SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSBA
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED SEPTEMBER 30, 1998
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.
137 North Larchmont Boulevard, #507, Los Angeles, California 90004
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(Address of Principal Executive Offices) (Zip Code)
(Registrant's Telephone Number, including Area Code): (323) 933-0565
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.
Common Stock, $.001 par value 2,607,610
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Title of Class Number of Shares Outstanding
at September 30, 1998
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<TABLE>
<CAPTION>
COMMERCIAL LABOR MANAGEMENT, INC.
BALANCE SHEET
SEPTEMBER 30, 1998
ASSETS
<S> <C>
September 30, 1998
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CURRENT ASSETS $0
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TOTAL CURRENT ASSETS 0
OTHER ASSETS 0
----------------------------
TOTAL OTHER ASSETS 0
TOTAL ASSETS $0
============================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMMERCIAL LABOR MANAGEMENT, INC.
BALANCE SHEET
SEPTEMBER 30, 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
September December
30, 1998 31, 1997
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Current Liabilities:
Accounts payable $57,750 $25,875
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LIABILITIES $57,750 $25,875
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TOTAL LIABILITIES $57,750 $25,875
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value, 50,000,000 231,813 231,813
shares authorized, 2,607,610 issued and
outstanding (post one for five reverse
split in July 1998)
Paid-in Capital 572,506 572,506
Accumulated Deficit (862,069) (627,868)
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TOTAL STOCKHOLDER'S EQUITY (57,750) 176,451
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $0 $202,326
=====================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT
</TABLE>
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<TABLE>
<CAPTION>
COMMERCIAL LABOR MANAGEMENT, INC.
STATEMENT OF INCOME
NINE MONTH PERIOD ENDED SEPTEMBER 30
<S> <C> <C>
Sept. 30 Sept. 30
1998 1997
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Income 0 0
==================================================
Expenses $31,875 0
Net Income (Loss) (31,875) 0
Write off of Tax Benefit (202,326) 0
Net Income (Loss) (234,201) 0
Weighted Average Number of 2,607,610 0
Shares Outstanding (adjusted for
1 for 5 reverse split)
Income (Loss) Per Share of ($.089) 0
Common Stock
==================================================
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF INCOME
FOR THREE MONTH PERIOD ENDED SEPTEMBER 30, 1998
<S> <C> <C> <C> <C> <C> <C>
Sept. 30 Sept. 30
1998 1997
- ---------------------------------------------------------------------------------------------------------------
Income 0 0
==================================================
Expenses $31,875 0
Net Income (Loss) (31,875) 0
Net Income (Loss) (31,875) 0
Weighted Average Number of 2,607,610 0
Shares Outstanding (adjusted for
1 for 5 reverse split)
Income (Loss) Per Share of ($.012) 0
Common Stock
==================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMMERCIAL LABOR MANAGEMENT, INC.
STATEMENT OF CASH FLOW
SEPTEMBER 30, 1998
<S> <C>
1998
- --------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES ($31,875)
NET CASH FROM OPERATING ACTIVITIES ($31,875)
-------------------------------------
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
</TABLE>
<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.
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. The Company implemented a one for five reverse
split in July 1998 of its issued and outstanding shares. 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.
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 did 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
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 FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 1998
COMPARED TO SAME PERIOD ENDED SEPTEMBER 30, 1997.
The Company had no business operations or revenues in the period in 1998 or
1997. The Company incurred $31,875 in general and administrative expenses in the
period in 1998 compared to no expenses in 1997. The general and administrative
expenses in 1998 included transfer agent fees, printing and filing expenses,
legal fees and costs payable to outside counsel, accounting costs, miscellaneous
expenses, much of which cost related to the Plan of Reorganization and Stock
Exchange Agreement entered into between the Company and CNG Communications, Inc.
and the sole shareholder of CNG Communications, Inc. The operating costs also
reflect deferred compensation payable to the President of the company for
services rendered in the quarter ended September 30, 1998. The Company did not
have assets, capital, or cash to pay any of its accounts payable as of September
30, 1998. Loss per share for the period was ($.012) adjusted for reverse split,
compared to $0 in 1997.
RESULTS OF OPERATIONS FOR NINE MONTH PERIOD ENDED SEPTEMBER 30, 1998 COMPARED TO
SAME PERIOD ENDED SEPTEMBER 30, 1997.
The Company had no business operations or revenues in the period in 1998 or
1997. The Company incurred $31,875 in general and administrative expenses in the
period in 1998 compared to no
<PAGE>
expenses in 1997. The general and administrative expenses in 1998 included
transfer agent fees, printing and filing expenses, legal fees and costs payable
to outside counsel, accounting costs, miscellaneous expenses, much of which cost
related to the Plan of Reorganization and Stock Exchange Agreement entered into
between the Company and CNG Communications, Inc. and the sole shareholder of CNG
Communications, Inc. The operating costs also reflect deferred compensation
payable to the President of the company for services rendered in the quarter
ended September 30, 1998. The Company did not have assets, capital, or cash to
pay any of its accounts payable as of September 30, 1998. The Company wrote off,
in the second quarter, an estimated tax benefit of $202,326 carred as an asset
due to the unlikelyhood of it being usable in the Internal Revenue Code. Loss
for the period per share was ($.089) adjusted for the reverse split, compared to
$0 in 1997.
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 and funds advanced by shareholders. 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>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 2. CHANGES IN SECURITIES
In 1997 and 1998, the Company effected two reverse stock splits: a one
for 20 reverse split (December 1997) and a one for five reverse split
in July 1998. For trading purposes, there was a delay in implementing
the 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.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
Written Consent of a Majority of Shareholders was obtained July 16, 1998 to
effect a reverse split of one for five issued and outstanding shares. The Board
of Directors concurred in the action by Board Resolution.
Item 5. OTHER INFORMATION
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.
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
3.4 Amendment to Articles of Incorporation filed
August 5, 1998
Reports on Form 8-K for the period:
8-K filed August 17, 1998
8-K filed September 18, 1998
<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: March 24, 1999 By: /s/ Edward L. Torres
------------------------------
Edward L. Torres
President and Chief
Financial Officer
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<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> (289,563)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 31,875
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (31,875)
<INCOME-TAX> 0
<INCOME-CONTINUING> (31,875)
<DISCONTINUED> 0
<EXTRAORDINARY> (202,326)
<CHANGES> 0
<NET-INCOME> (234,201)
<EPS-PRIMARY> (.089)
<EPS-DILUTED> (.089)
</TABLE>
