Attached files
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, 2013
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____________ to _____________
Commission file number 000-1414382
Concrete Leveling Systems, Inc.
(Exact name of registrant as specified in its charter)
Nevada 26-0851977
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
5046 E. Boulevard, NW, Canton, OH 44718
(Address of principal executive officer)
(330) 966-8120
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
(Title of each class) (Name of each exchange on which registered)
--------------------- -------------------------------------------
Securities registered pursuant to section 12(g) of the Act:
$.001 par value common stock
(Title of class)
Indicate by check mark if the registrant is well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 of Section 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
requested to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Website, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405
of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated file, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated file," and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
The aggregate market value of the voting and non-voting common equity held by
non-affiliates is $388,533. 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 October 17, 2012. 6,395,418 $0.001 par value common shares
DOCUMENTS TO BE INCORPORATED BY REFERENCE
Form SB-2 with exhibits filed January 16, 2008.
TABLE OF CONTENTS
Number Item in Form 10-K Page No.
------ ----------------- --------
1 Business 3
2 Properties 4
3 Legal Proceedings 4
5 Market for Registrant's Common Equity, Related Stock holder Matters
and Issuer Purchases of Equity Securities 4
7 Management's Discussion and Analysis of Financial Condition and
Results of Operation 5
8 Financial Statements and Supplementary Data 7
9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 17
9A Controls and Procedures 17
10 Directors and Executive Officers of the Registrant 18
11 Executive Compensation 19
12 Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters 20
13 Certain Relationships and Related Transactions, and Director
Independence 21
14 Principal Accountant Fees and Services 21
15 Exhibits and Financial Statement Schedules 21
Signatures 22
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
12 years and, therefore, has direct knowledge as to the operations of the
concrete leveling service unit, as well as the variety of applications to which
it can be used.
Effective July 31, 2009, the Company entered into a Marketing Agreement
with Stark Concrete Leveling, Inc. to become the exclusive distributor for the
CLS service unit. Stark Concrete Leveling, Inc. ("Stark") is owned and operated
by Mr. Edward A. Barth. Mr. Barth is President of CLS. Under the terms of the
Marketing Agreement, Stark will receive a commission equal to 30% of the sales
price of any unit sold. Stark waived its commissions on sales for the year ended
July 31, 2013. Stark is responsible for all costs of marketing, and the training
of buyer's agent in the use of the units. Stark intends to continue to market
the service unit through placing ads in construction equipment trade journals
throughout the United States.
The majority of the components of the concrete leveling service units are
readily available from several manufacturers, as stock items. The Company has
negotiated with the manufacturers of key components to be classified as an OEM
manufacturer, thus receiving a reduced cost for its components. Certain items
require custom fabrication. The Company has identified a metal fabricator who
can specially fabricate the components to the Company's specifications.
Competitive fabricators are available within the Company's geographic area,
should it become necessary to seek another fabricator.
None of the components utilized in fabricating the concrete leveling units
are subject to patents, trademarks, licenses, franchises or other royalty
agreements. In addition, there is no need for any governmental approval for the
manufacture or sale of the concrete leveling service units. The Company is
unaware of any cost or effects resulting from required compliance with any
federal, state or local environmental laws.
3
CLS has three full time employees, Mrs. Suzanne I. Barth (the majority
shareholder, a director and the Company's CEO), Mr. Edward A. Barth, the
Company's President and Mr. Eugene H. Swearengin, the Company's Secretary. On
July 31, 2013 the Officer's forgave all compensation accrued from August 1, 2012
through July 31, 2013 and have agreed to work without compensation beginning
August 1, 2013, until such time as the Company's sales increase to a point that
cash is available to pay salaries. All other services required by the
Corporation are performed by independent contractors under the direction of Mr.
and Mrs. Barth.
ITEM 2. PROPERTIES
The Company is currently occupying the commercial space from which it is
conducting its operations from Mr. Edward A. Barth. The Corporation is occupying
this space on a month-to-month basis. It is occupying approximately 2,500 square
feet of space. On July 31, 2013 Mr. Barth forgave all rent accrued from August
1, 2012 through July 31, 2013 and have agreed to lease the space rent free
beginning August 1, 2013.
ITEM 3. LEGAL PROCEEDINGS
None
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
MARKET INFORMATION ON COMMON STOCK. The Company's stock commenced trading
on the Over the Counter Bulletin Board (OTCBB) under the trading symbol CLEV on
June 25, 2010. There have been no dividends issued by the Company. The volume of
shares sold since trading began has been very small. To the best of the
Company's knowledge, all trades have involved actual sales and not inter-broker
transactions. As of the end of the Company's fiscal year, there are
approximately 28 holders of CLS's common shares. The following demonstrates the
price of the Company's common stock for the last two fiscal years:
Fiscal Year Ended July 31
2012 2013
----------------- ----------------
High Low High Low
---- --- ---- ---
First Quarter $ 0.26* $ 0.07* $ 0.15* $ 0.13*
Second Quarter $ 0.07* $ 0.08* $ 0.13* $ 0.13*
Third Quarter $ 0.13* $ 0.24* $ 0.15* $ 0.13*
Fourth Quarter $ 0.24* $ 0.15* $ 0.14* $ 0.15*
----------
* The figures reflected in this table are bid prices.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS. At
present, the Company has not set aside any securities for the purpose of
providing compensation to any of the Company's employees. Although no plan
exists, the Board of Directors have issued common shares to the Company's
4
officers in satisfaction of salary and rental obligations of the Company. All
such shares were issued at the share's fair market value on the date of
authorization. Details of the transactions appear below.
RECENT SALE OF EQUITY SECURITIES NOT REGISTERED UNDER THE SECURITIES ACT.
During the Company's fiscal year, it issued no additional securities.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
The purpose of this discussion and analysis is to enhance the understanding
and evaluation of the results of operations, financial positions, cash flows,
indebtedness and other key financial information of CLS for the fiscal years
2012 and 2013. For a more complete understanding of this discussion please read
the Notes to Financial Statements included 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 low level of
cash flow. The Company, however, lacks funds to establish inventory in the form
of completed service units, due to the lack of liquidity. At present, the
Company borrows funds from its shareholders to meet liquidity demands and plans
to continue this practice over the next year.
The Company's intention is to maintain an inventory of one partially
completed service unit, the Company will fabricate a completed service unit upon
receipt of a signed Purchase Order. It is the Company's practice to require a
fifty percent (50%) down payment on all purchase orders, therefore, should
additional units be ordered, the Company will receive sufficient liquidity from
the down payment to fabricate the service unit for the customer. At present,
Management does not anticipate the need for any significant capital expenditures
during the next 12 months. All fabrication for the service units are performed
by outside contractors. Final assembly will be completed at the Company's
facility by Company employees. However, these tasks will not require additional
capital expenditures.
RESULTS OF OPERATIONS. CLS became an operating company during fiscal year
ended July 31, 2010. During the last fiscal year, CLS sold one new unit and
otherwise had negligible sales for the year. The Company continues to receive
payments on the self-financed portion of the service units sold during the
fiscal year ending July 31, 2010 and this fiscal year. The Company was in
serious negotiations with several potential customers during the last fiscal
year; however, financing concerns continue to plague the Company. Management is
encouraged with the recent sale of units and the positive feedback that its
customers have in operating 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 four new service
units. The largest factor the Company experiences in failing to sell more
service units is the inability of purchasers to obtain capital necessary to
purchase the units.
5
In order to increase interest in the service units, the Company attended a
trade show, in Canada at the end of November, 2012. Although a substantial
number of leads were produced, no sales have resulted to date.
During the fiscal year ending July 31, 2009, management changed its
position with regard to the marketing and sales of the concrete leveling service
units. Instead of bearing the cost of marketing the units and the cost of
training the purchasers with regard to the operation of the units, management
has contracted with Stark Concrete Leveling, Inc. ("Stark") to become its
exclusive distributor. Stark is owned by Mr. Edward A. Barth, the Company's
President. It is through Mr. Barth's effort that the companies' sales were
secured. Under the terms of the Distribution Agreement, Stark is responsible for
the cost of all marketing of the concrete leveling service units. In addition,
it is responsible for the onsite training for the purchasers in the operation of
the service units. In exchange for assuming these obligations and duties, Stark
receives a commission of thirty percent (30%) of the sales price of each unit.
Stark waived its commissions on sales for the year ended July 31, 2013.
The recent sales of the Company's concrete leveling service unit has
created positive feedback from the purchasers. For the short time that the
servicing units have been in operation, the purchasers have recognized the
market for such services in their area and immediately commence to receive
revenues.
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
Hobe & Lucas
Certified Public Accountants, Inc.
4807 Rockside Road, Suite 510 Phone: (216) 524.8900
Independence, Ohio 44131 Fax: (216) 524.8777
http://www.hobe.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
of Concrete Leveling Systems, Inc.
Canton, Ohio
We have audited the accompanying balance sheets of Concrete Leveling
Systems, Inc. as of July 31, 2013 and 2012, and the related statements of
income, stockholders' equity (deficit), and cash flows for the years then ended.
Concrete Leveling Systems, Inc.'s management is responsible for these financial
statements. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Concrete Leveling Systems,
Inc. as of July 31, 2013 and 2012, and the results of its operations and its
cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming Concrete
Leveling Systems, Inc. will continue as a going concern. As discussed in Note 1
to the financial statements, the nature of the industry in which the Company
operates raises substantial doubt about the Company's ability to continue as a
going concern. Management's plans regarding this matter are described in Note 1.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
/s/ Hobe & Lucas
------------------------------------------
Hobe & Lucas
Certified Public Accountants, Inc.
Independence, Ohio
October 17, 2013
7
Concrete Leveling Systems Inc.
Balance Sheets
July 31, 2013 and 2012
2013 2012
---------- ----------
ASSETS
CURRENT ASSETS
Cash in bank $ 2,171 $ 9,658
Accounts receivable 4,495 800
Current portion of notes receivable 30,113 24,621
Interest receivable 2,447 1,217
Deposits 12,000 --
Inventory 1,070 14,971
---------- ----------
Total Current Assets 52,296 51,267
---------- ----------
PROPERTY, PLANT AND EQUIPMENT
Equipment 700 1,900
Less: Accumulated depreciation (700) (1,900)
---------- ----------
Total Property, Plant and Equipment -- --
---------- ----------
OTHER ASSETS
Notes receivable, net of current portion 33,337 48,231
Deposits 10 10
---------- ----------
33,347 48,241
---------- ----------
TOTAL ASSETS $ 85,643 $ 99,508
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 72,524 $ 51,547
Advances - stockholders 15,000 --
Notes payable - stockholders 62,750 62,750
Other accrued expenses 23,172 18,723
Deferred Revenue -- 50,000
---------- ----------
Total Current Liabilites 173,446 183,020
---------- ----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock (par value $0.001)
100,000,000 shares authorized:
6,395,418 shares issued and outstanding at
July 31, 2013 and 2012 6,395 6,395
Additional paid-in capital 405,355 324,355
Retained (deficit) (499,553) (414,262)
---------- ----------
Total Stockholders' (Deficit) (87,803) (83,512)
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ 85,643 $ 99,508
========== ==========
See notes to financial statements.
8
Concrete Leveling Systems Inc.
Statements of Income
For the Years Ended July 31, 2013 and 2012
2013 2012
---------- ----------
Equipment and parts sales $ 55,077 $ 767
---------- ----------
Cost of Sales 21,389 138
---------- ----------
Gross Margin 33,688 629
---------- ----------
EXPENSES
Selling, general and administration 117,031 115,714
Depreciation -- --
---------- ----------
Total Expenses 117,031 115,714
---------- ----------
(Loss) from Operations (83,343) (115,085)
OTHER INCOME (EXPENSE)
Interest income 3,799 2,842
Interest expense (5,747) (6,491)
---------- ----------
Total Other Income (Expense) (1,948) (3,649)
---------- ----------
Net (Loss) Before Income Taxes (85,291) (118,734)
Provision for Income Taxes -- --
---------- ----------
Net (Loss) $ (85,291) $ (118,734)
========== ==========
Net (Loss) per Share - Basic and Fully Diluted $ (0.01) $ (0.02)
========== ==========
Weighted average number of common shares outstanding -
basic and fully diluted 6,395,418 5,611,975
========== ==========
See notes to financial statements.
9
Concrete Leveling Systems Inc.
Statements of Stockholders' Equity
For the Years Ended July 31, 2013 and 2012
Total
Additional Stockholders'
Issued Par Paid-in Accumulated Equity
Shares Value Capital (Deficit) (Deficit)
------ ----- ------- --------- ---------
Balance July 31, 2011 5,585,418 $ 5,585 $ 244,165 $(295,528) $ (45,778)
--------- ------- --------- --------- ---------
Issuance of Common Stock
July, 2012 810,000 810 80,190 -- 81,000
Net (Loss) -- -- -- (118,734) (118,734)
--------- ------- --------- --------- ---------
Balance July 31, 2012 6,395,418 6,395 324,355 (414,262) (83,512)
--------- ------- --------- --------- ---------
Conversion of stockholder payables
July 2013 -- -- 81,000 -- 81,000
Net (Loss) -- -- -- (85,291) (85,291)
--------- ------- --------- --------- ---------
Balance July 31, 2013 6,395,418 $ 6,395 $ 405,355 $(499,553) $ (87,803)
========= ======= ========= ========= =========
See notes to financial statements.
10
Concrete Leveling Systems, Inc.
Statements of Cash Flows
For the Years Ended July 31, 2013 and 2012
2013 2012
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (85,291) $ (118,734)
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
(Increase) Decrease in accounts receivable (3,695) (435)
(Increase) Decrease in interest receivable (1,230) (774)
Decrease (Increase) in inventory 13,901 (14,709)
(Increase) Decrease in deposits (12,000) --
Increase (Decrease) in accounts payable 101,978 72,072
Increase (Decrease) in deferred revenue (50,000) 25,000
Increase (Decrease) in other accrued expenses 4,449 4,635
---------- ----------
Net cash from (used by) operating activities (31,888) (32,945)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments on notes receivable 9,401 8,693
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Loans from stockholders -- 14,200
Advances from stockholders 15,000 --
---------- ----------
15,000 14,200
Net Increase (decrease) in cash (7,487) (10,052)
Cash and equivalents - beginning 9,658 19,710
---------- ----------
Cash and equivalents - ending $ 2,171 $ 9,658
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION
Interest $ 873 $ 913
========== ==========
Income Taxes $ -- $ --
========== ==========
NON-CASH FINANCING ACTIVITIES
On July 31, 2013, the Company converted accounts payable due to three
stockholders totaling $81,000 to additional paid-in capital.
On July 19, 2012, three stockholders of the Company exchanged accrued rents and
management fees totaling $81,000 for 810,000 shares of the Company's common
stock.
See notes to financial statements.
11
Concrete Leveling Systems, Inc.
Notes to Financial Statements
July 31, 2013 and 2012
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.
REVENUE RECOGNITION
The Company recognizes revenue when product is shipped or picked up by the
customer.
ACCOUNTS RECEIVABLE
The Company grants credit to its customers in the ordinary course of business.
The Company provides for an allowance for uncollectible receivables based on
prior experience. The allowance was $-0- at July 31, 2013 and 2012.
NOTES RECEIVABLE
The Company has three notes receivable totaling $40,889 and $47,852 at July 31,
2013 and 2012, respectively. The notes each carry an interest rate of 6.00% and
are due at varying dates between November 2013 and March 2016. The notes are
secured by equipment.
The Company has an additional note receivable in the amount of $22,561 and
$25,000 at July 31, 2013 and 2012, respectively . This note carries an interest
rate of 8.00%. The note is secured by equipment.
ADVERTISING AND MARKETING
Advertising and marketing costs are charged to operations when incurred.
Advertising costs were $6,450 and $1,650 for the years ended July 31, 2013, and
2012, respectively.
INVENTORIES
Inventories, which consist of parts and work in progress, are recorded at the
lower of cost or fair market value.
12
Concrete Leveling Systems, Inc.
Notes to Financial Statements
July 31, 2013 and 2012
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the period. Actual results could differ from those estimates.
GOING CONCERN
The Company was formed on August 28, 2007 and was in the development stage
through July 31, 2009. The year ended July 31, 2010 was the first year during
which it was considered an operating company. The Company has sustained
substantial operating losses since its inception. In addition, the Company has
used substantial amounts of working capital in its operations. Further, at July
31, 2013, current liabilities exceed current assets by $121,151, and total
liabilities exceed total assets by $87,803. 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 2013
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, 2013 and 2012
NOTE 6 - INCOME TAXES
Income taxes on continuing operations at July 31 include the following:
2013 2012
-------- -------
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:
2013 2012
------------------- ------------------
% 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 (29,000) (34)% (38,500) (34)%
-------- ----- -------- -----
Income taxes at statutory rate $(29,000) (34)% $(38,500) (34)%
======== ===== ======== =====
The components of and changes in the net deferred taxes were as follows:
2013 2012
---------- ----------
Deferred tax assets:
Net operating loss carryforwards $ 124,400 $ 124,600
Compensation and Miscellaneous 17,300 15,600
---------- ----------
Deferred tax assets 141,700 140,200
---------- ----------
Deferred tax liabilities:
Depreciation 0 100
---------- ----------
Total 141,700 140,100
Valuation Allowance (141,700) (140,100)
---------- ----------
Net deferred tax assets: $ 0 $ 0
========== ==========
14
Concrete Leveling Systems, Inc.
Notes to Financial Statements
July 31, 2013 and 2012
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, 2013 or 2012 due
to a valuation allowance, which increased by $1,600 and $40,500 in 2013 and
2012, respectively.
The Company has incurred losses that can be carried forward to offset future
earnings if conditions of the Internal Revenue Code are met. These losses are as
follows:
Expiration
Year of Loss Amount Date
------------ -------- ---------
Period Ended July 31, 2008 $ 62,107 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
Period Ended July 31, 2012 $113,260 2/28/2033
Tax periods ended July 31, 2010, 2011, 2012 and 2013 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
expense to this stockholder totaled $15,000 for the years ended July 31, 2013
and 2012. Rent payable to this stockholder was $-0- at both July 31, 2013 and
2012. Accounts payable totaling $15,000 was forgiven by the stockholder on July
31, 2013. Accounts payable totaling $15,000 were converted to common stock
during year ended July 31, 2012.
The Company paid compensation fees to three of its stockholders. Compensation
fees expense to these stockholders totaled $66,000 for both years ended July 31,
2013 and 2012. Compensation fees payable to these stockholders were $-0- at both
July 31, 2013 and 2012. Accounts payable totaling $66,000 was forgiven on July
31, 2013. Accounts payable totaling $66,000 was converted to common stock during
the year ended July 31, 2012.
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. The
company waived its commissions on sales for the year ended July 31, 2013.
Commission expense totaled $-0- for the years ended July 31, 2013 and 2012. The
amounts payable to the related party were $36,074 at July 31, 2013 and 2012.
15
Concrete Leveling Systems, Inc.
Notes to Financial Statements
July 31, 2013 and 2012
NOTE 7 - RELATED PARTIES (CONTINUED)
Four stockholders of the Company loaned a total of $62,750 to the Company at
various times during the years ended July 31, 2012 and 2011. The loans carry
interest rates from 8% to 12% and are due on demand.
Two stockholders of the Company advanced a total of $15,000 to the Company at
various times during the year ended July 31, 2013. The advances carry no
interest.
NOTE 8 - COMPARATIVE STATEMENTS
Certain prior-year amounts have been reclassified to conform to current-year
classifications.
NOTE 9 - SUBSEQUENT EVENTS
The Company has evaluated all subsequent events through October 17, 2013, the
date the financial statements were available to be issued. There are no events
to report.
16
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES. Pursuant to Rule 13a-15(b) of the
Securities Exchange Act of 1934 ("Exchange Act"), the Company carried out an
evaluation, with the participation of the Company's Chief Executive Officer
(CEO) and Chief Financial Officer (CFO), of the effectiveness of the Company's
disclosure controls and procedures (as defined under Rule 13a-15(e) of the
Exchange Act) as of the end of the period covered by this report. Based upon
that evaluation, the Company's CEO/CFO concluded that the Company's disclosure
controls and procedures are effective to ensure that information required to be
disclosed by the Company in the reports that the Company files or submits under
the Exchange Act, is recorded, processed, summarized and reported, within the
time period specified by the United States Securities and Exchange Commission
rules and forms, and that such information is accumulated and communicated to
the Company's management, including the Company's CEO/CFO, as appropriate, to
allow timely decisions regarding required disclosure.
MANAGEMENTS ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING. Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting as such term is defined in Exchange Act Rules
13a-15(f) and 15d - 15(f). Under the supervision and with the participation of
management, including our Chief Executive Officer and Chief Financial Officer,
the Company conducted an evaluation of the effectiveness of its internal
controls over financial reporting based on the frame work in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commissions ("COSO"). Based on this evaluation, management has
concluded that our internal control over financial reporting was effective as of
July 31, 2013.
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.
17
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Executive Officers and Directors and their respective ages as of July
31, 2013 are as follows:
DIRECTORS
Name of Director: Age:
----------------- ----
Suzanne I. Barth 52
Edward A. Barth 55
Eugene H. Swearengin 59
EXECUTIVE OFFICERS
Executive Officer: Age: Office:
------------------ ---- -------
Suzanne I. Barth 52 Chief Executive Officer and
Chief Financial Officer
Edward A. Barth 55 President
Eugene H. Swearengin 59 Secretary
Suzanne I. Barth, age 52, 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 24 years, Mrs. Barth has been involved as an
office manager for various businesses in the construction industry.
Edward A. Barth, age 55 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 59, 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 35 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.
18
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, 2012 $30,000.00 0.00 0.00 0.00 0.00 0.00 0.00
President, CEO
Suzanne I. Barth, 2013 $ 0.00 0.00 0.00 0.00 0.00 0.00 0.00
President, CEO
Edward A. Barth, 2012 $24,000.00 0.00 0.00 0.00 0.00 0.00 0.00
President
Edward A. Barth, 2013 $ 0.00 0.00 0.00 0.00 0.00 0.00 0.00
President
Eugene H. Swearengin, 2012 $12,000.00 0.00 0.00 0.00 0.00 0.00 0.00
Secretary
Eugene H. Swearengin, 2013 $ 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Secretary
Due to the lack of sales in the Company, the Officers of the Company have
agreed to waive any compensation for services that they rendered to the Company
for the last fiscal year. All of the Officers have agreed to continue to provide
services to the Company without compensation, until such time as the Company's
sales increase to a point that cash is available to pay salaries.
For the fiscal year ending July 31, 2012, the Company was unable to pay
Mrs. Barth for her services and her management fee was accrued. In July 2012,
pursuant to an action of the Board, Mrs. Barth agreed to capitalize the accrued
management fee owed to her through July 31, 2012. Mrs. Barth received 300,000
shares of the Company's $0.001 par value common stock, valued at $0.10 per
share, in exchange for the $30,000 of accrued and unpaid management fee. All of
the shares issued are considered restricted shares and the value of the shares
issued in 2012 were determined based upon the bid price for the Company's shares
on July 13, 2012.
For the fiscal year ending July 31, 2012 the Company was unable to pay Mr.
Edward A. Barth for his services and his management fee was accrued. In addition
the Company was unable to pay rent to Mr. Barth for the same time period. In
19
July 2012, pursuant to an action of the Board, Mr. Barth agreed to capitalize
the accrued management fee and rent owed to him through July 31, 2012. Mr. Barth
received 390,000 shares of the Company's $0.001 par value common stock, valued
at $0.10 per share, in exchange for accrued rent of $15,000 and accrued
management fee owed through July 31, 2012. All of the shares issued are
considered restricted shares and the value of the shares issued in 2012 were
determined based upon the bid price for the Company's shares as of July 13,
2012.
For the fiscal year ending July 31, 2012 the Company was unable to pay its
Secretary, Mr. Eugene H. Swearengin his management fee of $12,000 for the
current fiscal year. In July 2012, pursuant to an action of the Board, Mr.
Swearengin agreed to capitalize the accrued management fee owed to him through
July 31, 2012. Mr. Swearengin received 120,000 shares of the Company's $0.001
par value common stock, valued at $0.10 per share, in exchange for accrued
management fee owed through July 31, 2012. All of the shares issued are
considered restricted shares. The value of the shares issued in 2012 were based
upon the bid price for the Company's shares as of July 13, 2012.
The Company currently has three Directors, Mrs. Suzanne I. Barth, Mr.
Edward A. Barth and Mr. Eugene H. Swearengin, who are serving as Directors
without compensation.
The Corporation does not have written employment agreements or consulting
agreements with any of the Company's officers. All of the Company's officers
work on a part-time basis for the Company without compensation.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides the names and addresses of each person known
to own directly or beneficially more than a 5% of the outstanding common stock
as of July 31, 2013 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 2,951,667 59.90%
Director, Chief Executive + 879,167 (owned
Officer and Chief Financial directly by her spouse,
Officer Edward A. Barth)
5046 East Boulevard NW Total Shares 3,782,084
Canton, OH 44718
Common stock Edward A. Barth 879,167 59.90%
Director and President +2,951,667 (owned
5046 East Boulevard NW directly by his spouse,
Canton, OH 44718 Suzanne I. Barth)
Total shares 3,380,834
Common stock Eugene H. Swearengin 185,000 2.89%
Director and Secretary
7855 Freedom Ave., NW
North Canton, OH 44720
20
Common stock: All Officers and Directors as a group that consist of
three individuals as of July 31, 2013 directly owned 4,015,835 shares directly
and beneficially, equaling 62.79% of the outstanding shares of common stock.
The percent of class is based on 6,395,418 shares of common stock issued
and outstanding as of July 31, 2013.
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.
2013 2012
-------- --------
A. Audit Fees - $ 15,190 $ 17,300
B. Audit-Related Fees - $ 0 $ 0
C. Tax Fees - $ 800 $ 700
D. Other Fees - $ 0 $ 0
All of the above auditor's fees were approved by the Directors of the
Company. The Company has no audit committee and the Directors of the Board,
evaluate and approve all accountant fees.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
A. Financial Statements. 2013 audited financial statements
B. Exhibits.
Exhibit 3.1 Articles of Incorporation*
Exhibit 3.2 Bylaws*
Exhibit 31.1 Rule 13a - 14(a)/15d - 14(a) Certification
Exhibit 32 Section 1350 Certification
Exhibit 101 Interactive data files pursuant to Rule 405 of
Regulation S-T
----------
* This Exhibit incorporated by reference to Form SB-2 filed January 16, 2008.
21
SIGNATURES
Pursuant to the requirements of section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Concrete Leveling Systems, Inc.
By: /s/ Suzanne I. Barth
------------------------------------
Suzanne I. Barth, CEO
By: /s/ Edward A. Barth
------------------------------------
Edward A. Barth, President
Date: October 28, 2013
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the registrant
and in the capacity and on the date indicated.
Concrete Leveling Systems, Inc.
By: /s/ Suzanne I. Barth
------------------------------------
Suzanne I. Barth, its Principal
Executive Officer, its Principal
Financial Officer, and its Principal
Accounting Officer and Director
By: /s/ Edward A. Barth
------------------------------------
Edward A. Barth, its President
By: /s/ Eugene H. Swearengin
------------------------------------
Eugene H. Swearengin, Director
Date: October 28, 2013
2
