UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(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, 2011
[ ] 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 [ ] 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 [ ] No [X]
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 $169,983. This value is based upon the price at which the
common equity was last sold.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
5,585,418 $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 5
8 Financial Statements and Supplementary Data 7
9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 16
9A Controls and Procedures 16
10 Directors and Executive Officers of the Registrant 17
11 Executive Compensation 18
12 Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 19
13 Certain Relationships and Related Transactions, and Director
Independence 20
14 Principal Accountant Fees and Services 20
15 Exhibits and Financial Statement Schedules 20
Signatures 21
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
11 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. 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 is 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 placing ads in
construction equipment trade journals throughout the United States. Stark will
also continue its telephone marketing by contacting concrete contractors in
select targeted areas.
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
manufacturer 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. Mrs.
Barth receives a management fee of $2,500 per month, Mr. Barth received a
management fee of $2,000 per month and Mr. Swearengin received a management fee
of $1,000 per month, commencing January 1, 2011. All other services required by
the Corporation are performed by independent contractors under the direction of
Mr. and 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. 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
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. Since it commenced trading, the Company's common shares have sold
for a high of $1.10 per share and a low of $0.07 per share. 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 29 holders of CLS's common
shares.
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 a total of 197,500 shares of
its $0.001 par value common stock to Mrs. Suzanne I. Barth, in satisfaction of
the accrued fees owed by the Company to Mrs. Barth. 97,500 common shares were
issued at the rate of $0.20 per share on January 31, 2011 and 100,000 shares
were issued at $0.15 per share on July 13, 2011. In addition, the Company issued
211,250 shares of its $0.001 par value common stock to Mr. Edward A. Barth, in
satisfaction of accrued salary and rents. Mr. Barth received 81,250 shares
effective January 31, 2011, valued at $0.20 per share. Mr. Barth received an
additional 130,000 shares on July 13, 2011 valued at $0.15 per share.
The Board of Directors also approved the capitalization of accrued fees
owed to Mr. Eugene H. Swearengin, an officer of the Company. Mr. Swearengin
received 40,000 shares of the Company's $0.001 par value common stock in
satisfaction of $6,000 of accrued management fees. These shares were issued on
July13, 2011 and valued at $0.15 per share. The share values for each of the
capitalized accrued fees, rents and salaries were determined by the bid price
for the shares on the date that the Board of Directors approved the
capitalization of the accrued amounts. All of the shares were issued pursuant to
Section 4(2) of the Securities Act of 1933. All of the shares are restricted
securities.
4
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
2011 AND 2010. FOR A MORE COMPLETE UNDERSTANDING OF THIS DISCUSSION PLEASE READ
THE NOTES TO FINANCIAL STATEMENTS INCLUDING IN THIS REPORT.
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 certain
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.
Instead of maintaining an inventory of service units, the Company will only
fabricate completed service units 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 its last
fiscal year. It successfully sold one service unit during the last fiscal year.
The total sales received for the new concrete leveling service unit amounted to
$45,000. The Company has received full payment for this unit. The Company
continues to receive payments on the self-financed portion of the service unit
sold during the fiscal year ending July 31, 2010. 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. CLS has now sold a total of three new
service units. Two new service units were sold in the prior fiscal year and one
during the most current fiscal year. 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. Several potential buyers have expressed
an interest in purchasing a service unit. However, tight credit markets have
delayed several sales. The Company anticipates selling an additional service
unit prior to the end of this calendar year.
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 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 receives 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 purchaser. For the short
5
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 2012.
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.
6
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 sheets of Concrete Leveling Systems, Inc. as of
July 31, 2011 and 2010, and the related statements of operations, stockholders'
equity (deficit), and cash flows for the years then ended. 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 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. 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 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, 2011 and 2010, and the results of its operations and its
cash flows for the years then ended 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 19, 2011
7
Concrete Leveling Systems Inc.
Balance Sheets
July 31, 2011 and 2010
2011 2010
---------- ----------
ASSETS
CURRENT ASSETS
Cash in bank $ 19,710 $ 2,426
Accounts receivable 365 --
Current portion of notes receivable 18,538 17,815
Inventory 262 613
---------- ----------
TOTAL CURRENT ASSETS 38,875 20,854
---------- ----------
PROPERTY, PLANT AND EQUIPMENT
Equipment 1,900 1,900
Less: Accumulated depreciation (1,900) (1,382)
---------- ----------
TOTAL PROPERTY, PLANT AND EQUIPMENT -- 518
---------- ----------
OTHER ASSETS
Notes receivable, net of current portion 38,450 47,246
Deposits 10 10
---------- ----------
TOTAL OTHER ASSETS 38,460 47,256
---------- ----------
TOTAL ASSETS $ 77,335 $ 68,628
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 60,475 $ 63,782
Loans from stockholders 48,550 17,000
Other accrued expenses 14,088 10,068
---------- ----------
TOTAL CURRENT LIABILITES 123,113 90,850
---------- ----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock (par value $0.001)
100,000,000 shares authorized:
5,585,418 and 5,136,668 shares issued and
outstanding at July 31, 2011 and 2010 respectively 5,585 5,137
Additional paid-in capital 244,165 168,363
Accumulated (deficit) (295,528) (195,722)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (45,778) (22,222)
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 77,335 $ 68,628
========== ==========
See notes to financial statements.
8
Concrete Leveling Systems Inc.
Statements of Operations
For the Years Ended July 31, 2011 and 2010
2011 2010
---------- ----------
Equipment and parts sales $ 49,899 $ 115,661
---------- ----------
Cost of Sales 23,266 47,599
---------- ----------
Gross Profit 26,633 68,062
---------- ----------
EXPENSES
General & administration 126,288 125,988
Depreciation & amortization 518 633
---------- ----------
TOTAL EXPENSES 126,806 126,621
---------- ----------
(Loss) from Operations (100,173) (58,559)
---------- ----------
OTHER (EXPENSE)
Interest income 5,359 1,457
Interest expense (4,992) (2,052)
---------- ----------
TOTAL OTHER (EXPENSE) 367 (595)
---------- ----------
Net (Loss) Before Income Taxes (99,806) (59,154)
Provision for Income Taxes -- --
---------- ----------
Net (Loss) $ (99,806) $ (59,154)
========== ==========
Net (Loss) per Share - Basic and Fully Diluted $ (0.02) $ (0.01)
========== ==========
Weighted average number of common shares outstanding
- basic and fully diluted 5,226,538 4,937,730
========== ==========
See notes to financial statements.
9
Concrete Leveling Systems, Inc.
Statements of Stockholders' Equity
For the Years Ended July 31, 2011 and 2010
Common Stock
--------------------- Additional Total
Issued Par Paid-in Accumulated Stockholders'
Shares Value Capital (Deficit) Equity
------ ----- ------- --------- ------
BALANCE, JULY 31, 2009 4,842,918 $ 4,843 $ 124,907 $(136,568) $ (6,818)
--------- -------- --------- --------- ---------
ISSUANCE OF COMMON STOCK
JANUARY, 2010 187,500 188 22,312 -- 22,500
ISSUANCE OF COMMON STOCK
JULY, 2010 106,250 106 21,144 -- 21,250
NET (LOSS) -- -- -- (59,154) (59,154)
--------- -------- --------- --------- ---------
BALANCE, JULY 31, 2010 5,136,668 $ 5,137 $ 168,363 $(195,722) $ (22,222)
--------- -------- --------- --------- ---------
ISSUANCE OF COMMON STOCK
JANUARY, 2011 178,750 178 35,572 -- 35,750
ISSUANCE OF COMMON STOCK
JULY, 2011 270,000 270 40,230 -- 40,500
NET (LOSS) -- -- -- (99,806) (99,806)
--------- -------- --------- --------- ---------
BALANCE, JULY 31, 2011 5,585,418 $ 5,585 $ 244,165 $(295,528) $ (45,778)
========= ======== ========= ========= =========
See notes to financial statements.
10
Concrete Leveling Systems, Inc.
Statements of Cash Flows
For the Years Ended July 31, 2011 and 2010
2011 2010
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $(99,806) $(59,154)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 518 633
(Increase) Decrease in accounts receivable (365) (72,500)
Decrease (Increase) in inventory 351 28,999
(Increase) Decrease in prepaid expenses -- 75
Increase (Decrease) in accounts payable 72,943 34,450
Increase (Decrease) in other accrued expenses 4,020 44,954
-------- --------
NET CASH (USED BY) OPERATING ACTIVITIES (22,339) (22,543)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments on notes receivable 8,073 7,439
CASH FLOWS FROM FINANCING ACTIVITIES
Loans from stockholders 31,550 17,000
Net Increase (decrease) in cash 17,284 1,896
Cash and equivalents - beginning 2,426 530
-------- --------
CASH AND EQUIVALENTS - ENDING $ 19,710 $ 2,426
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION
Interest $ 734 $ 1,352
======== ========
Income Taxes $ -- $ --
======== ========
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES
During October, 2009, the Company converted $20,000 of accounts receivable into
a note receivable from the customer.
On January 28, 2010, two stockholders of the Company exchanged accrued rents and
management fees totaling $22,500 for 187,500 shares of the Company's common
stock.
On February 23, 2010, the Company converted $35,000 of accounts receivable into
a note receivable from the customer.
On June 27, 2010, the Company converted $17,500 of accounts receivable into a
note receivable from the customer.
On July 26, 2010, two stockholders of the Company exchanged accrued rents and
management fees totaling $21,250 for 106,250 shares of the Company's common
stock.
On January 31, 2011, two stockholders of the Company exchanged accrued rents and
management fees totaling $35,750 for 178,750 shares of the Company's common
stock
On July 13, 2011, three stockholders of the Company exchanged accrued rents and
management fees totaling $40,500 for 270,000 shares of the Company's common
stock
See notes to financial statements.
11
CONCRETE LEVELING SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2011 AND 2010
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, 2011 and 2010.
NOTES RECEIVABLE
The Company has three notes receivable totaling $56,988 and $65,061 at July 31,
2011 and 2010, respectively. The notes each carry an interest rate of 6.00% and
are due at varying dates between October 2012 and March 2016.
ADVERTISING AND MARKETING
Advertising and marketing costs are charged to operations when incurred.
Advertising costs were $670 and $377 for the years ended July 31, 2011, and
2010, respectively.
INVENTORIES
Inventories, which consist of parts and supplies, 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.
12
CONCRETE LEVELING SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2011 AND 2010
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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, 2011, current liabilities exceed current assets by $84,238, and total
liabilities exceed total assets by $45,778. 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. However, in order to fabricate an improved 2012
model service unit, the Company has found it necessary to borrow funds to
purchase the components. 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 - OPERATING SEGMENT
The Company operates in one reportable segment, concrete leveling systems sales.
13
CONCRETE LEVELING SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2011 AND 2010
NOTE 6 - INCOME TAXES
Income taxes on continuing operations at July 31 include the following:
2011 2010
------ ------
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:
2011 2010
------------------ -------------------
% 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 (34,000) (34)% (20,400) (34)%
-------- ---- -------- ----
Income taxes at statutory rate $(34,000) (34)% $(20,400) (34)%
======== ==== ======== ====
The components of and changes in the net deferred taxes were as follows:
2011 2010
-------- --------
Deferred tax assets:
Net operating loss carryforwards $ 86,100 $ 53,300
Compensation and Miscellaneous 13,700 12,600
-------- --------
Deferred tax assets 99,800 65,900
Deferred tax liabilities:
Depreciation 200 100
-------- --------
Total 99,600 65,800
Valuation Allowance (99,600) (65,800)
-------- --------
Net deferred tax assets: $ 0 $ 0
======== ========
14
CONCRETE LEVELING SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2011 AND 2010
NOTE 6 - 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, 2011 or 2010 due
to a valuation allowance, which increased by $32,300 and $19,800 in 2011 and
2010, 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 $ 62,781 2/28/2029
Period Ended July 31, 2009 $ 68,766 2/28/2030
Period Ended July 31, 2010 $ 25,311 2/28/2031
Period Ended July 31, 2011 $ 96,481 2/28/2032
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 7 - RELATED PARTIES
The Company leases warehouse and office space from one of its stockholders. Rent
paid to this stockholder totaled $15,000 for the years ended July 31, 2011 and
2010. Rent payable to this stockholder was $-0- at both July 31, 2011 and 2010.
The Company paid management fees to three of its stockholders. Management fees
paid to these stockholders totaled $59,000 and $30,000 for the years ended July
31, 2011 and 2010, respectively. Management fees payable to these stockholders
were $-0- and $4,500 at July 31, 2011 and 2010, 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.
Commission expense totaled $13,500 and $34,500 for the years ended July 31, 2011
and 2010, respectively. The amounts payable to the related party were $36,074
and $32,721 at July 31, 2011 and 2010, respectively.
Three stockholders of the Company loaned a total of $48,550 to the Company at
various times during the years ended July 31, 2011 and 2010. The loans carry
interest rates from 8% to 12% and are due on demand.
NOTE 8 - SUBSEQUENT EVENTS
The Company has evaluated all subsequent events through October 19, 2011, the
date the financial statements were available to be issued. There are no events
to report.
15
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.
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 Officer and two Directors, 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 and regularly conveyed to the other Director.
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.
16
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Executive Officers and Directors and their respective ages as of July
31, 2011 are as follows:
DIRECTORS
Name of Director: Age:
----------------- ----
Suzanne I. Barth 50
Edward A. Barth 53
Eugene H. Swearengin 57
EXECUTIVE OFFICERS
Executive Officer: Age: Office:
------------------ ---- -------
Suzanne I. Barth 50 Chief Executive Officer and Chief Financial
Officer
Edward A. Barth 53 President
Eugene H. Swearengin 57 Secretary
Suzanne I. Barth, age 50, 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 22 years, Mrs. Barth has been involved as an
office manager for various businesses in the construction industry.
Edward A. Barth, age 53 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 57, 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 33 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.
SIGNIFICANT EMPLOYEES:
As of the end of the Company's fiscal year, CLS had three significant
employees. Mrs. Suzanne I. Barth, the Company's CEO 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. Mr. Edward A. Barth, the Company's President is
17
involved in the ordering of components for the service units and the supervision
of the fabrication of the service units. Mr. Barth receives a monthly management
fee of $2,000 per month. All fabrication work to be performed and marketing
services will be performed on an independent contracting basis with outside
companies. Mr. Eugene H. Swearengin is the Company's Secretary. The Corporation
does not contemplate hiring any employees until such time as revenues from the
business can justify hiring an employee on a full time basis.
ITEM 11. EXECUTIVE COMPENSATION
The table below summarizes all compensation awarded to, earned by, or paid
to the executive officers of CLS by any person for all services rendered in any
capacity to CLS for the present fiscal year.
Other Securities
Name and Annual Restricted Underlying All Other
Principal Compen- Stock Options/ LTIP Compen-
Position Year Salary($) Bonus sation($) Award(s)($) SARs($) Payouts($) sation($)
-------- ---- --------- ----- --------- ----------- ------- ---------- ---------
Suzanne I. Barth, 2010 $30,000.00 0.00 0.00 0.00 0.00 0.00 0.00
President, CEO 2011 $30,000.00 0.00 0.00 0.00 0.00 0.00 0.00
Edward A. Barth, 2011* $20,000.00 0.00 0.00 0.00 0.00 0.00 0.00
President
Eugene H. 2011* $ 6,000.00 0.00 0.00 0.00 0.00 0.00 0.00
Swearengin,
Secretary
----------
* Commenced receiving income during 2011
The Company has been unable to pay Mrs. Barth for her services and her
management fee has been accrued. In January 2011, pursuant to an action of the
Board, Mrs. Barth agreed to capitalize the accrued management fee owed to her
through January 31, 2011. Mrs. Barth received 97,500 shares of the Company's
$0.001 par value common stock, valued at $0.20 per share, in exchange for the
$19,500 of accrued and unpaid management fee. On July 13, 2011, pursuant to
actions of the Board, Mrs. Barth capitalized an additional $15,000 in accrued
and unpaid management fees and received an additional 100,000 shares of its
$0.001 par value common stock, valued at $0.15 per share. On January 28, 2010
Mrs. Barth received 125,000 shares of the Company's $0.001 par value common
stock, valued at $0.12 per share in exchange for $15,000 of accrued and unpaid
salary. On July 26, 2010, Mrs. Barth received 75,000 shares of the Company's
$0.001 par value common stock, valued at $0.20 per share in exchange for $15,000
of accrued and unpaid management fee through July 31, 2010. All of the shares
issued are considered restricted shares. The value of the shares issued were
based upon the bid price for the Company's shares as of the date that the Board
of Director's approved the capitalization of the debt.
The Company was unable to pay Mr. Edward A. Barth for his services and his
management fee has been accrued. On January 31, 2011, pursuant to the actions of
the Board of Directors, Mr. Barth agreed to capitalize the accrued management
fee owed to him through January 31, 2011. In addition, Mr. Barth agreed to
capitalize accrued rental expenses owed to him for the lease of the Company's
offices. The total amount capitalized was $16,250, consisting of $8,000 of
accrued management fee and $8,250 of accrued rental expense. Mr. Barth received
18
81,250 shares of the Company's $0.001 par value common stock, valued at $0.20
per share. On July 13, 2011, Mr. Barth received an additional 130,000 shares of
the Company's $0.001 par value common stock, valued at $0.15 per share, in
exchange for $8,000 of accrued management fees and $11,500 of accrued rental
expense, through July 31, 2011. All of the shares issued are considered
restricted shares and the value of the shares were determined based upon the bid
price for the Company's shares as of the date of the Board of Director's
approved the capitalization of the debt.
The Company was unable to pay its Secretary, Mr. Eugene H. Swearengin his
management fee for the current fiscal year. Mr. Swearengin commenced receiving a
fee of $1,000 per month, effective January 1, 2011. During the fiscal year, he
accrued $6,000 in fees. On July 13, 2011, pursuant to actions of the Board of
Directors, Mr. Swearengin was offered the ability to capitalize his accrued
fees, which he elected to do. Mr. Swearengin received 40,000 shares of the
Company's $0.001 par value common stock, valued at $0.15 per share in exchange
for the $6,000 in accrued and unpaid fees. All of the shares issued are
considered restricted shares. The value of the shares were based upon the bid
price for the Company's shares as of the date that the Board of Directors
approved the capitalization of the debt.
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 a 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 and receive a management fee. Mrs.
Suzanne I. Barth, receives a fee of $2,500 per month to serve as CEO and COO of
the Company. Mr. Edward A. Barth receives a fee of $2,000 per month to serve as
President of the Company and Mr. Eugene H. Swearengin receives a fee of $1,000
per month to serve as Secretary of the Company.
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, 2011 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 2,651,667 55.36%
Director, President and + 440,417 (owned
Chief Executive Officer directly by her spouse,
5046 East Boulevard NW Edward A. Barth)
Canton, OH 44718 Total Shares 3,092,084
Common stock Edward A. Barth 440,417 55.36%
Incoming President +2,651,667 (owned
5046 East Boulevard NW directly by his spouse,
Canton, OH 44718 Suzanne I. Barth)
Total shares 3,392,084
Common stock Eugene H. Swearengin 65,000 1.16%
Director and Secretary
7855 Freedom Ave., NW
North Canton, OH 44720
19
Common stock: All Officers and Directors as a group that consist of three
individuals as of July 31, 2011 directly owned 3,157,084 shares directly and
beneficially, equaling 56.52% of the outstanding shares of common stock.
The percent of class is based on 5,585,418 shares of common stock issued
and outstanding as of July 31, 2011.
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.
A. Audit Fees - $18,020
B. Audit-Related Fees - $ 0
C. Tax Fees - $ 720
D. Other Fees - $ 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.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
A. Financial Statements. 2011 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.
20
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: June 8, 2012
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: June 8, 2012
21