10-K: Concrete Leveling Systems Reports Loss, Stalled Gaming Merger

Concrete Leveling Systems, Inc. reported a net loss for fiscal year 2025, with auditors raising substantial doubt about its ability to continue as a going concern, while its pivotal Jericho Associates acquisition remains contingent.

Summary

• Reported a net loss of $61,390 for the fiscal year ended July 31, 2025, an improvement from the $65,985 net loss in 2024.
• Revenues decreased to $703 in 2025 from $778 in 2024, attributed to decreased demand for concrete leveling parts.
• Operating expenses increased to $51,597 in 2025 from $49,349 in 2024, primarily due to higher accounting fees.
• Cash and cash equivalents stood at $824 as of July 31, 2025, down from $887 in 2024.
• Total liabilities increased to $641,128 in 2025 from $578,925 in 2024, while total assets increased slightly to $19,479 from $18,666.
• The company has a stockholders' deficit of $621,649 as of July 31, 2025.
• Auditors raised substantial doubt about the company's ability to continue as a going concern due to significant losses and negative cash flow from operations.
• The acquisition of Jericho Associates, Inc., which would diversify the company into gaming and hospitality, remains contingent on regulatory review, financing, and finalization of closing documents for an "over $300 million project."
• As of October 29, 2025, the company had approximately $32,000 in cash, which management believes is only sufficient to finance operations through November 30, 2025.
• The company has 0 full-time and 0 part-time employees as of July 31, 2025.

Sentiment

Score: 2

Explanation: The company faces severe financial distress, including a going concern warning, declining revenues, negative operating cash flow, and minimal cash reserves. Its primary strategic initiative (Jericho acquisition) has been significantly delayed and remains contingent, with no clear path to completion or funding. While the net loss slightly improved, the overall financial health and operational capacity are extremely weak, and internal controls are ineffective.

Positives

• Net loss decreased to $61,390 in fiscal year 2025 from $65,985 in fiscal year 2024.
• A concrete leveling unit was sold for $55,000 on August 19, 2025, a subsequent event that could improve short-term liquidity.
• Management believes the addition of the gaming and hospitality business (Jericho acquisition) will generate increased revenue over the 2026 fiscal year.

Negatives

• Revenues decreased by 9.6% to $703 in fiscal year 2025 from $778 in fiscal year 2024 due to decreased demand for concrete leveling parts.
• Cash and cash equivalents declined to $824 as of July 31, 2025, from $887 in the prior year.
• Net cash used in operating activities was $(63) in 2025, a significant deterioration from $205 provided by operating activities in 2024.
• Total liabilities increased by 10.7% to $641,128, while total assets only marginally increased to $19,479.
• The company has a substantial stockholders' deficit of $621,649.
• The company has 0 full-time and 0 part-time employees, indicating minimal operational capacity.
• Internal controls over financial reporting were deemed ineffective due to material weaknesses.

Risks

• Substantial doubt about the ability to continue as a going concern due to significant losses, negative cash flow, and insufficient cash to meet operating requirements for the next twelve months.
• The pivotal acquisition of Jericho Associates, Inc. and its associated "over $300 million project" in gaming and hospitality remains contingent on regulatory review, financing, and finalization of closing documents, with no guarantee of completion.
• Failure to generate sufficient revenues or obtain additional financing could lead to the company going out of business.
• The company's shares are classified as "penny stock," which limits liquidity and makes it more difficult for broker-dealers to sell, potentially hindering investors' ability to liquidate their investment.
• Material weaknesses in internal control over financial reporting, including inadequate segregation of duties, lack of a code of ethics, lack of a whistleblower policy, and lack of an independent board of directors or board committees related to financial reporting.
• Reliance on related-party advances from Jericho to fund operating expenses, which are non-interest-bearing and have no stated repayment terms, creating dependency.
• Utilization of Net Operating Loss (NOL) carryforwards may be subject to limitation under Internal Revenue Code Section 382 if the company experiences an ownership change.

Future Outlook

Management believes that with the addition of the gaming and hospitality business (Jericho acquisition), the company will begin to generate increased revenue over the 2026 fiscal year. However, existing cash flows are not believed to be sufficient to meet operating requirements for the next twelve months, necessitating potential additional funds through debt or equity securities.

Management Comments

• "We believe that with the addition of our gaming and hospitality business, we will begin to generate increased revenue over the 2026 fiscal year."
• "Management believes the estimated fair value of the use of these facilities [rent-free office space] is not material to the accompanying financial statements."
• "Management believes that despite our material weaknesses set forth above, our financial statements for the fiscal year ended July 31, 2025 are fairly stated, in all material respects, in accordance with U.S. GAAP."

Industry Context

The company operates in the niche concrete leveling industry and is attempting to diversify into the highly competitive and regulated casino gaming, hospitality, and entertainment sectors through a contingent acquisition. The gaming industry, particularly in California and Nevada, involves significant capital investment and regulatory hurdles, as evidenced by the "over $300 million project" and ongoing regulatory review mentioned. The company's current minimal operations and financial distress contrast sharply with the capital-intensive nature of the gaming industry it aims to enter.

Comparison to Industry Standards

• The company's current revenue of $703 and zero employees are significantly below industry standards for publicly traded companies, even smaller reporting companies.
• The proposed "over $300 million project" for a casino and hotel resort, if finalized, would place the company in a league with regional casino developers, such as those behind properties like Table Mountain Casino (mentioned in Ronald Tassinari's background, which he developed and managed with gross revenues over $300m). However, the company's current financial state and lack of operational infrastructure make this comparison aspirational rather than current.
• The company's substantial stockholders' deficit and going concern warning are indicative of severe financial distress, far below typical industry benchmarks for financial health and stability.
• The ineffectiveness of internal controls due to fundamental weaknesses (segregation of duties, lack of ethics/whistleblower policies, independent board) falls significantly short of corporate governance best practices and regulatory expectations for public companies, regardless of size.

Management Changes

Corporate Governance

Related Party Transactions

• The company uses warehouse and office space rent-free from its President, Edward A. Barth.
• Four stockholders loaned a total of $62,750 to the company between 2010 and 2012, with interest rates from 8.00% to 12.00%, due on demand. Accrual of further interest was waived effective July 31, 2013.
• One stockholder and a company owned by the stockholder advanced $124,817 between 2012 and 2020. $124,217 of this balance was converted to a note payable on December 31, 2020, carrying 7.25% interest, payable on demand. Accrued interest was $41,277 as of July 31, 2025.
• Advances from Jericho Associates, Inc. (proposed merger partner) totaling $360,179 as of July 31, 2025, to fund operating expenses. These advances are non-interest-bearing, have no stated repayment terms, and are expected to be repaid upon consummation of the merger.

Stakeholder Impact

• Shareholders face significant dilution risk if new equity is raised. The stock is a "penny stock," limiting liquidity. The contingent nature of the Jericho acquisition creates uncertainty regarding future business direction and value. Existing shareholders will see significant share cancellations by management upon Jericho closing.
• Employees: Currently 0 employees, so direct impact is minimal, but future growth and stability are uncertain.
• Creditors face high risk due to the company's substantial liabilities, negative equity, and going concern warning. Repayment of related-party advances is contingent on a merger that has been significantly delayed.
• Jericho Associates, Inc.: Its advances to Concrete Leveling Systems are at risk if the merger does not finalize or if Concrete Leveling Systems fails.

Next Steps

• Generate sufficient revenue or obtain additional financing through debt or equity securities to meet operating requirements for the next twelve months.
• Complete the regulatory review, finalization of closing documents, and financing arrangements for the "over $300 million project" related to the Jericho acquisition.
• Implement changes to remediate material weaknesses in internal control over financial reporting, including appointing additional qualified personnel, adopting a written whistleblower policy and code of ethics, and appointing an independent board of directors with related committees in fiscal year 2026.
• The President, CEO, and Secretary will cancel a significant portion of their common stock holdings upon the finalization of the Jericho acquisition.

Key Dates

Recommendation

The company is in severe financial distress, evidenced by a going concern warning from its auditors, declining revenues, negative operating cash flow, and critically low cash reserves that can only sustain operations for approximately one month. The pivotal acquisition of Jericho Associates, Inc., intended to diversify the business into the gaming industry, has been significantly delayed for years and remains highly contingent on external factors, casting doubt on its realization. Furthermore, the company operates with zero employees, has material weaknesses in internal controls, and its stock is classified as a penny stock, severely limiting liquidity. Without a clear and immediate path to substantial capital infusion and successful execution of the contingent merger, the company's ability to continue as a viable entity is highly questionable, making it a strong sell.

Keywords

Concrete Leveling Systems, CLEV, 10-K, SEC filing, financial report, gaming industry, hospitality industry, casino development, Jericho Associates, going concern, penny stock, internal controls, related party transactions, net loss, revenue decline, capital raise