SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
Annual Report Pursuant to
the Securities Exchange Act of 1934
For the fiscal year ended 12-31-98
Commission file number 33-26531-LA
COMMERCIAL LABOR MANAGEMENT, INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0241079
- ----------------------- -------------------
(State of incorporation) (I.R.S. Employer
Identification No.)
137 N. Larchmont, #507, Los Angeles, CA 90004
----------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (323)933-0565
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: None
Name of each exchange on which registered: N/A
Securities registered pursuant to Section 12(g) of the Act:
Title of each class: None
Indicate by check mark whether the registrant (1) 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 (2) has been subject to the filing
requirements for at least the past 90 days.
Yes X No
----- ------
Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B
is not contained in this form, and no disclosure will be contained, to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. X
-----
State issuer's revenues for its most recent fiscal year. $0
1
<PAGE>
Transitional Small Business Disclosure Format:
Yes X No
----- ------
Aggregate market value of the voting stock held by non-affiliates of the
registrant as of December 31, 1998: $1,068,307 (based on the closing bid price
of $7.50 per share as reported on OTC BB as of December 31, 1998)
Number of outstanding shares of the registrant's $.001 par value common stock,
as of December 31, 1998: 4,564,741.
2
<PAGE>
PART 1
Item 1. Business
Commercial Labor Management, Inc. is a Nevada corporation (the
"Company") organized on October 18, 1988 with the initial name Tokyo Raiders,
Inc. It subsequently changed its name to Club USPN, Inc. then to XL Corp. and
then to Commercial Labor Management, Inc. The Company was incorporated for the
purpose of engaging in any lawful business, with its original purpose to
evaluate and acquire one or more unspecified businesses or properties. Until May
1990, the Company was a developmental stage enterprise raising capital,
searching for an acquisition, and acquiring 7.5 acres of undeveloped residential
land in New Jersey, at which time it changed its name to Club USPN, Inc. An
acquisition of a pizza marketing network company in 1990 was mutually rescinded
on September 30, 1990.
Principal operations of the Company were not re-established until May
10, 1993, when the Company agreed to acquire all of the shares of SONO
International, a Nevada corporation, effective on June 9, 1993, in exchange for
625,000 shares of the Company's common stock. SONO International ("SI") was
organized in Nevada on July 2, 1992 to provide contract manufacturing and
maquilador (shelter) services in Tijuana, Baja California, Mexico, with four
wholly-owned subsidiaries: WIRETECH and EXCEL Mexican Manufacturing (both Nevada
corporations), and WIRETECH de Mexico, S.A. de C.V., and Operadora de Shelters,
S.A. de C.V. (both Mexican corporations).
On September 30, 1994, the Company sold its SI operations unit to SI's
former stockholders and received in return 619,200 shares of the Company's
common stock held by those former SI stockholders. The Company's motivation for
this transaction was due to the substantial losses incurred by the SI unit,
without signs of immediate improvement. The shares received back by the Company
provided the Company with a reduction in share capitalization which could be
used in acquiring or merging with a more promising operating company.
On March 21, 1995, the Company entered into an Agreement and Plan of
Reorganization with Commercial Labor Management, Inc. pursuant to which the
Company acquired 100% of the total issued and outstanding common and preferred
stock of Commercial Labor Management, Inc. in exchange for 1,928,330 shares of
the Company's stock. Effective July 1, 1995, the Company and Commercial Labor
Management, Inc. entered into a Rescission Agreement pursuant to which they
mutually agreed to rescind the acquisition because the Company did not believe
that it had received adequate consideration for its purchase. As a result, the
Company received a return of its 1,928,330 shares of common stock which have
been canceled, and the Company tendered back all of the shares of Commercial
3
<PAGE>
Labor Management, Inc. which it owned. The Company is now seeking to make
another business acquisition or enter into another business combination with an
operating entity.
In June 1997, all issued and outstanding shares of the Company's Series
A Convertible Preferred Stocks were converted by their holders into 7,200,00
shares of the Company's common stock.
In December 1997 the Company, by the written consent of its majority
shareholders representing approximately 82.6% of the total issued and
outstanding common stock of the Company, (i) amended its Articles of
Incorporation to increase the authorized common stock from 15,000,000 to
50,000,000 shares, par value $.001 per share, and (ii) effected a one for twenty
reverse stock split to result in a total of 643,804 shares of common stock
issued and outstanding. On December 31, 1997, an additional 7,530,600 shares of
the common stock were issued to a consultant for services rendered, resulting in
a total of 8,173,804 shares of the Company's common issued and outstanding as of
December 31, 1997. In July 1998, the company, by the written consent of its
majority shareholders representing approximately 87% of the total issued and
outstanding common stock of the Company, effected a one for five reverse stock
split.
On August 6, 1998, 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
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 filed a lawsuit
against CNG in 1999, the sole share holder of CNG, and Westower Corporation (the
company which 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 filed lawsuit against the defendants, or
that it will recover any of its claimed 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 any
business acquisition in the future.
As a result of the breach of that agreement by CNG and the CNG shareholder,
the Company did not deliver any shares of its Common Stock to the CNG
shareholder. After the cancellation of shares, 4,200,000 Common Shares have been
issued to 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
<PAGE>
At year end, the Company had a loss carryforward in the amount of $821,659
which probably will not be available to offset future taxable income due to tax
code restrictions. 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, due to Internal Revenue Code restrictions.
EMPLOYEES:
The Company does not currently have any employees. The executive
officers of the Company are not currently paid any salary or other compensation
for their services.
No significant business activity was conducted by the Company during
the fiscal year. As a result, no income was realized by the Company in its last
fiscal year.
The Company was inactive and presently does not participate in any
industry segment. The Company had no material revenues or operating profits or
identifiable assets attributable to its industry segment.
5
<PAGE>
Item 2. Property
The Company does not have any formal offices at year end. Records are
maintained and mail received at 137 N. Larchmont, #507, Los Angeles, CA 90004.
The Company owns no real property.
Item 3. Legal Proceedings
The Company was a party to no pending legal proceedings, nor is any
property subject to such proceedings, at December 31, 1998. Subsequent to year
end, the Company filed suit against Paul Bishop and CNG Communications, Inc. for
breach of contract.
Item 4. Submission of Matters to a Vote of Security
Holders
Written Consent of a Majority of Shareholders was obtained on July 16, 1998
to effect a reverse stock split of one for five issued and outstanding shares.
The Board of Directors concurred in the action by Board resolution. In December
1997, the Company effected a one-for-twenty reverse stock split of the issued
and outstanding shares through written consent of a majority of the issued and
outstanding shares and concurrent Board of Directors resolution. 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" ruling. There is no assurance regarding the final outcome of
the NASDAQ'S UPC #084-98, or the effect the ruling and dispute will have on the
Company.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The Company's common stock trades on the NASD OTC Bulletin Board Market
under the symbol "CLMI."
The range of high and low bid quotations for each fiscal quarter since
the last report and previous two years, as reported by the National Quotation
Bureau Incorporated, was as follows:
6
<PAGE>
1998 High Low
---------------- ---------- ------
First quarter* $ .31 .09
Second quarter* $ .31 .28
Third quarter* $ .56 .09
Fourth quarter* $18.50 .50
* Split adjusted one for 100
1997 High Low
---------------- -------- -------
First quarter .01 *
Second quarter .01 *
Third quarter .01 *
Fourth quarter $.01 *
1996 High Low
--------------- ------- -------
First quarter .07 .05
Second quarter .02 .01
Third quarter .02 .01
Fourth quarter $.02 $.01
* No quotations reported
The above quotations reflect inter-dealer prices, without retail
mark-up, mark-down, or commission and may not necessarily represent actual
transactions.
As of December 31, 1998, there were approximately 300 record holders of
the Company's Common Stock not including shares held in "street name" in
brokerage accounts, which number is unknown.
The Company has not declared or paid any cash dividends on its common
stock and does not anticipate paying dividends for the foreseeable future.
Item 6. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Financial Condition and Changes in Financial
Condition
During the fiscal year ended December 31, 1998, the Company continued
to search for and evaluate operating businesses for potential acquisition,
although no offers were completed by the Company. One agreement was entered into
with CNG Communications, Inc., but CNG reneged on the agreement, and the matter
is now the subject of litigation. The search for a new business acquisition was
only conducted sporadically because management, which was not paid any
compensation by the Company during the fiscal year ending December 31, 1998, was
able to dedicate only a limited amount of time to the Company's affairs.
7
<PAGE>
Management plans to continue to maintain the Company's reports to the Securities
and Exchange Commission current in 1999 and to intensify its focus on the
Company's goal of acquiring or entering into a business combination with a new
operating business.
LIQUIDITY AND CAPITAL RESOURCES:
The Company had a working capital deficit of $57,750 as of December 31,
1998, comprised of accounts payable for accounting and legal services rendered
for the Company and funds advanced by shareholders. As of December 31, 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.
No operations were conducted and no revenues were generated in the
fiscal year. The Company at year end had no capital, no cash, and no other
assets. The Company at year end was totally illiquid and needed cash infusions
from shareholders to provide capital, or loans from outside sources.
Results of Operations
1998 Compared to 1997
The Company had no business operations or revenues in the period in 1998 or
1997. The Company incurred $31,875 in officers' consulting fees and expenses in
1998 compared to no expenses in 1997. The Company did not have assets, capital,
or cash to pay any of its accounts payable as of year end. Loss per share for
the period was ($.004) adjusted for reverse split, compared to $0 in 1997.
1997 Compared to 1996
During the fiscal year ended December 31, 1997, the Company incurred no
general and administrative expenses. In 1996 the Company incurred $25,875 in
General and Administrative expenses most of which were professional fees and
wrote off as uncollectible a $180,000 receivable from an officer. At present,
the Company has no business income or operations. Accordingly, the reported
financial information herein may not be indicative of future operating results.
Profit/loss on operations in 1997 was zero compared to the 1996 loss on
operations of $205,875.
8
<PAGE>
Item 7. Financial Statements and Supplementary Data
Please refer to pages F-1 through F-11.
Item 8. Changes in and Disagreements on Accounting and
Financial Disclosure
In connection with audits of two most recent fiscal years and any
interim period preceding resignation, no disagreements exist with any former
accountant on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope of procedure, which disagreements if not
resolved to the satisfaction of the former accountant would have caused him to
make reference in connection with his report to the subject matter of the
disagreement(s).
The principal accountants' reports on the financial statements for any
of the past two years contained no adverse opinion or a disclaimer of opinion
nor was qualified as to uncertainty, audit scope, or accounting principles
except for the "going concern" qualification.
PART III
Item 9. Directors and Executive Officers of the
Registrant and Compliance with Section 16(a)
The directors and executive officers of the Company as of December 31,
1998, are as follows:
Name Age Position
- ----------------- ----- ------------------------
Edward L. Torres 39 President, Chief Financial
Offieer, Secretary, Director
The term of office of each director and executive officer ends at, or
immediately after, the next annual meeting of shareholders of the Company.
Except as otherwise indicated, no organization by which any director or officer
has been previously employed is an affiliate, parent or subsidiary of the
Company.
Edward L. Torres has been the President, Chief Financial Officer, and
Chairman of the Board of Directors of the Company since July 30, 1995 and was
the President of the Company from March 21, 1995 until June 1, 1995. Mr. Torres
became the Secretary of the Company in 1998. Mr. Torres was also the President
and principal shareholder of Commercial Labor Management, Inc. from its
inception in 1992 until July 30, 1995, when it ceased to conduct business.
Commercial Labor Management, Inc. was engaged in the business of leasing
employees to a variety of businesses, primarily in California. Since the
cessation of business by Commercial Labor Management, Inc., Mr. Torres has been
an independent marketing consultant for other employee leasing companies. Mr.
Torres has a Bachelors in Business Administration from South Bay University.
9
<PAGE>
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than 10% of a registered class of the Company's equity securities, to
file reports of ownership and changes in ownership of equity securities of the
Company with the Securities and Exchange Commission and NASDAQ. Officers,
directors and greater-than 10% shareholders are required by the regulations of
the Securities and Exchange Commission to furnish the Company with copies of all
Section 16(a) filings.
1. The following persons filed reports under Section 16(a) during the
most recent fiscal year:
a. Edward Torres President and Director
b. Mark Richardson Shareholder
Mark French, the prior Secretary and a Director of the Company, did not, to
the Company's knowledge, file any reports under Section 16(a) of the Exchange
Act.
2. For each person, listed by subparagraph letter above:
Number of late Number of Known failures
reports (2) transactions not to file forms
reported on a
timely basis
- ---------------- ----------------- ---------------
a. one none Form 5 for 1998 (1)
b. one none Form 5 for 1998 (1)
(1) The Company belives there would be no transactions on Form 5 which were not
reported on Form 4 for 1998.
(2) The Company believes Mark French was required to file a Form 4 and a Form 5
for transactions in 1997.
Item 10. Executive Compensation
The Company accrued $31,875 in compensation to the executive officers
as a group for services rendered to the Company in all capacities during the
1998 fiscal year. No one executive officer received, or has accrued for his
benefit, in excess of $60,000 for the year. No cash bonuses were or are to be
paid to such persons.
The Company does not have any employee incentive stock option plans.
There are no plans pursuant to which cash or non-cash compensation was
paid or distributed during the last fiscal year, or is proposed to be paid or
distributed in the future, to the executive officers of the Company. No other
10
<PAGE>
compensation not described above was paid or distributed during the last fiscal
year to the executive officers of the Company. There are no compensatory plans
or arrangements, with respect to any executive office of the Company, which
result or will result from the resignation, retirement or any other termination
of such individual's employment with the Company or from a change in control of
the Company or a change in the individual's responsibilities following a change
in control.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE OF EXECUTIVES
<S> <C> <C> <C> <C> <C> <C>
Annual Compensation Awards
Name and Year Salary Bonus Other Annual Restricted Securities
Principal ($) ($) Compensation Stock Underlying
Position ($) Award(s) Options/
($) SARs (#)
- ----------------------------------------------------------------------------------------------------------------------------
Edward L. 1998 0 0 31,875 0 0
Torres,
President
1997 0 0 0 0 0
1996 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Mark 1998 0 0 0 0 0
French,
Secretary
(resigned
in 1998)
1997 0 0 0 0 0
1996 0 0 0 0 0
</TABLE>
Option/SAR Grants Table (None)
Aggregated Option/SAR Exercises in Last Fiscal Year an FY-End Option/SAR
value (None)
Long Term Incentive Plans - Awards in Last Fiscal Year (None)
11
<PAGE>
DIRECTOR COMPENSATION FOR LAST FISCAL YEAR
(Except for compensation of Officers who are also Directors which Compensation
is listed in Summary Compensation Table of Executives)
<TABLE>
<CAPTION>
Cash Compensation Security Grants
<S> <C> <C> <C> <C> <C>
Name Annual Meeting Consulting Number Number of
Retainer Fees Fees/Other of Securities
Fees ($) ($) Fees ($) Shares Underlying
(#) Options/SARs(#)
- -----------------------------------------------------------------------------------------------------------------------------
A. Director 0 0 0 0 0
Edward L. Torres
B. Director 0 0 0 0 0
Mark French
(resigned in
1988)
</TABLE>
Item 11. Security Ownership of Certain Beneficial
Owners and Management
The following table sets forth information, as of December 31, 1998,
with respect to the beneficial ownership of the Company's $.001 par value common
stock by each person known by the Company to be the beneficial owner of more
than five percent of the outstanding common stock and each member of management.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Stock Names and Address Beneficial Percent
Title of Class of Beneficial Owner Ownership of Class
- -------------- --------------------- ----------- --------
Common Mark J. Richardson (1) 2,220,400 48.7%
1299 Ocean Avenue
Suite 900
Santa Monica, CA 90401
Common Edward L. Torres (2) 2,100,000 46%
208 Mira Mar Ave.
Suite One
Long Beach, CA 90803
President and Director
</TABLE>
(1) Mr. Richardson is a consultant to the Company.
(2) Mr. Torres is the President, Chief Financial Officer and Chairman of
the Board of Directors of the Company.
Item 12. Certain Relationships and Related Transactions
In September 1998 the Company caused a stock certificate for 4,200,000
shares of its common stock to be prepared for the closing of the proposed CNG
acquisition, which was never delivered and such shares were canceled.
12
<PAGE>
On July 31, 1998, the Company canceled 6,539,044 shares due to the reverse
split (one for five) to facilitate the proposed CNG acquisition. On October 27,
1998, the Company reissued 4,200,000 shares consisting of 2,100,000 shares each
to Mark Richardson, a shareholder holding more than ten percent of the
outstanding shares of the corporation, and Ed Torres, President and Director of
the Company, pending another business combination which has not yet been
identified.
PART IV
Item 13. Exhibits and Reports on Form 8-K
The following documents are filed as part of this report:
1. Reports on Form 8-K:
August 11, 1998
September 11, 1998
October 27, 1998
2. Exhibits:
None.
13
<PAGE>
INDEX
Form 10-K
Regulation Consecutive
S-K Number Exhibit Page Number
- ------------ --------------- ------------
3.1 Articles of *Incorporated by
Incorporation reference to Registration
Statement #2-87742-D
3.2 Bylaws *Incorporated by
reference to Registration
Statement #2-87742-D
3.3 Amendments to Articles *Incorporated by
of Incorporation filed reference to Form 8-K
May 1998 filed January 21, 1999
3.4 Amendments to the Articles *Incorporated by
of Incorporation filed reference to Form 8-K
August 1998 filed January 21, 1999
27.1 Financial Data Schedule F-12
14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
COMMERCIAL LABOR MANAGEMENT, INC.
(Registrant)
Date: 4/12/99
/s/ Edward M. Torres
------------------------------------
President
Pursuant to the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
COMMERCIAL LABOR MANAGEMENT, INC.
(Registrant)
Date: 4/12/99
/s/ Edward M. Torres
------------------------------------
Director
------------------------------------
Director
------------------------------------
Director
15
<PAGE>
<TABLE>
<CAPTION>
COMMERCIAL LABOR MANAGEMENT, INC.
BALANCE SHEET
ASSETS
<S> <C> <C>
December 31, December 31,
1998 1997
---------------------------------------------------------------
CURRENT ASSETS
Note receivable $0 $0
---------------------------------------------------------------
TOTAL CURRENT ASSETS 0 0
FIXED ASSETS
Tax benefit 0 202,326
Land 0 0
---------------------------------------------------------------
TOTAL FIXED ASSETS 0 202,326
---------------------------------------------------------------
TOTAL ASSETS $0 $202,326
===============================================================
The Accompanying Notes are an Integral Part of This Statement
</TABLE>
F-1
<PAGE>
<TABLE>
<CAPTION>
COMMERCIAL LABOR MANAGEMENT, INC.
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
December 31, December 31,
1997
----------------------------------------------------------
CURRENT LIABILITIES:
Accounts payable $57,750 $25,875
Note payable for land 0 0
----------------------------------------------------------
TOTAL CURRENT LIABILITIES 57,750 25,875
----------------------------------------------------------
TOTAL LIABILITIES 57,750 25,875
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value,
50,000,000 shares authorized;
8,173,804 (1997) & 4,564,741
(1998) issued & outstanding 231,813 231,813
Paid-in Capital 572,506 572,506
Accumulated deficit (862,069) (627,868)
----------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY (57,750) 176,451
----------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $0 $202,326
==========================================================
The Accompanying Notes are an Integral Part of This Statement
</TABLE>
F-2
<PAGE>
<TABLE>
<CAPTION>
COMMERCIAL LABOR MANAGEMENT, INC.
STATEMENT OF INCOME
<S> <C> <C>
December 31, December 31,
1998 1997
-------------------------------------------------------------
Expenses:
Professional fees $31,875 $0
Tax Benefit Write-off 202,326 0
-------------------------------------------------------------
TOTAL EXPENSES 234,201 0
Net Income/(Loss) Before Taxes (234,201) 0
NET INCOME (LOSS) ($234,201) 0
-------------------------------------------------------------
Weighted Average Number of
Shares Outstanding 6,013,655 10,205,625
Income Per Share of Common Stock
($.04) 0
=============================================================
The Accompanying Notes are an Integral Part of This Statement
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
COMMERCIAL LABOR MANAGEMENT, INC.
STATEMENT OF CASH FLOW
<S> <C> <C>
December December
31, 1998 31, 1997
-----------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash from Operating Activities 0 0
-----------------------------------
CASH FLOWS USED IN INVESTING ACTIVITIES
Net Cash from Investing Activities 0 0
-----------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net Cash from Financing Activity 0 0
-----------------------------------
Net Increase (Decrease) in Cash 0 0
Cash at beginning of year 0 0
-----------------------------------
Cash at end of year $0 $0
===================================
The Accompanying Notes are an Integral Part of This Statement
</TABLE>
F-4
<PAGE>
<TABLE>
<CAPTION>
COMMERCIAL LABOR MANAGEMENT, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FROM DECEMBER 31, 1993 TO DECEMBER 31, 1998
Common Stock Preferred Stock
----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Additional Treasury
Number of Number of Paid-in Stock & Accumulated
Shares Amount Shares Amount Capital Adj's Deficit Total
----------------------------------------------------------------------------------------------------------
BALANCE -
12/31/93 800,000 40,000 219,197 (171,685) 105,287 364,479
1994 ACTIVITY
Exercise of
warrants 50,000
2-for-1 split
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
3-for-1 reverse
split 3/20
1995 Net (589,018)
Transactions
Issuance of 8,970,076
Preferred Stock
Loss for the
period ended 180,000 180,000 180,000
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 - June
30, 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)
General (291,711)
cancellations
(2,603,548)
----------------------------------------------------------------------------------------------------------
BALANCE - Mar. 31, 1997 6,661,036 $51,813 180,000 180,000 $572,506 0 ($627,868) 176,451
==========================================================================================================
Cancellations
Issuances/Con- (4,425,000)
versions 10,628,048 180,000 180,000 180,000 $572,506 0 ($627,868) 176,451
----------------------------------------------------------------------------------------------------------
BALANCE - June
30, 1997 12,864,048 231,813 0 0 $572,506 0 ($627,868) 176,451
==========================================================================================================
BALANCE - Sept.
30, 1997 12,864,048 231,813 0 0 $572,506 0 ($627,868) 176,451
==========================================================================================================
20-for-1 reverse
split (12,220,880)
New issuances 7,530,600
----------------------------------------------------------------------------------------------------------
BALANCE -
Dec. 31, 1997 8,173,804 231,813 0 0 $572,506 0 (627,868) 176,451
==========================================================================================================
1998 ACTIVITY
20-for-1 reverse
split (6,539,043) (234,201) (234,201)
Cancellation of
shares (1,270,020)
New issuances 4,200,000
----------------------------------------------------------------------------------------------------------
BALANCE -
Dec. 31, 1998 4,564,741 231,813 0 0 $572,506 0 (862,069) (57,750)
==========================================================================================================
The Accompanying Notes are an Integral Part of This Statement
</TABLE>
F-5
<PAGE>
COMMERCIAL LABOR MANAGEMENT
NOTES TO THE FINANCIAL STATEMENT
DECEMBER 31, 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 Sono 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 or 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
share outstanding during the applicable period. For 1997, the
calculation is as follows: 9,264,584 shares outstanding for 7 weeks,
6,661,036 were outstanding for 9 weeks, 1,194,528 shares were
outstanding for 1 week, 12,864,084 for approximately 9 weeks, equals an
average of 10,811.998. For January 1, 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 1,186,307. From October 27, 1998 to December 31, 1998,
the shares outstanding were 4,564,741. On December 31, 1998, the shares
outstanding were 4,564,741.
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
F-6
<PAGE>
COMMERCIAL LABOR MANAGEMENT
NOTES TO THE FINANCIAL STATEMENT
DECEMBER 31, 1998
shareholders of record in exchange for these net assets. Also, in the
forth quarter of 1994, the Company issued some common stock to
individuals to whom money was owed for professional services rendered
prior to September 30, 1994.
3. CAPITAL STOCK:
Preferred Convertible 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 December 31, 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 December 31, 1998,
4,564,741 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 transactions. 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. Shares which were
surrendered for have been reissued and are currently being held by the
principal shareholders of the Company pending another business
combination.
F-7
<PAGE>
COMMERCIAL LABOR MANAGEMENT
NOTES TO THE FINANCIAL STATEMENT
DECEMBER 31, 1998
4. Related Party Transactions:
On July 31, 1998, the Company canceled 6,539,044 shares due to the
reverse split (one for five) to facilitate the proposed CNG
acquisition. On October 27, 1998, the Company reissued 4,200,000 shares
consisting of 2,100,000 shares each to Mark Richardson, a shareholder
holding more than ten percent of the outstanding shares of the
corporation, and Ed Torres, President and Director, of the Company,
pending another business combination which has not yet been identified.
F-8
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