10-Q: Concrete Leveling Systems Reports Q3 2024 Results, Revenue Declines Amidst Ongoing Going Concern Doubts

Concrete Leveling Systems reported a net loss of $47,096 for the nine months ended April 30, 2024, with decreased revenue and ongoing concerns about the company's ability to continue as a going concern.

Summary

• Concrete Leveling Systems, Inc. reported its financial results for the quarter and nine months ended April 30, 2024.
• The company's revenue decreased to $175 for the three months ended April 30, 2024, compared to $320 for the same period in 2023, primarily due to lower parts sales.
• For the nine months ended April 30, 2024, revenue was $450, down from $695 in the same period of 2023, also due to lower parts sales.
• The company's net loss for the three months ended April 30, 2024, was $10,640, compared to a net loss of $10,467 for the same period in 2023.
• The net loss for the nine months ended April 30, 2024, was $47,096, compared to a net loss of $41,100 for the same period in 2023.
• Operating expenses increased to $8,149 for the three months ended April 30, 2024, from $8,110 in 2023, and to $39,600 for the nine months ended April 30, 2024, from $33,875 in 2023, primarily due to higher professional fees.
• The company's total assets were $26,149, and total liabilities were $567,519 as of April 30, 2024.
• The company has a working capital deficit of $541,370 and has sustained substantial operating losses since its inception.
• The company's auditors have raised substantial doubt about its ability to continue as a going concern.
• The company is exploring raising additional capital through debt or equity securities.

Sentiment

Score: 2

Explanation: The document presents a very negative outlook due to declining revenue, increasing losses, a going concern warning from auditors, and material weaknesses in internal controls. The company's future is highly uncertain.

Positives

• The company is exploring opportunities in the gaming and hospitality industry, which could potentially increase revenue in the future.
• The company has a plan to address material weaknesses in internal controls.

Negatives

• The company experienced a decrease in revenue for both the three and nine-month periods ending April 30, 2024.
• The company's operating expenses increased for both the three and nine-month periods ending April 30, 2024.
• The company has a significant working capital deficit and has sustained substantial operating losses since its inception.
• The company's auditors have raised substantial doubt about its ability to continue as a going concern.
• The company's internal controls over financial reporting were deemed ineffective due to material weaknesses.

Risks

• The company's ability to continue as a going concern is uncertain due to substantial operating losses and a working capital deficit.
• The company may not be successful in raising additional capital through debt or equity securities.
• The company's internal control weaknesses could lead to misstatements in financial reporting.
• The company's success is dependent on the finalization of the Jericho transaction and the success of the gaming and hospitality division.
• The company faces competition in both the concrete leveling and gaming industries.

Future Outlook

The company anticipates significant increases in cash flows provided by financing activities during the next 12 months, as it intends to raise capital through either debt or equity securities to fund its business. The company believes that with the addition of its gaming and hospitality business, it will begin to generate increased revenue over the 2025 fiscal year.

Management Comments

• Management believes that with the addition of our gaming and hospitality business, we will begin to generate increased revenue over the 2025 fiscal year.
• Management believes that despite our material weaknesses set forth above, our financial statements for the nine month period ended April 30, 2024 are fairly stated, in all material respects, in accordance with U.S. GAAP.

Industry Context

The company operates in the concrete leveling industry and is attempting to expand into the gaming and hospitality industry. The report highlights the challenges of a small company trying to expand into new markets while facing financial difficulties.

Comparison to Industry Standards

• It is difficult to compare Concrete Leveling Systems to industry standards due to its unique situation of operating in a niche market and attempting to expand into a completely different sector.
• The company's financial performance is significantly below industry averages for both concrete leveling and gaming companies, as evidenced by its consistent losses and negative working capital.
• Unlike established concrete leveling companies, Concrete Leveling Systems is not generating significant revenue from its core business.
• Unlike established gaming and hospitality companies, Concrete Leveling Systems has not yet generated any revenue from its new division.
• The company's internal control weaknesses are not typical of larger, more established companies in either industry.

Corporate Governance

Legal Proceedings

• To the best of the Company’s knowledge and belief, no legal proceedings are currently pending or threatened.

Related Party Transactions

• The company uses warehouse and office space belonging to one of its stockholders without charge.
• The company has loans from stockholders with interest rates ranging from 8.00% to 12.00%, with interest accrual waived by noteholders effective July 31, 2013.
• The company has a note payable to a stockholder with interest at 7.25%, and advances from stockholders with no interest.
• A stockholder has paid invoices of the company at various times between August 2018 and April 2024.

Stakeholder Impact

• Shareholders face significant risk due to the company's financial instability and going concern issues.
• Employees may be concerned about job security due to the company's financial difficulties.
• Customers may be hesitant to do business with the company due to its uncertain future.
• Suppliers and creditors face increased risk of non-payment due to the company's financial situation.

Next Steps

• The company plans to implement changes to address material weaknesses in internal controls.
• The company intends to raise capital through debt or equity securities.
• The company will continue to pursue the Jericho transaction and the development of its gaming and hospitality division.

Key Dates

Keywords

Concrete Leveling Systems, Financial Results, Going Concern, Revenue, Net Loss, Operating Expenses, Internal Controls, Gaming, Hospitality, Capital Raise