<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549 Page 1 of 12
Sequentially
FORM 10-Q Numbered Document
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended Commission File Number
September 30, 1998 33-26531-LA
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COMMERCIAL LABOR MANAGEMENT, INC.
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(Exact Name of Registrant as specified in its Charter)
Nevada 88-241079
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(State or other Jurisdiction of I.R.S. Employer
Incorporation or Organization Identification No.)
137 North Larchmont Boulevard, #507, Los Angeles, California 90004
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(Address of Principal Executive Offices) (Zip Code)
(323) 933-0565
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(Registrant's Telephone Number, including Area Code)
Indicate by check mark whether the Registrant (i) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (ii) has been subject to such
filing requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes
of Common Stock, as for the latest practicable date.
Common Stock, $.001 par value 4,565,340
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Title of Class Number of Shares Outstanding
at November 11, 1998
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COMMERCIAL LABOR MANAGEMENT, INC.
BALANCE SHEET
SEPTEMBER 30, 1998
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ASSETS
CURRENT ASSETS $0
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TOTAL CURRENT ASSETS 0
OTHER ASSETS 0
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TOTAL OTHER ASSETS 0
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TOTAL ASSETS $0
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT
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COMMERCIAL LABOR MANAGEMENT, INC.
BALANCE SHEET
SEPTEMBER 30, 1998
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $57,750
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LIABILITIES 0
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TOTAL LIABILITIES 57,750
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value, 50,000,000 shares
authorized, 4,565,340 issued and outstanding 231,813
Paid-in Capital 572,506
Accumulated deficit (862,069)
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TOTAL STOCKHOLDER'S EQUITY (57,750)
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $0
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT
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COMMERCIAL LABOR MANAGEMENT, INC.
STATEMENT OF INCOME
SEPTEMBER 30, 1998
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NET INCOME (LOSS) ($31,875)
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Weighted Average Number of
Shares Outstanding 4,381,937
Income (Loss) Per Share
of Common Stock (.007)
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT
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COMMERCIAL LABOR MANAGEMENT, INC.
STATEMENT OF CASH FLOW
SEPTEMBER 30, 1998
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CASH FLOWS FROM OPERATING ACTIVITIES
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NET CASH FROM OPERATING ACTIVITIES 0
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CASH FLOWS USED IN INVESTING ACTIVITIES
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NET CASH FROM INVESTING ACTIVITIES 0
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CASH FLOWS FROM FINANCING ACTIVITIES
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NET CASH FROM FINANCING ACTIVITY 0
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NET INCREASE (DECREASE) IN CASH 0
CASH AT BEGINNING OF YEAR 0
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CASH AT END OF YEAR $0
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT
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COMMERCIAL LABOR MANAGEMENT, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FROM DECEMBER 31, 1993 TO SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
Common Stock Preferred Stock
------------------------------------------- Additional Treasury
Number Number Paid-in Stock Accumulated
of Shares Amount of Shares Amount Capital & Adjs Deficit Total
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE-December 31, 1993 800,000 40,000 219,192 (171,685) 105,287 $364,479
1994 ACTIVITY
Exercise of warrants 50,000
Two-for-one split on 3/1/94 850,000
Warrants exercised 197,867 11,813 473,340 171,685 656,838
Adjust stock to reflect the 1993
SEMAC debt exchange (395,141)
Sale of operations (619,200) 171,685
Loss for the year ended 12/31/94 (590,767) (590,767)
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BALANCE - Dec. 31, 1994 883,526 $51,813 $864,217 0 ($485,480) $430,550
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1995 ACTIVITY
One-for-three reverse split 3/20 (589,018)
1995 Net Transactions 8,970,076
Issuance of Preferred Stock 180,000 180,000 180,000
Loss for the period ended 9/30/95 (6,513) (6,513)
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BALANCE - Dec. 31, 1995 9,264,584 $51,813 180,000 $180,000 $864,217 0 $(491,993) $604,037
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1996 ACTIVITY
Loss for the year ended 12/31/96 (135,875) (135,875)
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BALANCE - Dec. 31, 1996 9,264,584 $51,813 180,000 $180,000 $864,217 0 ($627,868) $468,162
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1997 ACTIVITY
Cancellation of land transaction (291,711) (291,711)
General cancellations (2,603,548)
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BALANCE - March 31, 1997 6,661,036 $51,813 180,000 $180,000 $572,506 0 ($627,868) $176,451
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Cancellations (4,425,000)
Issuances/Conversions 10,628,048 $180,000 180,000 $180,000 0
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BALANCE - June 30, 1997 12,864,084 $231,813 0 $0 $572,506 0 ($627,868) $176,451
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BALANCE - Sept. 30, 1997 12,864,084 $231,813 0 $0 $572,506 0 ($627,868) $176,451
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One-for-twenty reverse split 643,204
New issuances 7,530,600
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BALANCE - Dec. 31, 1997 8,173,804 $231,813 0 $0 $572,506 0 ($627,868) $176,451
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1998 ACTIVITY
BALANCE - March 30, 1998 8,173,804 $231,813 0 $0 $572,506 0 ($627,868) $176,451
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One-for-five reverse split 1,634,760
New Issuances 972,850
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BALANCE - August 4, 1998 2,607,610 $231,813 0 $0 $572,506 0 ($830,194) ($25,875)
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Cancellations (2,242,270)
New Issuances 4,200,000
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BALANCE - November 11, 1998 4,565,340 $231,813 0 $0 $572,506 0 ($862,069) ($31,875)
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS
<PAGE>
COMMERCIAL LABOR MANAGEMENT
NOTES TO THE FINANCIAL STATEMENT
SEPTEMBER 30, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
GENERAL:
Commercial Labor Management, Inc. (Formerly XL Corp.) Is a Nevada Corporation
(the "Company") was organized October 19, 1988.
The Company was originally incorporated in Nevada under the Tokyo Raiders on
October 19, 1988. In 1990, the Company acquired certain rights to a pizza
franchise and changed its name to Club USPN, Inc. In June of 1993, the
Company acquired Sono International, Inc., but those operations were
discontinued and the shares of Sona were sold to the original shareholders of
Sono. In March of 1995 the Board approved the merger with Commercial Labor
Management which was handled as a reverse merger, and also approved a name
change to Commercial Labor Management. However, that merger was rescinded
and never completed. The Company is currently seeking other potential
mergers of acquisitions.
INCOME TAX REPORTING:
The Company files a corporate tax return in the U.S.
EARNINGS PER SHARE:
The calculations of earnings per share was determined by dividing the net
income or loss by the computed weighted average number of common shares
outstanding during the applicable period. For 1996 the shares outstanding are
9,264,584. For 1997 the calculation is as follows: 9,264,584 shares were
outstanding for 7 weeks, 6,661,036 shares were outstanding for 9 weeks,
1,194,528 shares were outstanding for 1 week and 12,864,084 shares were
outstanding for approximately 9 weeks, equals an average of 10,811,998. From
January 1, 1998 to July 31, 1998, the shares outstanding were 8,173,804.
From July 31, 1998 to August 4, 1998, the shares outstanding were 1,634,760.
From August 4, 1998 to October 27, 1998, the shares outstanding were
2,607,610. From October 27, 1998 to November 11, 1998, the shares outstanding
were 4,565,340. On November 11, 1998, the shares outstanding were 4,565,340.
INCOME TAXES:
In December 1992 the Financial Accounting Standards Board issued Statement of
Accounting Standards Number 109, "Accounting for Income Taxes" (FASB 109).
Adoption of FASB 109 is required for fiscal years beginning after December 15,
1992. The Company follows the requirements set forth in FASB 109.
2. PAID IN CAPITAL:
Paid in capital is made up in part by contributions of office furniture &
equipment, manufacturing equipment, trade receivable, and accounts payable in
exchange for common stock. Common stock was issued to Shareholder's of
record in exchange for these net assets. Also, in the fourth quarter of 1994
the Company issued common stock to individuals to whom money was owed for
professional services rendered, prior to the sale-back of September 30, 1994.
<PAGE>
COMMERCIAL LABOR MANAGEMENT, INC.
NOTES TO THE FINANCIAL STATEMENT
SEPTEMBER 30, 1998
3. CAPITAL STOCK:
PREFERRED STOCK
The authorized capital stock of the Company includes 2,000,000 shares of
Preferred Stock, par value $.001 per share. The Company has no outstanding
shares of Preferred Stock as of September 30, 1998.
COMMON STOCK
The authorized capital stock of the Company includes 50,000,000 shares of
Common Stock, par value $.001 per share. As of September 30, 1998, 2,607,610
shares of the Company's Common Stock were outstanding, and as of November 11,
1998, 4,565,340 shares of the Company's Common Stock, par value $.001 per
share, were outstanding.
In 1997 and 1998, the Company effected two reverse stock splits, a one for 20
reverse split and a one for five reverse split. On November 3, 1998, the
NASDAQ Stock Market, Inc. issued a Uniform Practice Advisory (UPC #084-98)
advising NASDAQ members that the effective date of the one for 20 reverse
stock split for settlement purposes would be revised to occur on October 14,
1998 rather than September 22, 1998 because NASDAQ believes that "a
sufficient lack of information and uncertainty existed in the marketplace to
warrant a revision." Certain members of the NASDAQ disagree with the NASDAQ's
ruling. There is no assurance regarding the final outcome of the NASDAQ's UPC
#084-98, or the effect that the ruling and dispute will have on the Company.
In addition, the Company entered into a Plan of Reorganization and Stock
Exchange Agreement with CNG Communications, Inc. and the sole shareholder of
CNG Communications, Inc. ("CNG") pursuant to which the Company planned to
issue 4,200,000 shares of its Common Stock to the sole shareholder of CNG,
and cancel a sufficient number of outstanding shares to result in the CNG
shareholder owning an agreed upon percentage of the Company on the closing of
the transaction. As a result of the breach of that agreement by CNG and the
CNG shareholder, the Company did not issue any shares of its Common Stock to
the CNG shareholder. Those shares have been issued and are currently being
held by the principal shareholders of the Company pending another business
combination, if any (none has yet been identified), as disclosed in the
Company's Report on Form 8-K, dated October 27, 1998.
4. TAX BENEFIT:
The Company has a loss carryforward in the amount of $821,659 available to
offset future taxable income. These losses expire as they offset income or
can be carried forward for a maximum of 15 years. The intangible long term
asset of $202,326 previously recorded for the potential tax benefit from the
loss carryforward was written off in the second quarter because the Company
does not believe that the loss carryforward will be available to offset
income which may be earned by the Company in the future, if any.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
BACKGROUND
During the fiscal quarter ended September 30, 1998, management
continued to seek an operating business to acquire or with which to
enter into a business combination. On August 6, 1998, the Company
entered into Plan of Reorganization and Stock Exchange Agreement
with CNG Communications, Inc. and the sole shareholder of CNG
Communications, Inc. ("CNG") pursuant to which the Company was to
acquire 100% of the issued and outstanding stock of CNG in
consideration for the issuance of 4,200,000 shares of the Company's
Common Stock (i.e. to result in the CNG shareholder owning an agreed
upon percentage of the Company's total issued and outstanding stock on
the closing of the transaction). The proposed acquisition of CNG did
not close. Management believes that CNG and its shareholder breached
the agreement. Accordingly, the Company intends to file a lawsuit
against CNG, the sole shareholder of CNG, and Westower Corporation
(the company which recently announced that it had acquired CNG) for
breach of contract, intentional interference with business
relationship and related claims. The Company has not yet specified
the amount of its damages. There is no assurance that the Company
will prevail in its planned lawsuit against the defendants, or that
it will recover any of its damages. The principal shareholders of
the Company are currently advancing the costs of the lawsuit on
behalf of the Company. There is no assurance that the Company will
be able to make a business acquisition in the future.
RESULTS OF OPERATIONS
The Company did not incur operating expenses or earn revenues during
the fiscal quarter ended September 30, 1998, except for operating
costs of $31,875. The operating costs of $31,875 reflect advances
made by the principal shareholders of the Company on behalf of the
Company for transfer agent fees, printing and filing expenses, legal
fees and costs payable to outside counsel, accounting costs, costs
incurred in connection with the Plan of Reorganization and Stock
Exchange Agreement between the Company, CNG Communications, Inc. and
the sole shareholder of CNG Communications, Inc., administrative
expenses and similar costs. The operating costs also reflect
deferred compensation payable to the President of the Company for
work performed by him during the fiscal quarter ended September 30,
1998. The Company does not have the funds to pay any of its accounts
payable at this time. Services for which payment has been made by
the issuance of Common Stock in the Company have not been recorded
as an expense because the Company's stock is presently deemed to
have no value. Accounts payable to the independent certified public
accounting firm will only be paid in cash if and when cash is
available.
LIQUIDITY AND CAPITAL RESOURCES
The Company had a working capital deficit of $57,750 as of September
30, 1998, comprised of accounts payable for accounting and legal
services rendered for the Company. As of September 30, 1998, the
Company has no tangible assets and total liabilities of $57,750.
The Company presently has no operating businesses and no sources of
revenue, capital or financing. If the Company identifies a business
to acquire and needs cash to accomplish the acquisition, then it
will have to issue stock or incur borrowings in order to obtain such
funds. There is no assurance that the Company will be able to
obtain additional funding, if required. There is no assurance that
the Company will be able to acquire an operating business.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
Date: November 11, 1998 By: /s/ Edward L. Torres
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President and Chief Financial Officer
(chief financial officer and accounting
officer and duly authorized officer)
Date: November 11, 1998 By: /s/ Edward L. Torres
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Secretary (corporate secretary and duly
authorized officer)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JUN-30-1998
<PERIOD-END> SEP-30-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 57,750
<BONDS> 0
0
0
<COMMON> 231,813
<OTHER-SE> (862,069)
<TOTAL-LIABILITY-AND-EQUITY> (57,750)
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
