<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
June 30, 1998 33-26531-LA
-----------
COMMERCIAL LABOR MANAGEMENT, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as specified in its Charter)
Nevada 88-241079
- ------------------------------- ----------------
(State or other Jurisdiction of I.R.S. Employer
Incorporation or Organization Identification No.)
208 Mira Mar Avenue, Suite One, Long Beach, California 90703
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(562) 987-5443
- --------------------------------------------------------------------------------
(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
----- -----
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 2,607,610
- ----------------------------- ----------------------------
Title of Class Number of Shares Outstanding
at August 4, 1998
<PAGE>
COMMERCIAL LABOR MANAGEMENT, INC.
BALANCE SHEET
JUNE 30, 1998
-----------------------------------------------------------------------
-----------------------------------------------------------------------
ASSETS
CURRENT ASSETS $0
--------
TOTAL CURRENT ASSETS 0
OTHER ASSETS 0
--------
TOTAL OTHER ASSETS 0
--------
TOTAL ASSETS $0
--------
--------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT
<PAGE>
COMMERCIAL LABOR MANAGEMENT, INC.
BALANCE SHEET
JUNE 30, 1998
-----------------------------------------------------------------------
-----------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $25,875
---------
LIABILITIES 0
---------
TOTAL LIABILITIES 25,875
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value, 50,000,000 shares
authorized, 2,607,610 issued and outstanding 231,813
Paid-in Capital 572,506
Accumulated deficit (830,194)
---------
TOTAL STOCKHOLDER'S EQUITY (25,875)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $0
---------
---------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT
<PAGE>
COMMERCIAL LABOR MANAGEMENT, INC.
STATEMENT OF CASH FLOW
JUNE 30, 1998
-----------------------------------------------------------------------
-----------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
------------------------------------
NET CASH FROM OPERATING ACTIVITIES 0
---------
CASH FLOWS USED IN INVESTING ACTIVITIES
---------------------------------------
NET CASH FROM INVESTING ACTIVITIES 0
---------
CASH FLOWS FROM FINANCING ACTIVITIES
------------------------------------
NET CASH FROM FINANCING ACTIVITY 0
---------
NET INCREASE (DECREASE) IN CASH 0
CASH AT BEGINNING OF YEAR 0
---------
CASH AT END OF YEAR $0
---------
---------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT
<PAGE>
COMMERCIAL LABOR MANAGEMENT, INC.
STATEMENT OF INCOME
JUNE 30, 1998
-----------------------------------------------------------------------
-----------------------------------------------------------------------
NET INCOME (LOSS) $0
---------
---------
Weighted Average Number of
Shares Outstanding 8,173,804
Income (Loss) Per Share
of Common Stock 0.00
---------
---------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT
<PAGE>
COMMERCIAL LABOR MANAGEMENT, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FROM DECEMBER 31, 1993 TO JUNE 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
- ---------------------------------------------------------------------------------------------------------------------------------
<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)
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE - Dec. 31, 1994 883,526 $51,813 $864,217 0 ($485,480) $430,550
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
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)
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE - Dec. 31, 1995 9,264,584 $51,813 180,000 $180,000 $864,217 0 $(491,993) $604,037
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
1996 ACTIVITY
Loss for the year ended 12/31/96 (135,875) (135,875)
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE - Dec. 31, 1996 9,264,584 $51,813 180,000 $180,000 $864,217 0 ($627,868) $468,162
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
1997 ACTIVITY
Cancellation of land transaction (291,711) (291,711)
General cancellations (2,603,548)
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE - March 31, 1997 6,661,036 $51,813 180,000 $180,000 $572,506 0 ($627,868) $176,451
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Cancellations (4,425,000)
Issuances/Conversions 10,628,048 $180,000 180,000 $180,000 0
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE - June 30, 1997 12,864,084 $231,813 0 $0 $572,506 0 ($627,868) $176,451
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE - Sept. 30, 1997 12,864,084 $231,813 0 $0 $572,506 0 ($627,868) $176,451
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
One-for-twenty reverse split 643,204
New issuances 7,530,600
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE - Dec. 31, 1997 8,173,804 $231,813 0 $0 $572,506 0 ($627,868) $176,451
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE - March 30, 1998 8,173,804 $231,813 0 $0 $572,506 0 ($627,868) $176,451
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
One-for-five reverse split 1,634,760
New Issuances 972,850
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE - August 4, 1998 2,607,610 $231,813 0 $0 $572,506 0 ($830,194) ($25,875)
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS
<PAGE>
COMMERCIAL LABOR MANAGEMENT
NOTES TO THE FINANCIAL STATEMENT
JUNE 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. On
July 31, 1998, the shares outstanding were 1,634,760. On August 4, 1998, the
shares outstanding were 2,607,610.
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
NOTES TO THE FINANCIAL STATEMENT
JUNE 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 June 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 June 30, 1998, 8,173,804
shares of the Company's Common Stock were outstanding, and as of August 4,
1998, 2,607,610 shares of the Company's Common Stock, par value $.001 per
share, were outstanding.
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 June 30, 1998, management
continued to seek an operating business to acquire or with
which to enter into a business combination. 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 June 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 $25,875 as of June 30,
1998, comprised of accounts payable for accounting and legal services
rendered for the Company. As of June 30, 1998, the Company has no
tangible assets and total liabilities of $25,875. 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: August 4, 1998 By:/s/ Edward L. Torres
-----------------------------------------
President and Chief Financial Officer
(chief financial officer and accounting
officer and duly authorized officer)
Date: August 4, 1998 By:/s/ Edward L. Torres
-----------------------------------------
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> MAR-31-1998
<PERIOD-END> JUN-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> 25,875
<BONDS> 0
0
0
<COMMON> 231,813
<OTHER-SE> (830,194)
<TOTAL-LIABILITY-AND-EQUITY> (25,875)
<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>
