ITEM 1. DESCRIPTION OF BUSINESS
Kingdom Koncrete, Inc. is a Nevada corporation which was incorporated in 2006 and immediately purchased 100% of the outstanding stock of Kingdom Concrete, Inc., a Texas corporation which was formed on July 18, 2003. The transaction was accounted for as a reverse merger. In this filing, we refer to Kingdom Koncrete, Inc. as “we,” “us”, “the Company” or “Kingdom” unless we specifically state otherwise or the context indicates otherwise. We specialize in providing pre-mixed concrete into our mobile mixer trailers which are then towed by one of our customers to a job site of their choosing. The funds from the offering allowed us to invest in the growth of our company through equipment purchases and advertising as well as possible strategic expansion and acquisition.
Kingdom Koncrete, Inc. specializes in providing pre-mixed concrete into our mobile mixer trailers which are then towed by one of our customers to a job site of their choosing. Kingdom Concrete serves contractors and homeowners in NorthTexas with transit-mix trailers for small-pour concrete jobs. This process saves time, money and labor on a homeowners or small business’ ready-mix cement project. Large concrete companies generally don’t like small jobs as they are inherently unprofitable due to the small amount of concrete delivered. In addition, large concrete companies add a delivery fee for less than a full load and additional fees if the load cannot be unloaded immediately. Hand-mixing seems less expensive until all the costs are added up. Sufficient ready-mix sacks for one yard of concrete costs more than $110. Hand mixing is also back-breaking labor that results in an uneven distribution of moisture and aggregate.
We sell concrete on small, manageable, mobile mixing trailers to help complete a smaller project. The result is less cost and a better product. One trailer can mix from ј to 1ј yards for patios, sidewalks, slabs, fence posts or other concrete work. We sell to companies, municipalities, subcontractors and homeowners. Our transit-mix trailers are a completely different concept. In the past, with other types of pre-mixed concrete, the mix would settle out and begin to set as it was being delivered to the job site, giving a limited range and an inferior product that was difficult to work with. Our trailers mix on the way to the job, just like the “big” trucks. The concrete arrives ready for the job.
Our pricing is competitive with hardware store ready-mix sacks and much easier to manage physically. Compared to cement truck prices for small-pours, we provide an economic benefit in that the customer pays only for what they use and need. Pricing is structured on a residential, contractor, and multiple load basis. As of December 31, 2012, our general pricing structure was as follows:
1/4 yard 1/2 yard 3/4 yard 1 yard 1 1/4 yard
4 bag $72 $88 $105 $121 $137
5 bag $73 $92 $110 $128 $146
6 bag $74 $94 $115 $134 $154
'4 bag', '5 bag', '6 bag' refer to the proportion of cement in the mix. The higher the bag count, the higher the PSI (strength) of the concrete. We provide flexibility in that a customer can order the appropriate mix for the project, for example:
● 4 bag mix: Fence posts
● 5 bag mix: Sidewalks, slabs, or footers
● 6 bag mis: Driveways
As of December 31, 2012, we had 8 portable ready-mixed concrete trailers and one batch plant. Our operations consist principally of formulating, preparing and delivering ready-mixed concrete to the trailers at our batch plant in Rockwall Texas. Our marketing efforts primarily target general contractors, developers and home builders whose focus is on price, flexibility, and convenience.
Industry Overview
General
Ready-mixed concrete is a highly versatile construction material that results from combining coarse and fine aggregates, such as gravel, crushed stone and sand, with water, various admixtures and cement. Ready-mixed concrete can be manufactured in thousands of variations, which in each instance may reflect a specific design use. Manufacturers of ready-mixed concrete generally maintain only a few days’ inventory of raw materials and must coordinate their daily materials purchases with the time-sensitive delivery requirements of their customers.
The quality of ready-mixed concrete is time-sensitive, as it becomes difficult to place within 90 minutes after mixing. Many ready-mixed concrete specifications do not allow for its placement beyond that time. Consequently, the market for a permanently installed ready-mixed concrete plant generally is limited to an area within a 25-mile radius of its location. Concrete manufacturers produce ready-mixed concrete in batches at their plants and use mixer and other trucks to distribute and place it at the job sites of their customers. These manufacturers generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform.
Concrete manufacturers generally obtain contracts through local sales and marketing efforts they direct at general contractors, developers and home builders. As a result, local relationships are very important.
Historically, barriers to the start-up of a new ready-mixed concrete manufacturing operation were low. During the past several years, public concerns about dust, process water runoff, noise and heavy mixer and other truck traffic associated with the operation of ready-mixed concrete plants and their general appearance have made obtaining the permits and licenses required for new plants more difficult. Delays in the regulatory process, coupled with the substantial capital investment that start-up operations entail, have raised the barriers to entry for those operations.
Our Business Strategy
Our objectives are to become the leading provider of ready-mixed concrete in our primary market and to further expand the geographic scope of our business and, on a select basis, to integrate our operations vertically through acquisitions of aggregates supply sources that support our ready-mixed concrete operations.
Improving Marketing and Sales Initiatives
Our marketing strategy emphasizes the sale of value-added products to customers more focused on reducing their in-place building material costs than on the price per cubic yard of the ready-mixed concrete they purchase. We also strive to increase operating efficiencies. We believe that, if we continue to increase in size on both a local and national level, we should continue to experience future productivity and cost improvements in such areas as:
● materials, through procurement and optimized mix designs;
● purchases of mixer trailers and other equipment, supplies, spare parts and tools;
● vehicle and equipment maintenance; and
● insurance and other risk management programs.
Operations
Our ready-mixed concrete plant consists of a fixed facility that produces ready-mixed concrete in primarily wet batches. Our fixed-plant facilities produce ready-mixed concrete that is transported to a job sites by our mixer trailers.
Our wet batch plant serves a local market that we expect will have consistently high demand as opposed to dry batch plants that will serve markets that we expect will have a less consistent demand. A wet batch plant generally has a higher initial cost and daily operating expense but yields greater consistency with less time required for quality control in the concrete produced and generally has greater daily production capacity than a dry batch plant. The batch operator in a dry batch plant simultaneously loads the dry components of stone, sand and cement with water and admixtures in a mixer truck that begins the mixing process during loading and completes that process while driving to the job site. In a wet batch plant, the batch operator blends the dry components and water in a plant mixer from which the operator loads the already mixed concrete into the mixer trailer which leaves for the job site promptly after loading.
Any future decisions we make regarding the construction of additional plants will be impacted by market factors, including:
● the expected production demand for the plant;
● the expected types of projects the plant will service; and
● the desired location of the plant.
Mixer trailers slowly rotate their loads en route to job sites in order to maintain product consistency. One of our mixer trailers typically has a load capacity of 1 to 1 1/4 cubic yards, or approximately 6,000 pounds, and an estimated useful life of 15 years. A new trailer of this size currently costs approximately $18,000. As of December 31, 2012 we operate a fleet of 8 mixer trailers, which had an average age of approximately 3.0 years.
Cement and Other Raw Materials
We obtain most of the materials necessary to manufacture ready-mixed concrete on a periodic basis, as needed. These materials include cement, which is a manufactured product, stone, gravel and sand. Our batch plant typically maintains an inventory level of these materials sufficient to satisfy its operating needs for a few days. Cement represents the highest cost material used in manufacturing a cubic yard of ready-mixed concrete, while the combined cost of the stone, gravel and sand used is slightly less than the cement cost. We purchase each of these materials from several suppliers. We are not dependent on any one supplier. We have not entered into any supply agreements with any of our suppliers.
Marketing and Sales
General contractors typically select their suppliers of ready-mixed concrete. We believe the purchasing decision for many jobs ultimately is relationship-based. Our marketing efforts target general contractors, developers, and homebuilders whose focus is on price, flexibility, and convenience.
Customers
We rely heavily on repeat customers. Our management is responsible for developing and maintaining successful long-term relationships with key customers. We are not dependent on any one customer. Rather, we have built up a customer base which we market to, and these have developed into steady repeat customers.
Competition
The ready-mixed concrete industry is highly competitive. Our competitive position in our market depends largely on the location and operating costs of our ready-mixed concrete plant and prevailing prices in that market. Price is the primary competitive factor among suppliers for small or simple jobs, principally in residential construction, while timeliness of delivery and consistency of quality and service along with price are the principal competitive factors among suppliers for large or complex jobs. Our competitors range from small, owner-operated private companies to subsidiaries or operating units of large, vertically integrated manufacturers of cement and aggregates. Our vertically integrated competitors generally have greater manufacturing, financial and marketing resources than we have, providing them with a competitive advantage. Competitors having lower operating costs than we do or having the financial resources to enable them to accept lower margins than we do will have a competitive advantage over us for jobs that are particularly price-sensitive. Competitors having greater financial resources also may have competitive advantages over us. See “Risk Factors - We may lose business to competitors who underbid us and we may be otherwise unable to compete favorably in our highly competitive industry.”
Employees
We currently employ one employee, the President.
Governmental Regulation and Environmental Matters
A wide range of federal, state and local laws, ordinances and regulations apply to our operations, including the following matters:
● land usage;
● street and highway usage;
● air quality; and
● health, safety and environmental matters.
In many instances, we are required to have various certificates, permits or licenses to conduct our business. Our failure to maintain these required authorizations or to comply with applicable laws or other governmental requirements could result in substantial fines or possible revocation of our authority to conduct some of our operations. Delays in obtaining approvals for the transfer or grant of authorizations, or failures to obtain new authorizations, could impede acquisition efforts.
Environmental laws that impact our operations include those relating to air quality, solid waste management and water quality. These laws are complex and subject to frequent change. They impose strict liability in some cases without regard to negligence or fault. Sanctions for noncompliance may include revocation of permits, corrective action orders, administrative or civil penalties and criminal prosecution. Some environmental laws provide for joint and several strict liability for remediation of spills and releases of hazardous substances. In addition, businesses may be subject to claims alleging personal injury or property damage as a result of alleged exposure to hazardous substances, as well as damage to natural resources. These laws also may expose us to liability for the conduct of or conditions caused by others, or for acts that complied with all applicable laws when performed.
We have all material permits and licenses we need to conduct our operations and are in substantial compliance with applicable regulatory requirements relating to our operations. We had no capital expenditures relating to environmental matters in the current fiscal year. We currently do not anticipate any material adverse effect on our business, financial condition, results of operations or cash flows as a result of our future compliance with existing environmental laws controlling the discharge of materials into the environment.
Insurance:
We are only required to insure the trailers against liability and damage. Additionally, the company maintains hazard insurance on the batch plant property. No claims are outstanding as of December 31, 2012.
Future products and services:
The Company plans to increase the size of its trailer fleet as well as build additional batch plants in strategic locations. No additional services outside of the offering of ready mixed concrete are contemplated at this time.
ITEM 2.
ITEM 2. DESCRIPTION OF PROPERTY
The Company leases on a month to month basis a 1,250 square foot office warehouse space and a half acre of land at 4232 E. Interstate 30, Rockwall, Texas 75087.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
As of December 31, 2012, the Company is not involved in any legal proceedings.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 28, 2012, at the annual meeting of shareholders, a majority of our shareholders approved the following actions, all as proposed in our Proxy Statement:
1.To re-elect Ed Stevens as our sole director.
2.Ratify The Hall Group, CPAs as the Company’s registered independent accounting firm.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS
The common stock traded over-the-counter - bulletin board during 2012 and 2011. The stock closed on December 31, 2012 at $.08 a share.
At December 31, 2012, we had approximately 67 record holders of our common stock. This number excludes any estimate by us of the number of beneficial owners of shares held in street name, the accuracy of which cannot be guaranteed.
Dividends
We have not paid cash dividends on any class of common equity since formation and we do not anticipate paying any dividends on our outstanding common stock in the foreseeable future.
Warrants
The Company has no warrants outstanding.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable for smaller reporting companies.
ITEM 7.
ITEM 7. MANAGEMENT DISCUSSIONS AND ANALYSIS OR PLAN OF OPERATION
SUMMARY OF 2011
EXECUTIVE OVERVIEW: In 2012 we realized an increase in business of 57% versus 2011 after experiencing three straight years of declining revenue. And although North Texas remained in near drought conditions the improve economy, especially in the second half of the year, impacted the home improvement and municipality segments.
Our net loss of $3,729 in 2012 was significantly less versus 2011 which was $34,030. This was a direct result of the increased sales margin flowing through to the bottom line.
REVENUES: Revenues for the twelve months ended December 31, 2012 were $140,833 compared to $89,941 for the twelve months ended December 31, 2011. The increase of 56.6% is due to the improved economy and favorable weather conditions in North Texas, expecially in the second half of 2012.
COST OF SALES: Cost of sales for the twelve months ended December 31, 2012 were $66,621 compared to $47,839 for the twelve months ended December 31, 2011 making the gross profit percentages 52.7% and 46.8% respectively. The margin improvement is due to sales mix.
OPERATING EXPENSES: Total operating expenses, exclusive of depreciation, for the twelve months ended December 31, 2012 were $73,301 compared to $71,291 for the twelve months ended December 31, 2011. The decrease is related to reduced professional/contract services of $9,300 and partially offset by an increase in insurance related expenses of $4,400 and merchant fees of $1,800. The above costs do not include depreciation expense which was $4,640 for the twelve month period ended December 31, 2012 versus $4,843 for the equivalent periods ended December 31, 2011.
We had interest no expense in 2012 and 2011.
NET LOSS: Net loss for the twelve months ended December 31, 2012 was $3,729 compared to a loss of $34,030 for the twelve months ended December 31, 2011 due to the aforementioned reasons.
LIQUIDITY AND CAPITAL RESOURCES: The Company plans for liquidity needs on a short term and long term basis as follows:
Short Term Liquidity:
The company relies on funding operations through operating cash flows and when necessary shareholder advances. Operating cash flows were a positive $33,929 for the twelve months ended December 31, 2012. We currently have sufficient cash balances to continue operations but going forward in 2013 we will need to look at another capital funding alternatives if the sales revenue does not increase to generate positive cash flows. The President has advanced the Company $14,656 and $49,656 as of December 31, 2012 and 2011, respectively, for working capital. No interest is paid on this advance.
Long Term Liquidity:
The long term liquidity needs of the Company are projected to be met primarily through the cash flow provided by operations. As discussed above if sales revenues do not increase in 2013 the Company will have to explore alternative capital funding options.
Capital Resources:
With the limited operating history of our Company we have noticed a slight seasonal trend with increased business in the spring / summer and a fall off during the colder part of the year. Even with the recession, we still experienced the seasonal swings with the winter months (January - March and October to December) fluctuating more than the prior year.
We do not expect any significant change to our equity or debt structure and do not anticipate entering into any off-balance sheet arrangements.
Material Changes in Financial Condition:
WORKING CAPITAL: Working Capital improved by $911 to (30,855) between December 31, 2012 and 2011. This reduction is mainly due to the increase in inventory of $1,964 and a decrease in cash of $1,071.
Critical Accounting Policies:
The Company’s critical accounting policies and estimates are depreciation expense inventory. Please reference footnotes one and two.
SHAREHOLDERS’ EQUITY: Shareholders’ Equity decreased by $3,729 due to the net loss in the year ended December 31, 2012 and partially off-set by the stock issued for services.
UNUSUAL EVENTS: None.
FUTURE FINANCIAL CONDITION: After a stronger 2012 the company is optimistic that in 2013, with the improving economic conditions that sales will continue to grow. We are planning single-digit revenue growth in 2013 as we continue to advertise and take market share. We spend time with our customers listening to their voice and make necessary changes to improve service and market accordingly.
Management Advisors
Yorkdale Capital, LLC advises and assists the President with many aspects related to the regulatory filings including assistance with the consolidation of financial statements for audit. Yorkdale Capital, LLC or its principals are shareholders and have advanced the Company $36,099 and $2,380 as December 31, 2012 and December 31, 2011, respectively, for operating expenses.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for a smaller reporting company.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements of the Company, together with the independent auditors' report thereon of The Hall Group, CPAs appear on pages through of this report.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2012. This evaluation was accomplished under the supervision and with the participation of our chief executive officer / principal executive officer, and chief financial officer / principal financial officer who concluded that our disclosure controls and procedures are not effective to ensure that all material information required to be filed in the annual report on Form 10-K has been made known to them.
Disclosure, controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by in our reports filed under the Securities Exchange Act of 1934, as amended (the "Act") is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Based upon an evaluation conducted for the period ended December 31, 2012, our Chief Executive and Chief Financial Officer as of December 31, 2012 and as of the date of this Report, has concluded that as of the end of the periods covered by this report, we have identified the following material weaknesses in our internal controls:
·Reliance upon independent financial reporting consultants for review of critical accounting areas and disclosures and material non-standard transaction.
·Lack of sufficient accounting staff which results in a lack of segregation of duties necessary for a good system of internal control.
In order to remedy our existing internal control deficiencies, as our finances allow, we will hire additional accounting staff.
Management’s 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 Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles in the United States of America. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework at December 31, 2012. Based on its evaluation, our management concluded that, as of December 31, 2012, our internal control over financial reporting was not effective because of limited staff and a need for a full-time chief financial officer. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
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 is not subject to the attestation by the Company’s registered public accounting firm pursuant to the rules of the SEC that permit the Company to provide only management’s report in this annual report.
Changes in Internal Controls over Financial Reporting
We have not yet made any changes in our internal controls over financial reporting that occurred during the period covered by this report on Form 10-K that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
Name Age Position
Edward Stevens Chief Executive Officer, Chief Financial Officer, and Director since December 29, 2006
Background of the Director and Executive Officer:
Edward Stevens:
Mr. Stevens graduated from Indiana State University in 1989 with a BS in Electronic Technology. He was a Design Engineer with Grand Transformer, Inc., Plano, Texas from 1989 through 2003 before becoming a Design Engineer with Nova Magnetics, Inc., in Garland, Texas from 2003 to the present where he is still employed on a part time basis. In addition, in 2003 Mr. Stevens started Kingdom Concrete, Inc. which is the subsidiary of Kingdom Koncrete, Inc., being the President of both. Mr. Stevens is at the Kingdom Concrete, Inc. plant six days a week and spends approximately six hours on any given day on Kingdom Concrete, Inc. affairs. He spends approximately two hours a day working on projects for Nova Magnetics, Inc. out of the Kingdom Concrete offices.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Following is what our officers received in 2012 and 2011 as compensation.
Name Capacity Served Aggregate Remuneration
Edward Stevens Chief Executive Officer, Chief Financial Officer, and Director
2012: $0
2011: $0
As of the date of this filing, our sole officer is our only employee. We have no employment agreements with any officer, director or employee.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF MANANGEMENT AND BENEFICIAL OWNERS
As of December 31, 2012 the following persons are known to the Company to own 5% or more of the Company's Voting Stock:
Title / Relationship to Issuer Name of Owner Number of Shares Owned Percent of Total
Chief Executive Officer, Chief Financial Officer,
and Director
Edward Stevens 4,650,000 81.27%
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTION
As of the date of this filing, the Company owes their Chief Executive Officer for amounts advanced in prior years to fund operating expenses. As of December 31, 2012, the Company had an account payable to a shareholder for accounting and consulting services.
There are no other agreements or proposed transactions, whether direct or indirect, with anyone, but more particularly with any of the following:
● a director or officer of the issuer;
● any principal security holder;
● any promoter of the issuer;
● any relative or spouse, or relative of such spouse, of the above referenced persons.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
(1) AUDIT FEES
The aggregate fees billed for professional services rendered by our auditors, for the audit of the registrant's annual financial statements and review of the financial statements included in the registrant's Form 10-K or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements was $12,687 and $11,000 for the years ended December 31, 2012 and 2011, respectively.
(2) AUDIT-RELATED FEES
The aggregate fees billed for professional services rendered by our auditors, for the registrant’s quarterly financial statements and review of the unaudited financial statements included in the registrant’s Form 10-Q was $5,500 and $8,000 for the years ended December 31, 2012 and 2011, respectively.
(3) TAX FEES
NONE
(4) ALL OTHER FEES
NONE
(5) AUDIT COMMITTEE POLICIES AND PROCEDURES
Audit Committee Financial Expert
The Securities and Exchange Commission has adopted rules implementing Section 407 of the Sarbanes-Oxley Act of 2002 requiring public companies to disclose information about “audit committee financial experts.” As of the date of this Annual report, we do not have a standing Audit Committee. The functions of the Audit Committee are currently assumed by our Board of Directors. Additionally, we do not have a member of our Board of Directors that qualifies as an “audit committee financial expert.” For that reason, we do not have an audit committee financial expert.
Policies and Procedures:
The Board of Directors policies and procedures for hiring Independent Principal Accountants are summarized as follows:
·The Board ensures that the accountants are qualified by reviewing their valid license information as filed with the Texas State Board of Public Accountancy.
·The Board ensures that the firm is registered with the PCAOB.
·The Board ensures that the accountants are independent by reviewing Regulation S-X, section 210.2-01(b).
(6) If greater than 50 percent, disclose the percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees.
Not applicable.
ITEM 15.
ITEM 15. EXHIBITS, FINANICAL STATEMENTS AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report: Included in Part II, Item 7 of this report:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2012 and 2011
Consolidated Statements of Operations for the Years Ended December 31, 2012 and 2011
Consolidated Statement of Changes in Stockholders’ Equity for the Years Ended December 31, 2012 and 2011
Consolidated Statements of Cash Flows for the Years Ended December 31, 2012 and 2011
Notes to the Consolidated Financial Statements
(b) The Company filed no Form 8-K’s in 2012.
(c) Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned hereunto duly authorized.
KINGDOM KONCRETE, INC.
By: /s/ Edward Stevens
Edward Stevens
Chief Executive Officer & Chief Financial Officer
Dated: March 29, 2013
KINGDOM KONCRETE, INC.
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Management of
Kingdom Koncrete, Inc.
Rockwall, Texas
We have audited the accompanying consolidated balance sheets of Kingdom Koncrete, Inc. as of December 31, 2012 and 2011, and the related consolidated statements of operations, cash flows and stockholders’ equity for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
We were not engaged to examine management’s assertion about the effectiveness of Kingdom Koncrete, Inc.’s internal control over financial reporting as of December 31, 2012 and 2011 and, accordingly, we do not express an opinion thereon.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Kingdom Koncrete, Inc. as of December 31, 2012 and 2011, 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 that the Company will continue as a going concern. As discussed in Note 7 to the financial statements, the Company has suffered significant losses and will require additional capital to develop its business until the Company either (1) achieves a level of revenues adequate to generate sufficient cash flows from operations; or (2) obtains additional financing necessary to support its working capital requirements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 7. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ The Hall Group, CPAs
The Hall Group, CPAs
Dallas, Texas
March 29, 2013
KINGDOM KONCRETE, INC.
Consolidated Balance Sheets
December 31, 2012 and 2011
The Accompanying Notes are an Integral Part of these Consolidated Financial Statements.
KINGDOM KONCRETE, INC.
Consolidated Statements of Operations
For the Years Ended December 31, 2012 and
The Accompanying Notes are an Integral Part of these Consolidated Financial Statements.
KINGDOM KONCRETE, INC.
Consolidated Statement of Changes in Stockholders’ Equity
For the Years Ended December 31, 2012 and
The Accompanying Notes are an Integral Part of these Consolidated Financial Statements.
KINGDOM KONCRETE, INC.
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2012 and
The Accompanying Notes are an Integral Part of these Consolidated Financial Statements.
KINGDOM KONCRETE, INC.
Notes to the Consolidated Financial Statements
December 31, 2012 and 2011
NOTE 1 - NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Activities, History and Organization:
Kingdom Koncrete, Inc. (The “Company”) operates a ‘carry and go’ concrete business. The Company is located in Rockwall, Texas and was incorporated on August 22, 2006, under the laws of the State of Nevada.
Kingdom Koncrete Inc. is the parent company of Kingdom Concrete, Inc. (“Kingdom Texas”), a company incorporated under the laws of the State of Texas. Kingdom Texas was established in 2003 and for the past four years has been operating a single facility in Texas.
On August 22, 2006, Kingdom Koncrete, Inc. ("Koncrete Nevada"), a private holding company established under the laws of Nevada, was formed in order to acquire 100% of the outstanding common stock of Kingdom Texas. On June 30, 2006, Koncrete Nevada issued 5,000,000 shares of common stock in exchange for a 100% equity interest in Kingdom Texas. As a result of the share exchange, Kingdom Texas became the wholly owned subsidiary of Koncrete Nevada. As a result, the shareholders of Kingdom Texas owned a majority of the voting stock of Koncrete Nevada. The transaction was regarded as a reverse merger whereby Kingdom Texas was considered to be the accounting acquirer as its shareholders retained control of Koncrete Nevada after the exchange, although Koncrete Nevada is the legal parent company. The share exchange was treated as a recapitalization of Koncrete Nevada. As such, Kingdom Texas (and its historical financial statements) is the continuing entity for financial reporting purposes. The financial statements have been prepared as if Koncrete Nevada had always been the reporting company and, on the share exchange date, changed its name and reorganized its capital stock.
Significant Accounting Policies:
The Company’s management selects accounting principles generally accepted in the United States of America and adopts methods for their application. The application of accounting principles requires the estimating, matching and timing of revenue and expense. The accounting policies used conform to generally accepted accounting principles which have been consistently applied in the preparation of these financial statements.
The financial statements and notes are representations of the Company’s management which is responsible for their integrity and objectivity. Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company's system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.
Management believes that all adjustments necessary for a fair statement of the results for the years ended December 31, 2012 and 2011, respectively have been made.
Emerging Growth Company Critical Accounting Policy Disclosure
The Company qualifies as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging grown company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company may elect to take advantage of the benefits of this extended transition period in the future.
Basis of Presentation:
The Company prepares its financial statements on the accrual basis of accounting. All intercompany balance and transactions are eliminated. Investments in subsidiaries are reported using the consolidation method.
Use of Estimates:
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Recently Issued Accounting Pronouncements:
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
Cash and Cash Equivalents:
Cash and cash equivalents includes cash in banks with original maturities of three months or less are stated at cost which approximates market value, which in the opinion of management, are subject to an insignificant risk of loss in value.
Inventory:
Inventory is comprised of gravel, the primary raw material used to make concrete. The Company uses the weighted average method for inventory tracking and valuation and calculates inventory at each month end. Inventory is stated at the lower of cost or market value.
Fair Value of Financial Instruments:
Accounting Standards Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures” (formally SFAS No. 107), defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and requires certain disclosures about fair value measurements. In general, fair value of financial instruments are based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the Corporation’s credit worthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. At December 31, 2012, the Company did not have any financial instruments other than cash and cash equivalents.
Property and Equipment:
Property and equipment are stated at cost less accumulated depreciation. Major renewals and improvements are capitalized; minor replacements, maintenance and repairs are charged to current operations. Depreciation is computed by applying the straight-line method over the estimated useful lives which are generally five to seven years.
Revenue Recognition:
The Company recognizes revenue in accordance with ASC 605-10, "Revenue Recognition in Financial Statements". Revenue will be recognized only when all of the following criteria have been met:
·Persuasive evidence of an arrangement exists;
·Ownership and all risks of loss have been transferred to buyer, which is generally upon shipment;
·The price is fixed and determinable; and
·Collectibility is reasonably assured.
Revenue is recorded net of any sales taxes charged to customers.
Cost of Goods Sold:
Cost of goods sold consists primarily of gravel, which is used to make concrete. Due to large space requirements, the Company orders gravel approximately every four to six weeks and expenses all purchases when made. At each month end, the Company approximates the amount of gravel remaining and capitalizes it as inventory based upon the weighted average method.
Advertising:
Advertising costs are expensed as incurred. These expenses were $2,951 and $2,743 for the years ended December 31, 2012 and 2011, respectively.
Income Taxes:
The Company has adopted ASC 740-10, which requires the use of the liability method in the computation of income tax expense and the current and deferred income taxes payable.
Earnings per Share:
Earnings per share (basic) is calculated by dividing the net income (loss) by the weighted average number of common shares outstanding for the period covered. As the Company has no potentially dilutive securities, fully diluted earnings per share is equal to earnings per share (basic).
Reclassifications
Certain prior year balances have been reclassified to conform to current year presentation
Comprehensive Income
The Company had no components of comprehensive income. Therefore net loss equaled comprehensive loss for all periods presented.
NOTE 2 - FIXED ASSETS
Fixed assets at December 31, 2012 and 2011 are comprised of the following:
Depreciation expense was $4,640 and $4,843 for the years ended December 31, 2012 and 2011, respectively.
NOTE 3 - EQUITY
In 2011 the Company issued 250,000 common shares for consulting services that were valued at $20,000.
At December 31, 2012 there were 5,721,900 common shares outstanding. There are no stock option plans or outstanding warrants as of December 31, 2012.
NOTE 4 - INCOME TAXES
The Company has adopted ASC 740-10, which requires the use of the liability method in the computation of income tax expense and the current and deferred income taxes payable (deferred tax liability) or benefit (deferred tax asset). Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
The cumulative tax effect at the expected tax rate of 25% of significant items comprising the Company’s net deferred tax amounts as of December 31, 2012 and 2011 are as follows:
Deferred Tax Asset Related to:
The net deferred tax asset generated by the loss carryforward has been fully reserved. The cumulative net operating loss carry-forward is $296,893 at December 31, 2012, and will expire in the years 2026 through 2031.
The realization of deferred tax benefits is contingent upon future earnings and is fully reserved at December 31, 2012.
NOTE 5 - DUE TO SHAREHOLDER
The Company is obligated to a shareholder for funds advanced to the Company for start up expenses and working capital. The advances are unsecured and are to be paid back as the Company has available funds to do so. No interest rate or payback schedule has been established. There has been no interest paid or imputed on these advances. The amounts due at December 31, 2012 and 2011 are $14,656 and $49,656 respectively.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
The Company leases an office and operational facilities on a month-to-month basis. Rent expense was $13,800 and $13,800 for the years ended December 31, 2012 and 2011.
NOTE 7 - FINANCIAL CONDITION AND GOING CONCERN
Kingdom Koncrete, Inc. has an accumulated deficit through December 31, 2012 totaling $296,893 and recurring losses from operations. Because of this accumulated loss, Kingdom Koncrete, Inc. will require additional working capital to develop its business operations. The Company intends to raise additional working capital either through private placements, public offerings, bank financing and/or shareholder funding. There are no assurances that Kingdom Koncrete, Inc. will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings, bank financing and/or shareholder funding necessary to support Kingdom Koncrete, Inc.'s working capital requirements. To the extent that funds generated from any private placements, public offerings, bank financing and/or shareholder funding are insufficient, Kingdom Koncrete, Inc. will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to Kingdom Koncrete, Inc. If adequate working capital is not available Kingdom Koncrete, Inc. may not be able to continue its operations.
Management believes that the efforts it has made to promote its business will continue for the foreseeable future. These conditions raise substantial doubt about Kingdom Koncrete, Inc.'s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should Kingdom Koncrete, Inc. be unable to continue as a going concern.
NOTE 8 - RECENT ACCOUNTING PRONOUNCEMENTS
In May 2011, the FASB issued guidance clarifying previous guidance related to fair value measurement. This guidance is effective during interim and annual periods beginning after December 15, 2011. The Company adopted this guidance effective January 1, 2012. The adoption of this guidance had no material impact on the Company’s consolidated financial position, results of operations or disclosures.
In June 2011, the FASB issued Accounting Standards Update (“ASU”) No. 2011-05, “Comprehensive Income - Presentation of Comprehensive Income.” ASU No. 2011-05 eliminated the option to present the components of other comprehensive income as part of the statement of stockholders’ equity. It requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In December, 2011, the FASB issued ASU 2011-12, “Comprehensive Income - Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05” to defer the effective date of the specific requirement to present items that are reclassified out of accumulated other comprehensive income to net income alongside their respective components of net income and other comprehensive income. All other provisions of this update, which are to be applied retrospectively, are effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2011. As the Company does not have any components of comprehensive income, this pronouncement had no impact on the consolidated financial statements.
In December 2011, the FASB issued ASU No. 2011-11, “Balance Sheet - Disclosures about Offsetting Assets and Liabilities.” ASU 2011-11 requires entities to disclose information about offsetting and related arrangements of financial instruments and derivative instruments and will be applied retrospectively for all comparative periods presented. ASU 2011-11 is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The Company is currently evaluating the impact that the adoption will have on their consolidated financial statements.
No other recent pronouncements are anticipated to have an impact on the Company’s consolidated financial statements.
NOTE 9 - SUBSEQUENT EVENTS
In conjunction with the preparation of these financial statements, an evaluation of subsequent events was performed. No reportable subsequent events were noted.