SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED JUNE 30, 1999
Commission File No. 33-26531-LA
COMMERCIAL LABOR MANAGEMENT, INC.
(Exact Name of Registrant as specified in its Charter)
ZEROS & ONES, INC.
-------------------------------------
(Name Change Effective July 1, 1999)
Nevada 88-241079
- -------------------------------- ----------------------
(State or other Jurisdiction of I.R.S. Employer
Incorporation or Organization Identification No.)
39 E. Walnut Street, Pasadena, CA 91103
------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (626) 584-4040
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.
Common Stock, $.001 par value 4,587,741
- ----------------------------- ---------
Title of Class Number of Shares Outstanding
at June 30, 1999
<PAGE>
<TABLE>
<CAPTION>
COMMERCIAL LABOR MANAGEMENT, INC.
BALANCE SHEET
ASSETS
June 30, 1999 December 31, 1998
- -------------------------------------------- ------------------------------------- -----------------------------------
<S> <C> <C>
CURRENT ASSETS $0 $0
------------------------------------- -----------------------------------
TOTAL CURRENT ASSETS 0 0
FIXED ASSETS
Tax benefit 0 0
Land 0 0
------------------------------------- -----------------------------------
TOTAL OTHER ASSETS 0 0
TOTAL ASSETS $0 $0
===================================== ===================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMMERCIAL LABOR MANAGEMENT, INC.
BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, 1999 December 31, 1998
- --------------------------------------------------- ------------------------------- ---------------------------------
<S> <C> <C>
Current Liabilities:
Accounts payable $0 $57,750
------------------------------- ---------------------------------
LIABILITIES 0 57,750
------------------------------- ---------------------------------
TOTAL LIABILITIES $0 57,750
STOCKHOLDERS' EQUITY:
Common stock, $.001 par 231,813 231,813
value, 50,000,000 shares
authorized, 4,587,741
issued and outstanding at
June 30, 1999
Preferred Class A stock
none issued and outstanding 0 0
Paid-in Capital 572,506 572,506
Accumulated Deficit (876,519) (862,069)
------------------------------- ---------------------------------
TOTAL STOCKHOLDER'S EQUITY (72,200) (57,750)
------------------------------- ---------------------------------
TOTAL LIABILITIES AND $0 $0
STOCKHOLDERS' EQUITY
=============================== =================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMMERCIAL LABOR MANAGEMENT, INC.
STATEMENT OF INCOME
FOR SIX MONTHS ENDED JUNE 30, 1999
June 30, 1999 June 30, 1998
<S> <C> <C>
Income Revenues $0 $0
=============================== ===============================
Expenses (14,450) 0
=============================== ===============================
NET OPERATING INCOME (LOSS) ($14,450) $0
=============================== ===============================
Write off of tax benefit 0 ($202,326)
Net Profit (Loss) 0 (202,326)
Weighted Average Number of
Shares Outstanding 4,564,741 8,173,804
Income (Loss) Per Share of
Common Stock ($.001) ($.025)
=============================== ===============================
STATEMENT OF INCOME
FOR THREE MONTHS ENDED JUNE 30, 1999
June 30, 1999 June 30, 1998
Income Revenues $0 $0
=============================== ===============================
Expenses 0 0
=============================== ===============================
NET OPERATING INCOME (LOSS) $0 $0
=============================== ===============================
Write off of tax benefit 0 (202,326)
Net Profit (Loss) 0 ($202,326)
Weighted Average Number of
Shares Outstanding 4,564,741 8,173,804
Income (Loss) Per Share of
Common Stock $0.00 ($.025)
=============================== ===============================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMMERCIAL LABOR MANAGEMENT, INC.
STATEMENT OF CASH FLOW
FOR 6 MONTHS ENDED JUNE 30, 1999
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES 0
NET CASH FROM OPERATING ACTIVITIES (14,450)
-------------------------------------------
CASH FLOWS USED IN INVESTING ACTIVITIES 0
NET CASH FROM INVESTING ACTIVITIES 0
-------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES 0
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
JUNE 30, 1999
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. Effective
July 1, 1999, the Company closed its agreements to acquire 100% of the assets of
Zeros & Ones, Inc., a Delaware corporation ("ZOI")and 100% of the total issued
and outstanding stock of Polyganol Research Corporation, a Delaware corporation
("Polyganol"), EKO Corporation, a Delaware corporation ("EKO"), Wood Ranch
Technology Group, Inc., a Delaware corporation ("Wood Ranch"), and Kidvision,
Inc., a Delaware corporation ("Kidvision"). The Company is in the process of
acquiring the outstanding stock of Pillar West Entertainment, Inc., a California
corporation.
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
<PAGE>
COMMERCIAL LABOR MANAGEMENT
NOTES TO THE FINANCIAL STATEMENT
JUNE 30, 1998
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.
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, 1999.
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, 1999, 4,587,741 shares of the
Company's Common Stock were outstanding, and as of August 4, 1999, 7,000,000
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 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 have been reissued and were held by the principle shareholders of
the Company, pending another business combination.
<PAGE>
COMMERCIAL LABOR MANAGEMENT
NOTES TO THE FINANCIAL STATEMENT
JUNE 30, 1998
4. RELATED PARTY TRANSACTION:
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, pending
another business combination.
5. SUBSEQUENT EVENTS:
Effective July 1, 1999, the Company acquired 100% of the assets of ZOI and 100%
of the total issued and outstanding stock of Polyganol, Quantum, Wood Ranch,
EKO, and Kidvision and is in the process of acquiring 100% of the total issued
and outstanding stock of Pillar West Entertainment, Inc., as reported on the
Company's Report on Form 8-K, dated July 7, 1999. The Company also changed its
name to Zeros & Ones, Inc.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
BACKGROUND
During the fiscal quarter ended June 30, 1999, management caused the Company to
enter into plans of reorganization, asset purchase, and exchange agreements to
acquire six small private Internet technology and media companies. The
acquisitions closed effective July 1, 1999. The Company's financial statements
as of and for the period ending June 30, 1999 do not reflect the assets or
operations of those companies.
RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD IN 1999 COMPARED TO THE SAME
PERIOD IN 1998
The Company had no revenues for the three month period ending June 30, 1999 nor
the three month period ending June 30, 1998. The Company incurred no operating
expenses in the three month period in 1999 or 1998. The Company had no profit or
loss from operations in the three month period ending 1999 or 1998.
RESULTS OF OPERATIONS FOR SIX MONTH PERIOD ENDED JUNE 30, 1999 COMPARED TO THE
SAME PERIOD IN 1998.
The Company incurred operating expenses of $14,450 and earned no revenues during
the six months ended June 30, 1999 and incurred no operating expenses and earned
no revenue during the same period ending June 30, 1998. Profit/loss for the six
month period ending June 30, 1999 was ($14,450) as compared to ($202,326) in the
same period in 1998. The loss in the six months ending June 30, 1998 resulted
from the Company writing off tax benefits previously anticipated to be
available.
LIQUIDITY AND CAPITAL RESOURCES
The Company has no working capital deficit as of June 30, 1999. As of June 30,
1999, the Company has no tangible assets and no liabilities. Effective July 1,
1999, the Company completed the acquisition of several small, private Internet
technology and media related companies, as reported in the Company's Report on
Form 8-K dated July 7, 1999. As a result of the acquisition, the Company will
need substantial capital to implement the business plans of the newly acquired
subsidiaries. The Company plans to attempt to obtain the capital in a private
placement of its common stock. There is absolutely no assurance the Company will
be able to raise any additional capital or financing, which could substantially
hinder the Company's ability to implement its business plan. Additional
information regarding the newly acquired businesses is included in the Company's
Report on Form 8-K dated July 7, 1999.
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Certificate of Amendment to the Articles of Incorporation
changing the name of the Company to Zeros & Ones, Inc.,
effective July 1, 1999.
(b) Reports on Form 8-K
Report on Form 8-K dated May 9, 1999 relating to the proposed
plan of reorganization and exchange agreement with Zeros &
Ones, Inc., a Delaware corporation.
<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, 1999 By: /s/ Steve Schlair
-----------------------------
Steve Schlair
President and Chief
Financial Officer
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
COMMERCIAL LABOR MANAGEMENT, INC.
Commercial Labor Management, Inc., a Nevada corporation (the
"Corporation"), does hereby certify that:
1. Article One of the Corporation's Articles of Incorporation, as
amended, is hereby restated to be as follows:
"Article One. The name of this Corporation shall be Zeros &
Ones, Inc."
2. The foregoing amendment has been duly authorized and approved by the
Board of Directors of the Corporation.
3. The foregoing amendment has been duly adopted and approved by the
written consent of the stockholders holding no less than a majority of the
Corporation's outstanding stock entitled to vote thereon.
Dated: June 18, 1999 COMMERCIAL LABOR MANAGEMENT, INC.
-------------------------------------
Edward L. Torres, President
-------------------------------------
Edward L. Torres, Secretary
<PAGE>
STATE OF CALIFORNIA )
) SS.
COUNTY OF LOS ANGELES )
On June ___, 1999, before me, Constance Gale, a notary public in and
for said state, personally appeared Edward L. Torres, proved to me on the basis
of satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his authorized
capacities, and that by his signature on the instrument the entity upon behalf
of which the persons acted, executed the instrument.
WITNESS my hand and official seal.
Signature ________________________________
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 231,813
<OTHER-SE> (304,013)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 14,450
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (14,450)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,450)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
