10-Q 1 g8382.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2017

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from  ______________ to ______________

Commission file number 000-53048

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

Nevada
26-0851977
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)

5046 E. Boulevard, NW, Canton, OH  44718
(Address of principal executive officer)

(330) 966-8120
(Issuer's telephone number)

(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES  [X] NO [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss. 232.405 of this chapter) during the preceding 12 month (or for such shorter period that the registrant was required to submit and post such files).  YES  [X] NO [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined 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]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  YES  [  ] NO [  ]

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:  6,395,418
 
PART I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS
 
Concrete Leveling Systems, Inc.
Balance Sheets
January 31, 2017 and July 31, 2016
 
 
   
January 31
    
July 31
  
   
(Unaudited)
    
(Audited)
  
Assets
            
             
Current Assets
            
Cash in bank
  
$
466
    
$
104
  
Accounts receivable, net of allowance for doubtful accounts of $0 at January 31, 2017 and July 31, 2016
    
-
      
217
  
Current portion of notes receivable, net of allowance for loan losses of and $2,391 at January 31, 2017 and July 31, 2016
    
1,256
      
-
  
Interest receivable, net of collectability allowance of and $242 at January 31, 2017 and July 31, 2016
    
544
      
26
  
Inventory
    
23,703
      
23,607
  
Prepaid expenses and other current assets
    
943
      
485
  
Total Current Assets
    
26,912
      
24,439
  
                 
Property, Plant and Equipment
                
Equipment
    
700
      
700
  
Less: Accumulated depreciation
    
(700
)
    
(700
)
Total Property, Plant and Equipment
    
-
      
-
  
                 
Other Assets
                
Notes receivable, net of current portion and allowance for loan losses of $21,860 at January 31, 2017 and July 31, 2016
    
1,107
      
2,695
  
                 
Total Assets
  
$
28,019
    
$
27,134
  
                 
                 
Liabilities and Stockholders’ Equity (Deficit)
                
                 
Current Liabilities
                
Accounts payable
  
$
35,923
    
$
33,559
  
Accounts payable - stockholders
    
35,486
      
35,486
  
Advances - stockholders
    
111,800
      
89,400
  
Notes payable - stockholders
    
62,750
      
62,750
  
Accrued interest - stockholders
    
15,139
      
15,139
  
Other accrued expenses
    
17,329
      
15,828
  
Total Current Liabilities
    
278,427
      
252,162
  
                 
Stockholders’ Equity (Deficit)
                
Common stock (par value $0.001)
                
100,000,000 shares authorized:
                
6,395,418 shares issued and outstanding at January 31, 2017 and July 31, 2016
    
6,395
      
6,395
  
Additional paid-in capital
    
405,355
      
405,355
  
Retained (deficit)
    
(662,158
)
    
(636,778
)
Total Stockholders’ Equity (Deficit)
    
(250,408
)
    
(225,028
)
                 
Total Liabilities and Stockholders’ Equity (Deficit)
  
$
28,019
    
$
27,134
  
 
 
 
 
See notes to financial statements.
 
2
Concrete Leveling Systems, Inc.
Statements of Income
For the Three and Six Months Ended January 31, 2017
 
 
     
3 Months Ended
    
6 Months Ended
  
     
January 31, 2017
    
January 31, 2017
  
   
(Unaudited)
    
(Unaudited)
  
             
Equipment and parts sales
  
$
387
    
$
387
  
                 
Cost of Sales
    
110
      
110
  
                 
Gross Margin
    
277
      
277
  
                 
Expenses
                
Selling, general and administration
    
5,709
      
25,960
  
                 
(Loss) from Operations
    
(5,432
)
    
(25,683
)
                 
Other Income (Expense)
                
Interest income
    
389
      
786
  
Interest expense
    
(241
)
    
(483
)
Total Other Income (Expense)
    
148
      
303
  
                 
Net (Loss) Before Income Taxes
    
(5,284
)
    
(25,380
)
                 
Provision for Income Taxes
    
-
      
-
  
                 
Net (Loss)
  
$
(5,284
)
  
$
(25,380
)
                 
Net (Loss) per Share - Basic and Fully Diluted
  
$
(0.00
)
  
$
(0.00
)
                 
Weighted average number of common shares outstanding - basic and fully diluted
    
6,395,418
      
6,395,418
  
 
 
 
 
See notes to financial statements.
 
3
Concrete Leveling Systems, Inc.
Statements of Income
For the Three and Six Months Ended January 31, 2016
 
 
     
3 Months Ended
    
6 Months Ended
  
     
January 31, 2016
    
January 31, 2016
  
   
(Unaudited)
    
(Unaudited)
  
             
Equipment and parts sales
  
$
840
    
$
840
  
                 
Cost of Sales
    
552
      
552
  
                 
Gross Margin
    
288
      
288
  
                 
Expenses
                
Selling, general and administration
    
(3,451
)
    
14,330
  
                 
(Loss) from Operations
    
3,739
      
(14,042
)
                 
Other Income (Expense)
                
Interest income
    
278
      
576
  
Interest expense
    
(243
)
    
(495
)
Total Other Income (Expense)
    
35
      
81
  
                 
Net (Loss) Before Income Taxes
    
3,774
      
(13,961
)
                 
Provision for Income Taxes
    
-
      
-
  
                 
Net (Loss)
  
$
3,774
    
$
(13,961
)
                 
Net (Loss) per Share - Basic and Fully Diluted
  
$
0.00
    
$
(0.00
)
                 
Weighted average number of common shares outstanding - basic and fully diluted
    
6,395,418
      
6,395,418
  
 
 
 
 
See notes to financial statements.
 
4
 Concrete Leveling Systems, Inc.
 Statements of Cash Flows
For the Six Months Ended January 31, 2017 and 2016
 
     
January 31, 2017
    
January 31, 2016
  
   
(Unaudited)
    
(Unaudited)
  
Cash Flows from Operating Activities
            
Net (loss)
  
$
(25,380
)
  
$
(13,961
)
Adjustments to reconcile net (loss) to net cash used in operating activities:
                
(Decrease) in allowances for doubtful accounts and loan losses
    
(518
)
    
(8,467
)
Decrease (Increase) in accounts receivable
    
217
      
(190
)
(Increase) Decrease in inventory
    
(96
)
    
484
  
(Increase) in prepaid expenses and other current assets
    
(458
)
    
(613
)
Increase in accounts payable
    
2,364
      
(1,049
)
Increase in other accrued expenses
    
1,501
      
621
  
Net cash from (used by) operating activities
    
(22,370
)
    
(23,175
)
                 
Cash Flows from Investing Activities
                
Payments on notes receivable
    
332
      
495
  
                 
Cash Flows from Financing Activities
                
Loans from stockholders
    
22,400
      
23,500
  
                 
Net increase (decrease) in cash
    
362
      
820
  
Cash and equivalents - beginning
    
104
      
116
  
Cash and equivalents - ending
  
$
466
    
$
936
  
                 
Supplemental Disclosure of Cash Flows Information
                
Interest
  
$
483
    
$
495
  
Income Taxes
  
$
-
    
$
-
  
 
 
 
 
See notes to financial statements.
 
5
Concrete Leveling Systems, Inc.
Notes to Financial Statements
January 31, 2017
 
 
NOTE A - BASIS OF PRESENTATION
 
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10‑Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information, refer to the financial statements and footnotes thereto included in the Concrete Leveling Systems, Inc. Form 10-K filing for the period ended July 31, 2016.
 
NOTE B - GOING CONCERN
 
As shown in the financial statements, the Company incurred a net loss of $5,284 for the three months ended January 31, 2017, and has incurred substantial net losses since its inception. At January 31, 2017, current liabilities exceed current assets by $251,515. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue existence.
 
 
 
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ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Concrete Leveling Systems, Inc. (“CLS” or “The Company”) became an operating company in 2009.  As of January 31, 2017, CLS has cash assets of $466, no accounts receivable and net notes receivable in the amount of $2,363.  As of January 31, 2017, the Company was carrying inventory valued at $23,703.

The Company’s cash flow is currently not sufficient to maintain operations.  However, the Company is receiving periodic payments from the self financed sale of its concrete leveling service units, which creates some cash flow for the Company.  Mr. Edward A. Barth has continued to contact companies regarding the service units and has listed the service units held in inventory on Ebay. To date, the Company has been contacted with inquiries regarding the purchase of a unit, but no acceptable offers have been made.

CLS continues to have cash flow issues.  As of January 31, 2017, it had total current liabilities of $278,427, which includes advances from stockholders and notes and accounts payable to stockholders in the amount of $225,175, including accrued interest on those obligations.  The Company had a net loss of $5,284 during the quarter.  Mr. Barth continues to remain in contact with potential purchasers, who have expressed an interest in purchasing a service unit. The purchase of the Company’s product is seasonal in nature. Interest in purchasing the concrete leveling service units increases in late winter and early spring, since the use of the product is restricted by cold temperature.

There are no off balance sheet arrangements involving CLS at this time.

Liquidity Issues.  Since its inception, the Company has experienced continued need for additional liquidity in order to provide for operating expenses and to purchase components for the assembly of its product. The company maintains an inventory of two substantially completed service units.  In the event the Company receives an order for a concrete leveling service unit, it will seek a down payment in an amount sufficient to complete the unit, in order not to have to borrow additional funds. The Company is currently relying upon loans from stockholders to meet operating expenses.

Capital Resources.  CLS has made no material commitments for capital expenditures as of the end of its fiscal quarter ending January 31, 2017 and does not anticipate any immediate need for material capital expenditures over the next quarter.

Result of Operations.  During the quarter ended January 31, 2017, the Company has experienced little activity. The Company has devoted a limited amount of its resources to marketing its product during the last quarter. At present, it is not in discussions with any potential buyers of its concrete leveling service units.

ITEM 4 – 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 management, which consists 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 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 and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting.  There are no changes in the Company’s internal controls over financial reporting that occurred during the three months ended January 31, 2017 that have materially affected, or are reasonably likely to materially affect, the internal controls over financial reporting.
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PART II – OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

To the best of its knowledge, management of CLS is not aware of any legal proceedings in which CLS is currently involved.

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no unregistered sales of equity securities during this quarter.

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

There are no defaults upon any senior securities.

ITEM 4 – MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5 – OTHER INFORMATION

None
ITEM 6 – EXHIBITS

A. The following are filed as Exhibits to this report.  The numbers refer to the exhibit table of Item 601 of regulation S-K:  Reference is hereby made to the exhibits contained in the registration statement (Form SB-2) filed by Concrete Leveling Systems, Inc.

Exhibit 31.1 – Rule 13a-14(a)/15d-14(a) – Certification
Exhibit 31.2 – 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

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
CONCRETE LEVELING SYSTEMS, INC.
   
   
Date: March 13 , 2017
By: /s/ Edward A. Barth
  
 
Edward A. Barth, Principal Executive Officer
   
   
Date: March 13, 2017
By: /s/ Suzanne I. Barth
  
 
Suzanne I. Barth, Principal Financial Officer
 
 
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