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 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. All other services required by the Corporation are performed by independent contractors under the direction of Mr. and Mrs. Barth.
ITEM 2.
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.
ITEM 3. LEGAL PROCEEDINGS
None
PART II
ITEM 5.
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 31 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 2011 ---------------- --------------- High Low High Low ---- --- ---- --- First Quarter $0.26* $0.07* $0.25 $0.20 Second Quarter $0.07* $0.08* $0.30 $0.20 Third Quarter $0.13* $0.24* $0.39 $0.23 Fourth Quarter $0.14* $0.15* $0.43 $0.16
---------- * 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 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 300,000 shares of its $0.001 par value common stock to Mrs. Suzanne I. Barth, in satisfaction of the accrued management fees owed by the Company to Mrs. Barth in the amount of $30,000. These shares were issued on July 19, 2012 at a rate of $0.10 per share, based upon the bid price for the shares on July 13, 2012. In addition, the Company issued 390,000 shares of its $0.001 par value common stock to Mr. Edward A. Barth, in satisfaction of accrued management fees and rents in the amount of $39,000. These shares were issued on July 19, 2012 at the rate of $0.10 per share, based upon the bid price for the shares on July 13, 2012
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 120,000 shares of the Company's $0.001 par value common stock in satisfaction of $12,000 of accrued management fees. These shares were issued on July19, 2012 and valued at $0.10 per share, based upon the bid price of $0.10 for the shares on July 13, 2012. All of the shares were issued pursuant to Section 4(2) of the Securities Act of 1933. All of the shares are restricted securities.
ITEM 7.
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 2012. 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 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.
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 fiscal year ended July 31, 2010. During the last fiscal year, CLS has not sold a new unit and 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 sold after the close of 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. The Company was able to sell a concrete leveling unit after the close of this current fiscal year. Management is encouraged with the recent sale of these units and the positive feedback that its customers have received 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.
In order to increase interest in the service units, the Company is planning to attend several trade shows, both in the United States and Canada. The first trade show will occur in Canada at the end of November, 2012.
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 thirty percent (30%) of the sales price of each unit.
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. 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 2013. The Company currently plans to produce and sell up to four 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.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HOBE & LUCAS CERTIFIED PUBLIC ACCOUNTANTS, INC. 4807 Rockside Road, Suite 510 Independence, Ohio 44131 Tel: (216) 524-8900 Fax: (216) 524-8777 Edward A. Barth Concrete Leveling Systems, Inc. 5046 East Boulevard Northwest Canton, Ohio 44718
CONSENT OF INDEPENDENT AUDITORS
This firm was the independent auditor for Concrete Leveling Systems, Inc. as of July 31, 2012 and 2011, and for the years then ended. In this context, we understand that the Company is filing a Form 10-K with the Securities and Exchange Commission.
Pursuant to Item 601(b) (23) of Regulation S-K, this letter will serve as our consent for the Company to file with the Form 10-K our Report of Independent Registered Public Accounting Firm dated September 21, 2010 for the years ended July 31, 2012 and 2011, and to the reference of Hobe & Lucas, Certified Public Accountants, Inc., therein.
/s/ Hobe & Lucas CPAs Inc. ------------------------------- Hobe & Lucas CPAs Inc.
Independence, Ohio October 15, 2012
Concrete Leveling Systems Inc. Balance Sheets July 31, 2012 and 2011
See notes to financial statements.
Concrete Leveling Systems Inc. Statements of Income For the Years Ended July 31, 2012 and 2011
See notes to financial statements.
Concrete Leveling Systems Inc. Statements of Stockholders' Equity For the Years Ended July 31, 2012 and 2011
See notes to financial statements.
Concrete Leveling Systems, Inc. Statements of Cash Flows For the Years Ended July 31, 2012 and 2011
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.
On July 16, 2012, the Company financed the purchase of one of its units by a customer. The sale was not completed in the current year.
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.
CONCRETE LEVELING SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS JULY 31, 2012 AND 2011
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 when 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, 2012 and 2011.
NOTES RECEIVABLE
The Company has three notes receivable totaling $49,069 and $56,988 at July 31, 2012 and 2011, respectively. The notes each carry an interest rate of 6.00% and are due at varying dates between October 2012 and March 2016. The notes are secured by equipment.
As of July 16, 2012, the Company has an additional note receivable in the amount of $25,000. This note carries an interest rate of 8.00%. Monthly payments are due beginning October 1, 2012, continuing until September 1, 2017. The note is secured by equipment.
ADVERTISING AND MARKETING
Advertising and marketing costs are charged to operations when incurred. Advertising costs were $1,650 and $670 for the years ended July 31, 2012, and 2011, respectively.
INVENTORIES
Inventories, which consist of parts and work in progress, are recorded at the lower of cost or fair market value.
CONCRETE LEVELING SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS JULY 31, 2012 AND 2011
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, 2012, current liabilities exceed current assets by $131,753, and total liabilities exceed total assets by $83,512. 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.
CONCRETE LEVELING SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS JULY 31, 2012 AND 2011
NOTE 5 - OPERATING SEGMENT
The Company operates in one reportable segment, concrete leveling systems sales.
NOTE 6 - INCOME TAXES
Income taxes on continuing operations at July 31 include the following:
2012 2011 -------- --------
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:
The components of and changes in the net deferred taxes were as follows:
2012 2011 -------- -------- Deferred tax assets: Net operating loss carryforwards $124,600 $ 86,100 Compensation and Miscellaneous 15,600 13,700 -------- -------- Deferred tax assets 140,200 99,800 -------- -------- Deferred tax liabilities: Depreciation 100 200 -------- -------- Total 140,100 99,600 -------- -------- Valuation Allowance (140,100) (99,600) -------- --------
Net deferred tax assets: $ 0 $ 0 ======== ========
CONCRETE LEVELING SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS JULY 31, 2012 AND 2011
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, 2012 or 2011 due to a valuation allowance, which increased by $40,500 and $32,300 in 2012 and 2011, 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 Period Ended July 31, 2012 $113,230 2/28/2033
Tax periods ended July 31, 2009, 2010, 2011, and 2012 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, 2012 and 2011. Rent payable to this stockholder was $-0- at both July 31, 2012 and 2011. Accounts payable totaling $15,000 were converted to common stock during each of the years ended July 31, 2012 and 2011.
The Company paid management fees to three of its stockholders. Management fees paid to these stockholders totaled $66,000 and $59,000 for the years ended July 31, 2012 and 2011, respectively. Management fees payable to these stockholders were $-0- at July 31, 2012 and 2011, respectively. Accounts payable totaling $66,000 and 59,000 were converted to common stock during the years ended July 31, 2012 and 2011, respectivley
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 $-0- and $13,500 for the years ended July 31, 2012 and 2011, respectively. The amounts payable to the related party were $36,074 at July 31, 2012 and 2011.
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.
NOTE 8 - SUBSEQUENT EVENTS
The Company has evaluated all subsequent events through October 15, 2012, the date the financial statements were available to be issued. There are no events to report.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A.
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, 2012.
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.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Executive Officers and Directors and their respective ages as of July 31, 2012 are as follows:
DIRECTORS
Name of Director: Age: ----------------- ---- Suzanne I. Barth 51 Edward A. Barth 54 Eugene H. Swearengin 58
EXECUTIVE OFFICERS
Executive Officer: Age: Office: ------------------ ---- ------- Suzanne I. Barth 51 Chief Executive Officer and Chief Financial Officer Edward A. Barth 54 President Eugene H. Swearengin 58 Secretary
Suzanne I. Barth, age 51, 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 23 years, Mrs. Barth has been involved as an office manager for various businesses in the construction industry.
Edward A. Barth, age 54 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 58, 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 34 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 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, who receives a monthly management fee of $1,000 per month. 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.
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.
---------- * 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 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. 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. 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.
The Company was unable to pay Mr. Edward A. Barth for his services and his management fee has been accrued. In July 2012, pursuant to an action of the Board, Mr. Barth agreed to capitalize the accrued management fee 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. The Company has been unable to pay Mr. Barth for rental expenses owed or for the management fee owed to him. 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 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 issued in 2012 were determined based upon the bid price for the Company's shares as of July 13, 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. 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 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 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.
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, 2012 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 59.14% Director, President and + 830,417 (owned Chief Executive Officer directly by her spouse, 5046 East Boulevard NW Edward A. Barth) Canton, OH 44718 Total Shares 3,782,084
Common stock Edward A. Barth 830,417 59.14% Incoming President +2,951,667 (owned 5046 East Boulevard NW directly by his spouse, Canton, OH 44718 Suzanne I. Barth) Total shares 3,782,084
Common stock Eugene H. Swearengin 185,000 2.89% Director and Secretary 7855 Freedom Ave., NW North Canton, OH 44720
Common stock: All Officers and Directors as a group that consist of three individuals as of July 31, 2012 directly owned 3,967,084 shares directly and beneficially, equaling 62.03% 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, 2012.
ITEM 13.
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.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following is a list of the principal accountant fees and services for the past year.
2012 2011 ---- ---- A. Audit Fees - $17,300 $18,020
B. Audit-Related Fees - $ 0 $ 0
C. Tax Fees - $ 700 $ 720
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.
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
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.
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 29, 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: October 29, 2012