2 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
is 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. Under the terms of the Marketing Agreement, Stark will
receive a commission equal to 30% of the sales price of any unit sold. Stark
will be responsible for all costs of marketing, advertising, and the training of
buyer's agent in the use of the units. Stark intends to continue to market the
service unit through newspaper advertising, concentrating on markets where the
need for concrete leveling services is very high, but at present, there is very
limited competition for such services. Stark has also promoted the service units
through direct mailing in limited areas within the state of Washington, which
the Company believes has a large potential for concrete leveling services. In
addition, Stark established a booth in a home show in the Portland, Oregon area
to gain exposure for the product.
The majority of the components of the concrete leveling service units are
readily available from several manufacturers, as stock items. The Company has
now 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. The
Company has contracted with the fabricator to manufacture the complete unit
including the material hopper. At present, the Company has completed the
fabrication of two new service units and the retro fitting of an existing use
service unit. 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
manufacturer or sale of the concrete leveling service units. The Company is
unaware of any cost or affects resulting from required compliance with any
federal, state or local environmental laws.
CLS has one full time employee, Mrs. Suzanne I. Barth, the majority
shareholder and sole director of the Company. Mrs. Barth receives a management
fee of $2,500 per month. All other services required by the Corporation are
preformed by independent contractors under the direction of Mrs. Barth.
3
ITEM 2. PROPERTIES
The Company is currently leasing the commercial space from which it is
conducting its operations from Mr. Edward A. Barth, husband of the Corporation's
sole shareholder, Mrs. Suzanne I. Barth. The Corporation is leasing this space
on a month-to-month basis. It is leasing approximately 2,500 square feet of
space for a monthly rental of $1,250, including utilities.
ITEM 3. LEGAL PROCEEDINGS
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There have been no matters submitted during the fourth quarter of the
Company's fiscal year to a vote of security holders through the solicitation of
proxies or otherwise.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
SALE OF EQUITY SECURITIES NOT REGISTERED UNDER THE SECURITIES ACT. The
Company was initially capitalized on September 26, 2007. The Company issued
2,600,000 shares of its $0.001 par value common stock to Suzanne I. Barth for a
total value of $2,600. Thereafter on December 11, 2007, the Company issued,
through a private offering, 1,775,000 of its common stock at the price of $0.04
per share to a total of 14 purchasers. The total amount received by the Company
from this offering was $71,000. These shares were issued pursuant to Section
4(2) of the Securities Act of 1933 and Regulation D.
During the Company's fiscal year, it issued a total of 204,167 shares of
its $0.001 par value common stock to Mrs. Suzanne I. Barth, in satisfaction of
the outstanding payable owed by the Company to Mrs. Barth. In addition, the
Company issued 135,417 shares to Mr. Edward Barth in satisfaction of the
Company's payable owed to Mr. Barth for outstanding rent. These shares were
valued at $0.12 per share. All of these shares were issued pursuant to Section
4(2) of the Securities Act of 1933. All of those shares are restricted
securities.
USE OF PROCEEDS FOR SALE OF SECURITIES SOLD BY ISSUER PURSUANT TO
REGISTRATION STATEMENT UNDER FORM SB-2, EFFECTIVE JANUARY 16, 2008. During the
Company's fiscal year ending July 31, 2008, the Company sold 53,334 shares of
its common stock for $0.12 per share. During this fiscal year, the Company sold
an additional 75,000 shares of the common stock registered under this offering
for $0.12 per share. The balance of the offering expired. Almost all of the
proceeds received were utilized to fabricate the components necessary to
assemble the Company's concrete leveling service unit. A small portion of the
amount received from the sale of the securities was utilized for operating
capital.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
LIQUIDITY AND CAPITAL RESOURCES. During the fiscal year ending July 31,
2008, management for the Company recognized the need for additional liquidity
for the Company, for the purpose of obtaining inventory in the form of completed
concrete leveling service units. In order to address this issue, the Company
filed a registration with the United States Security and Exchange Commission to
issue additional shares, in order to raise $87,000. To date, the Company has
raised $15,400 through this offering. The offering has closed, by its terms.
4
Management has reevaluated the need to purchase used vehicles in order to
sell completed units to customers. Due to recent successes in its ability to
sell the stand alone service units, the Company now believes that there is a
market solely for the service units. The Company foresees a need for liquidity
over the next 12 months, but believes that collection of its current receivables
will permit the Company to stay in business without the need to seek additional
capital. In addition, management is of the opinion that the Company can work
without inventory and, instead, manufacture each concrete leveling service unit
at such time as it is ordered. All orders will require a 50% down payment. This
down payment will provide sufficient liquidity for the unit to be produced. At
present, management does not anticipate the need for any significant capital
expenditures during the next 12 months. Instead, the Company intends to rely on
outsourcing all of its fabrication and assembly requirements.
RESULTS OF OPERATIONS. CLS is in its developmental stages. It has recently
sold its used servicing unit with a truck for $35,000. In addition, the Company
recently sold its first new concrete leveling service unit for $45,000. The
Company received cash of $25,000 towards the sale of the new servicing unit and
is financing the balance of the purchase price through an Installment Promissory
Note, bearing interest at the rate of 6% per annum. The used service unit was
sold with a cash down payment of $2,500 and the balance payable through an
Installment Promissory Note, bearing interest at the rate of 6% per annum.
Management is encouraged with the recent sale of these units and the positive
feedback that its customers have received in utilizing the units. In addition to
the prospect of additional sales within the region that it sold its servicing
units, management is also encouraged with the knowledge that it 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.
During the past fiscal year, 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 Barth, a shareholder of the Company and husband of the
Company's Director, Mrs. Suzanne I. Barth. It is through Mr. Barth's effort that
both of the companies' recent sales were secured. Under the terms of the
Distribution Agreement, Stark is responsible for the cost of all marketing and
advertising 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. In exchange for assuming these obligations and duties, Stark
shall receive a commission of 30% of the sales price of each unit.
Management is of the belief that the current slow down in the housing
market and increased costs of raw materials will create an expanding market for
concrete leveling services. The recent sales of the Company's concrete leveling
service unit has created a 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. The Company is of the belief that the successful sales and
potential referrals or additional purchases from its current purchasers will
expand the Company's sales into the first and second calendar quarter of 2010.
The Company currently plans to produce and sell up to six additional concrete
leveling servicing units during the next fiscal year.
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
LETTERHEAD OF HOBE & LUCAS CERTIFIED PUBLIC ACCOUNTANTS, INC.
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 balance sheet of Concrete Leveling Systems, Inc. (a
development stage company) as of July 31, 2009 and 2008, and the related
statement of operations, stockholders' equity (deficit), and cash flows for the
year ended July 31, 2009 and the period beginning August 28, 2007 (inception)
and ended July 31, 2008, and the period beginning August 28, 2007 (inception)
and ended July 31, 2009. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with 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. An audit includes 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. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides 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, 2009 and 2008, and the results of its operations and its cash
flows for the year ended July 31, 2009, the period beginning August 28, 2007
(inception) and ended July 31, 2008, and the period beginning August 28, 2007
(inception) and ended July 31, 2009 in conformity with U.S. generally accepted
accounting principles.
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 15, 2009
6
Concrete Leveling Systems Inc.
(A Development Stage Company)
Balance Sheets
July 31, 2009 and 2008
2009 2008
--------- ---------
ASSETS
CURRENT ASSETS
Cash in bank $ 530 $ 8,203
Accounts receivable -- 218
Prepaid expense 75 3,324
Inventory 29,612 20,038
--------- ---------
Total Current Assets 30,217 31,783
--------- ---------
PROPERTY, PLANT AND EQUIPMENT
Equipment 1,900 700
Less: Accumulated depreciation (749) (116)
--------- ---------
Total Property, Plant and Equipment 1,151 584
--------- ---------
OTHER ASSETS
Deposits 10 10
--------- ---------
TOTAL ASSETS $ 31,378 $ 32,377
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 29,332 $ 11,610
Other accrued expenses 8,864 6,695
--------- ---------
Total Current Liabilites 38,196 18,305
--------- ---------
Stockholders' Equity (Deficit)
Common stock (par value $0.001)
100,000,000 shares authorized:
4,842,918 and 4,375,000 shares issued and outstanding
at July 31, 2009 and 2008 respectively 4,843 4,375
Additional paid-in capital 124,907 69,225
Stock subscriptions payable -- 6,400
(Deficit) accumulated during development stage (136,568) (65,928)
--------- ---------
Total Stockholders' Equity (Deficit) (6,818) 14,072
--------- ---------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 31,378 $ 32,377
========= =========
See notes to financial statements.
7
Concrete Leveling Systems Inc.
(A Development Stage Company)
Statements of Operations
For the Year Ended July 31, 2009, the Period from
August 28, 2007 (Inception) to July 31, 2008,
And the Period from August 28, 2007 (Inception) to July 31, 2009
August 28, 2007 August 28, 2007
Year Ended (Inception) to (Inception) to
July 31, July 31, July 31,
2009 2008 2009
----------- ----------- -----------
Equipment sales $ -- $ -- $ --
Equipment rental 1,271 1,107 2,378
----------- ----------- -----------
1,271 1,107 2,378
----------- ----------- -----------
Expenses
General & administration 70,553 66,814 137,367
Depreciation & amortization 632 116 748
----------- ----------- -----------
Total Expenses 71,185 66,930 138,115
----------- ----------- -----------
(Loss) from Operations (69,914) (65,823) (135,737)
Other (Expense)
Interest expense (726) (105) (831)
----------- ----------- -----------
Total Other (Expense) (726) (105) (831)
----------- ----------- -----------
Net (Loss) Before Income Taxes (70,640) (65,928) (136,568)
Provision for Income Taxes -- -- --
----------- ----------- -----------
Net (Loss) $ (70,640) $ (65,928) $ (136,568)
=========== =========== ===========
Net (Loss) per Share - Basic and Fully Diluted $ (0.02) $ (0.02) N/A
=========== =========== ===========
Weighted average number of common
shares outstanding - basic and fully diluted 4,511,647 3,934,113 N/A
=========== =========== ===========
See notes to financial statements.
8
Concrete Leveling Systems, Inc.
(A Development Stage Company)
Statements of Stockholders' Equity
For the Year Ended July 31, 2009, and the Period
Beginning August 28, 2007 (Inception) and Ended July 31, 2008
(Deficit)
Common Stock Accumulated
--------------------- Additional During
Issued Paid-in Stock Development
Shares Par Value Capital Subscriptions Stage Total $
------ --------- ------- ------------- ----- -------
Issuance of Common Stock
September, 2007 2,600,000 $ 2,600 $ -- $ -- $ -- $ 2,600
Issuance of Common Stock
December, 2007 1,775,000 1,775 69,225 -- -- 71,000
Stock Subscriptions Received
July, 2008 -- -- -- 6,400 -- 6,400
Net (Loss) -- -- -- -- (65,928) (65,928)
--------- ------- --------- -------- --------- --------
Balance, July 31, 2008 4,375,000 4,375 69,225 6,400 (65,928) 14,072
--------- ------- --------- -------- --------- --------
Issuance of Common Stock
August, 2008 53,333 53 6,347 (6,400) -- --
Issuance of Common Stock
April, 2009 255,835 256 30,446 -- -- 30,702
Issuance of Common Stock
June, 2009 65,000 65 7,735 -- -- 7,800
Issuance of Common Stock
July, 2009 93,750 94 11,154 -- -- 11,248
Net (Loss) -- -- -- -- (70,640) (70,640)
--------- ------- --------- -------- --------- --------
Balance, July 31, 2009 4,842,918 $ 4,843 $ 124,907 $ -- $(136,568) $ (6,818)
========= ======= ========= ======== ========= ========
See notes to financial statements.
9
Concrete Leveling Systems, Inc.
(A Development Stage Company)
Statements of Cash Flows
For the Year Ended July 31, 2009, the Period from August 28, 2007 (Inception)
to July 31, 2008, and the Period from August 28, 2007 (Inception)
to July 31, 2009
August 28, 2007 August 28, 2007
Year Ended (Inception) to (Inception) to
July 31, July 31, July 31,
2009 2008 2009
--------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (70,640) $ (65,928) $(136,568)
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation and amortization 632 116 748
(Increase) Decrease in accounts receivable 218 (218) --
Decrease (Increase) in inventory (9,574) (20,038) (29,612)
(Increase) Decrease in prepaid expenses 3,249 (3,324) (75)
(Increase) Decrease in deposits -- (10) (10)
Increase (Decrease) in accounts payable 58,471 11,609 70,081
Increase (Decrease) in other accrued expenses 2,169 6,695 8,864
--------- --------- ---------
Net cash (used by) operating activities (15,475) (71,097) (86,572)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (1,200) (700) (1,900)
--------- --------- ---------
Net cash (used by) investing activities (1,200) (700) (1,900)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of stock 9,002 80,000 89,002
--------- --------- ---------
Net cash provided by financing activities 9,002 80,000 89,002
--------- --------- ---------
Net Increase (decrease) in cash (7,673) 8,203 530
Cash and equivalents - beginning 8,203 -- --
--------- --------- ---------
Cash and equivalents - ending $ 530 $ 8,203 $ 530
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION
Interest $ 726 $ 99 $ 825
========= ========= =========
Income Taxes $ -- $ -- $ --
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES
On April 15, 2009, two stockholders of the Company exchanged accrued rents and
management fees totaling $29,500 for 245,835 shares of the Company's common
stock.
On July 31, 2009, two stockholders of the Company exchanged accrued rents and
management fees totaling $11,250 for 93,750 shares of the Company's common
stock.
See notes to financial statements.
10
Concrete Leveling Systems, Inc.
(A Development Stage Company)
Notes to Financial Statements
July 31, 2009 and 2008
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. The
Company recognizes its revenue when the 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 uncollectible receivables based on
prior experience. The allowance was $-0- at July 31, 2009 and 2008.
ADVERTISING AND MARKETING
Advertising and marketing costs are charged to operations when incurred.
Advertising costs were $441 for the year ended July 31, 2009, and $1,939 for the
period beginning August 28, 2007 (inception) and ended July 31, 2008.
INVENTORIES
Inventories, which consist of in-process and completed service units, are
recorded at the lower of 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.
DEVELOPMENT STAGE COMPANY
Concrete Leveling Systems, Inc. (a Nevada corporation) has been in the
development stage since its formation on August 28, 2007. It is primarily
engaged in the manufacturing and marketing of concrete leveling equipment
systems. Realization of a major portion of its assets is dependent upon the
Company's ability to successfully fabricate and market the products, meet its
future financing requirements, and the success of 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. The Company's majority
stockholder has agreed to advance funds necessary to meet the Company's
near-term cash needs.
11
Concrete Leveling Systems, Inc.
(A Development Stage Company)
Notes to Financial Statements
July 31, 2009 and 2008
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 - LOSS PER COMMON SHARE
Loss per common share is based on the weighted average number of shares
outstanding which was:
4,511,647 and 3,934,113 for the periods ended July 31, 2009 and 2008
respectively.
NOTE 4 - PRODUCT WARRANTIES
The Company will sell its products to customers together with limited repair or
replacement warranties. The Company warrants the leveling equipment package on a
one-year limited warranty. No sales occurred during the period beginning August
28, 2007 (inception) and ended July 31, 2009.
NOTE 5 - NEW ACCOUNTING PROCEDURES
There are no new accounting procedures that impact the Company.
NOTE 6 - 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 7 - OPERATING SEGMENT
The Company operates in one reportable segment, concrete leveling systems sales.
NOTE 8 - INCOME TAXES
Income taxes on continuing operations at July 31 include the following:
2009 2008
------ ------
Currently payable $ 0 $ 0
Deferred 0 0
------ ------
Total $ 0 $ 0
====== ======
12
Concrete Leveling Systems, Inc.
(A Development Stage Company)
Notes to Financial Statements
July 31, 2009 and 2008
NOTE 8 - INCOME TAXES (CONTINUED)
A reconciliation of the effective tax rate with the statutory U.S. income tax
rate at July 31 is as follows:
2009 2008
-------------------- --------------------
% 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 (24,000) (34)% (22,000) (34)%
-------- -------- -------- --------
Income taxes at statutory rate $(24,000) (34)% $(22,000) (34)%
======== ======== ======== ========
The components of and changes in the net deferred taxes were as follows:
2009 2008
-------- --------
Deferred tax assets:
Net operating loss carryforwards $ 45,000 $ 21,300
Compensation and Miscellaneous 1,100 1,000
-------- --------
Deferred tax assets 46,100 22,300
Deferred tax liabilities:
Depreciation 100 200
-------- --------
Total 46,000 22,100
Valuation Allowance (46,000) (22,100)
-------- --------
Net deferred tax assets $ 0 $ 0
======== ========
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, 2009 or 2008 due
to a valuation allowance, which increased by $23,900 in 2009.
13
Concrete Leveling Systems, Inc.
(A Development Stage Company)
Notes to Financial Statements
July 31, 2009 and 2008
NOTE 8 - INCOME TAXES (CONTINUED)
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 7/31/08 $ 62,781 2/28/2029
Period Ended 7/31/09 $ 68,766 2/28/2030
These tax periods 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 9 - RELATED PARTIES
The Company leases warehouse and office space from one of its stockholders. Rent
paid to this stockholder totaled $15,000 for the year ended July 31, 2009 and
$7,500 for the period beginning August 28, 2007 (inception) and ended July 31,
2008. Rent payable to this stockholder was $-0- and $1,250 at July 31, 2009 and
2008, respectively.
The Company paid a management fee to one of its stockholders. Management fees
paid to this stockholder totaled $22,500 for the year ended July 31, 2009 and
$7,000 for the period beginning August 28, 2007 (inception) and ended July 31,
2008. Management fees payable to this stockholder were $4,500 and $2,000 at July
31, 2009 and 2008, respectively.
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.
NOTE 10 - SUBSEQUENT EVENTS
During September of 2009, the Company completed its first sale of a concrete
leveling unit.
The Company has evaluated all subsequent events through October 15, 2009, the
date the financial statements were available to be issued.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. 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.
Management has the responsibility for establishing and maintaining adequate
internal control over financial reporting for the Company. With respect to items
involved in financial reporting are within the personal knowledge of the
Company's management. Due to the centralization of all financial matters being
filtered through the Company's sole Officer and Director, the Company believes
that controls over financial reporting are effective, since all financial
matters involving the Company are personally known by the Company's Chief
Executive.
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 pursuant to temporary rules of the Securities
and Exchange Commission that permit the Company to provide only management's
report in this annual report.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Executive Officers and Directors and their respective ages as of July
31, 2009 are as follows:
DIRECTORS
Name of Director: Age:
- ----------------- ----
Suzanne I. Barth 47
EXECUTIVE OFFICERS
Executive Officer: Age: Office:
- ------------------ ---- -------
Suzanne I. Barth 47 President, Chief Executive Officer
and Chief Financial Officer
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Suzanne I. Barth, age 47, is the Founder and sole Officer and Director of
CLS. Mrs. Barth received an AAS degree in Business Management from Stark
Technical College in 1983. Over the past 20 years, Mrs. Barth has been involved
as an office manager for various businesses in the construction industry. For
the past 81/2years, she has been the sole Shareholder, Director and Officer of
E.A.B Technical Services Co., Inc., an Ohio Corporation, located in Canton, Ohio
that is involved in the concrete leveling industry.
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.
SIGNIFICANT EMPLOYEES:
CLS at this time has one significant employee. All work performed on behalf
of the Corporation, at this time, is performed, by Mrs. Suzanne I. Barth, who
receives a management fee of $2,500 per month. This management fee became
effective on January 1, 2009. Prior to that time, Mrs. Barth received a
management fee of $1,000 per month. She will continue to work, at this amount,
until such time as the Corporation commences to receive revenue from sales of
its product. At such time as the Corporation commences to receive revenues, Mrs.
Barth's management fee will be re-evaluated by the Board of Directors. At the
present time, work is being performed for the Corporation, on an unpaid basis by
Mr. Edward A. Barth. Mr. Barth is involved in the ordering of components for the
service units and the supervision of the fabrication of the service units. All
fabrication work to be performed and marketing services will be performed on an
independent contracting basis with outside companies. The Corporation does not
contemplate hiring any employees until such time as revenues from the business
can justify hiring an employee on a full time basis.
ITEM 11. EXECUTIVE COMPENSATION
The table below summarizes all compensation awarded to, earned by, or paid
to the executive officers of CLS by any person for all services rendered in any
capacity to CLS for the present fiscal year.
Other Securities
Name and Annual Restricted Underlying All Other
Principal Compen- Stock Options/ LTIP Compen-
Position Year Salary($) Bonus sation($) Award(s)($) SARs($) Payouts($) sation($)
- -------- ---- --------- ----- --------- ----------- ------- ---------- ---------
Suzanne I. Barth, 2008 $ 7,000.00 0.00 0.00 0.00 0.00 0.00 0.00
President, CEO 2009 $22,500.00 0.00 0.00 0.00 0.00 0.00 0.00
The company has been unable to pay Mrs. Barth for her services and her
management fee has been accrued. In April, 2009, pursuant to an action of the
Board, Mrs. Barth agreed to capitalize the accrued management fee owed to her
through March 31, 2009. Mrs. Barth received 141,667 shares of the Company's
$0.001 par value common stock, valued at $0.12 per share, in exchange for the
$17,000 of accrued and unpaid salary. On July 31, 2009, pursuant to actions of
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the Board, Mrs. Barth capitalized an additional $7,500 in accrued and unpaid
wages and received an additional 62,500 shares of its $0.001 par value common
stock, valued at $0.12 per share. All of the shares issued are considered
restricted shares.
The company currently has one director, Mrs. Suzanne I. Barth who is
serving as Director without compensation.
The Corporation does not have a written employment agreement or consulting
agreement with Mrs. Suzanne I. Barth, the Corporation's President, CEO, COO and
Director. Mrs. Barth provides services to CLS on a part-time basis and receives
a management fee of $2,500 per month.
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, 2009 and by the officers and directors, individually and as a
group. Except as otherwise indicated, all shares are owned directly.
Amount of
Name and address beneficial Percent of
Class of Stock of beneficial owner ownership class
- -------------- ------------------- --------- -----
Common stock Suzanne I. Barth 2,689,584 55.5%
Director, President and
Chief Executive Officer
5046 East Boulevard NW
Canton, OH 44718
Common stock Charlene A. Barth 470,000 9.7%
5020 East Boulevard NW
Canton, OH 44718
Common stock Larry E. Williams 250,000 5.16%
2129 Market Ave. N
Canton, OH 44714
Common stock Glenn Silverhart 250,000 5.16%
5680 Wiclif Dr. NE
North Canton, OH 44721
Common stock John A. Williams 250,000 5.16%
17421 Schenely Ave.
Cleveland, Ohio 44119
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Common stock: All Officers and Directors as a group that consist of one
person aiming directly 2,554,167 shares and with 135,417 shares of beneficial
ownership, equaling 55.5% of the outstanding shares of common stock.
The percent of class is based on 4,842,918 shares of common stock issued
and outstanding as of July 31, 2009.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Mrs. Suzanne I. Barth is the sole promoter of CLS, further, she currently
holds a control position in the business, owning a total of 55.5% of the
outstanding common stock, both directly and beneficially. Mrs. Barth is to
receive no additional compensation from CLS with regard to her efforts in
selling the new common shares sold during the past fiscal year.
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
Shareholder of the Company recognizes the need to have an independent director
to review various matters. Further, the Company has no audit or compensation
committee. All matters are currently reviewed by the Sole Director of the
Company, Mrs. Suzanne I. Barth, who is 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.
A. Audit Fees $16,420
B. Audit-Related Fees $ 0
C. Tax Fees $ 760
D. Other Fees $ 0
All of the above auditor's fees were approved by the Sole Director of the
Company. The Company has no audit committee and the sole member of the Board of
Directors evaluates and approves all accountant fees.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
A. Financial Statements. 2008 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
- ----------
* This Exhibit incorporated by reference to Form SB-2 filed January 16, 2008.
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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, President
Date: October 29, 2009
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
Date: October 29, 2009
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