|
Quotes & Info
|
| All Recent SEC Filings |
14-May-2008
Quarterly Report
The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. The discussion should be read in conjunction with the consolidated financial statements and notes thereto. The following information contains forward-looking statements. (See "Forward Looking Statements.")
Recent Events: Completion of Initial Public Offering
On April 4, 2008, subsequent to the end of the first fiscal quarter of 2008, Castwell Precast Corporation (the "Company," "we, "us" or "our") completed the sale of all 1,000,000 shares of common stock offered pursuant to a registration statement on Form S-1 (originally filed on Form SB-2) (the "Offering"). The offering price was $0.15 per share and the Company received gross proceeds of $150,000 before deducting the costs of the Offering. Proceeds from the sale of the shares were deposited in a segregated escrow account until subscriptions for at least 800,000 Shares had been received and all checks had cleared. The shares were offered through Jason T. Haislip, an officer and director of the Company, who did not receive any additional compensation for such activities. Mr. Haislip was registered as the Company's "issuer agent" with the Utah Securities Division. No broker-dealer participated in the Offering and no sales commissions were paid in connection with the Offering.
General
We were incorporated on March 25, 2005 to engage in the business of manufacturing and installing precast concrete window wells. In connection with our organization, we sold 2,000,000 shares of our common stock to two officers and founding stockholders, for consideration of $74,000, consisting of $20,000 in cash and the contribution of property and equipment with an agreed upon value of $54,000. Subsequently, from May through July 2005, we sold an additional 380,000 shares to three persons for $38,000 in cash and in December 2005 we issued 428,348 shares to two creditors as payment for loans with an aggregate outstanding balance of $42,835 including principal and interest. In November 2005, we also issued a seven-year warrant to one of such creditors entitling it to purchase up to 100,000 shares of our common stock at an exercise price of $0.10 per share as additional consideration for a loan. Although we have not yet operated on a profitable basis, the cash received from such financing activities during 2005 was sufficient to sustain our operations through March 31, 2008.
Our executive offices are located at the residence of our president and treasurer for which we pay no rent. Until January 31, 2008, our operations were conducted at a leased facility consisting of approximately 4,000 square feet which we rented on a month-to-month basis for a monthly rental of $1,600, plus utilities. On February 1, 2008, we relocated our manufacturing operations to a manufacturing and warehouse facility owned by our vice president and located at 11744 South 2700 West, Riverton, Utah. We use approximately one-third of the facility on a shared basis and we pay a monthly rent of $500 plus our share of utilities.Our operations involve the manufacture, sale and installation of decorative pre-cast concrete window wells. Substantially all of such work is performed by our officers with limited marketing assistance from an independent contractor. To date, we have not operated on a profitable basis. We plan to use the proceeds from the Offering primarily to increase our capacity by increasing our working capital and acquiring additional equipment for use in the manufacture and installation of our products as required.
First Quarter of 2008 Compared to First Quarter of 2007
During the three months ended March 31, 2008, our revenues were $11,215 compared to revenues of $37,508 for the three month's ended March 31, 2007, a decrease of $26,293 or 70.1%. We believe the decrease is primarily attributable to reduced product sales during the first quarter of 2008 as result of the troubled housing market and the decrease in the construction of new homes. For the three months ended March 31, 2008, our gross profit was $5,426 or 48.4% of revenues compared to a gross profit for the three months ended March 31, 2007 of $19,293 or 51.4% of revenues, a decrease of $13,867 or 71.9%. The decrease is attributable to the decrease in revenues discussed above.
During the three months ended March 31, 2008, our net loss was $8,025 compared to a net loss of $3,927 for the three months ended March 31, 2007. The increase in net loss was primarily attributable to the $13,867 reduction in gross profit partially offset by the $9,769 decrease in operating expenses discussed above.
Liquidity and Capital Resources
On a consolidated basis, as of March 31, 2008, we had current assets in the form cash and receivables in the amount of $4,592 and current liabilities of $29,008, which resulted in a working capital deficit of $24,416. As of December 31, 2007, we had cash and receivables in the amount of $7,603 and current liabilities of $27,000, which resulted in a working capital deficit of $19,397. The $5,019 increase in our working capital deficit from December 31, 2007 to March 31, 2008 is the result of our $8,025 operating loss, depreciation of equipment and the absence of any financing activities during such period.
In connection with the completion of our Offering on April 4, 2008, we received gross proceeds of approximately $150,000 before deducting the costs of the Offering, which include $27,000 in legal fees included in accrued expenses at March 31, 2008. We anticipate that the net proceeds from the Offering together with our revenues and our existing assets will be sufficient to permit us to continue our business plan and conduct our operations for a period of at least twelve months.
Cash Flows
Operating Activities
Net cash provided by operating activities was $1,496 for the first three months of 2008 which is an increase of $3,785 from $2,289 net cash used in operating activities during the first three months of 2007.
Investing Activities
Net cash provided by investing activities was $0 during the first three months of 2008 compared to net cash used by investing activities of $100 during the first three months of 2007 resulting from the purchase of equipment.
Financing Activities
The Company did not receive any cash from financing activities during the first quarter of 2008 or 2007 and consequently did not use any cash from financing activities during either period.
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported in the financial statements, including the notes thereto, and related disclosures of commitments and contingencies, if any. We consider our critical accounting policies to be those that require the more significant judgments and estimates in the preparation of financial statements, including the following:
Revenue Recognition
The Company recognizes revenue upon delivery of its precast concrete products.
The allowance for doubtful accounts reflects the Company's best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on known troubled accounts, historical experience, and other currently available evidence. As of March 31, 2008, the Company had a zero balance in the allowance for doubtful accounts.
Depreciation
The Company's fixed assets consist mainly of machinery and equipment used to produce the concrete products it uses in its operations. The Company provides for depreciation of its equipment by the straight-line method, using an estimated useful life of 7 years.
Basic and Diluted Earnings (Loss) Per Share
In accordance with SFAS No. 128, "Earnings per Share," the basic earnings (loss)
per common share is computed by dividing net earnings available to common
stockholders by the weighted average number of common shares outstanding.
Diluted earnings (loss) per common share is computed similarly to basic earnings
(loss) per common share, except that the denominator is increased to include the
number of additional common shares that would have been outstanding if the
potential common shares had been issued and if the additional common shares were
dilutive. As of March 31, 2008, the Company did not have any dilutive common
stock equivalents.
Income Taxes
On March 31, 2008, the Company had a net operating loss available for carry forward of $129,107. The tax benefit of approximately $45,000 from the loss carry forward has been fully offset by a valuation reserve because the use of the future tax benefit is doubtful as the Company has been unable to establish a projection of operating profits for future years. The loss carryover will begin to expire in 2025.
Recent Accounting Pronouncements
Management believes that the adoption of any new relevant accounting pronouncements will not have a material effect on the Company's results of operations or its financial position.
Off-Balance Sheet Arrangements
The Company has not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.
|