As filed with the Securities and Exchange Commission on May 14, 1999
Registration No. 333-69415
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pre-effective Amendment 2
FORM SB-2
REGISTRATION STATEMENT
Under
The Securities Act of 1933
BALANCED LIVING, INC.
(Exact name of registrant as specified in its charter)
Colorado 8299 87-0575577
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
organization)
6375 South Highland Drive, Suite D
Salt Lake City, Utah 84121
(801) 424-1624
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
JEANNENE BARHAM
President and Chief Financial Officer
Balanced Living, Inc.
6375 South Highland Drive, Suite D
Salt Lake City, Utah 84121
(801) 424-1624
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies To:
A. ROBERT THORUP, ESQ.
RAY, QUINNEY & NEBEKER
79 South Main Street
Salt Lake City, Utah 84111
(801) 323-3359
(fax) (801) 532-7543
Approximate date of commencement of proposed sale of the securities to the
Public: As soon as practicable after the Effective Time of this
Registration Statement.
CALCULATION OF REGISTRATION FEE
Title of each Amount to Proposed Proposed Amount of
class of to be Maximum offering Maximum aggregate registration
securities to registered price per share offering price fee
be registered
common stock 100,000 - - -
units
common stock 100,000 $2.00 $200,000 $59.00
($0.001 par shares
value)
Class A 100,000 $3.00 $300,000 $88.50
Warrants and warrants
underlying and under-
common stock lying shares
Class B 100,000 $5.00 $500,000 $147.50
Warrants and warrants
underlying and under-
common stock lying shares
Class C 100,000 $10.00 $1,000,000 $295.00
Warrants and warrants
underlying and under-
common stock lying shares
TOTAL $590.00
<PAGE>
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its Effective Time until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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P R O S P E C T U S
100,000 Units $2.00 per Unit
Each Unit Consists of One Share of Common Stock, And One
Each of a Class A Warrant, a Class B Warrant, and a Class C Warrant
BALANCED LIVING, INC.
A Colorado Corporation
Balanced Living, Inc. is a new Colorado
corporation engaged in the personal development
business, and offers seminars, books, and
[LOGO] related personal development products to its
clients. All of its current activies are
conducted in its wholly owned subsidary,
The Balanced Woman, Inc.
These securities have not been approved or
Balanced Living, Inc. disapproved by the Securities and Exchange
6375 S. Highland Dr., Ste. D Commission, or any state securities agency,
Salt Lake City, UT 84121 nor has any federal or state regulatory
agency passed upon the accuracy or adequacy
of this propectus. Any representation to the
contrary is a criminal offense.
This offering
involves a
significant
degree of risk
Investors need
to read the
section called
"Risk of this
Investment"
found at page 3
- The Offering
Per Unit Total
Public Offering Price $2.00 $200,000
Estimated Selling Discounts
and Commissions $0.20 $20,000
Estimated Proceeds to Balanced Living $1.80 $180,000
- - This is a "best efforts, all or none" offering. Offering
proceeds will be deposited after receipt into an escrow
account pending receipt of subscriptions totaling $200,000 or
termination of the offering. If all of the Units are not
subscribed, all investor funds will be refunded without
interest or deduction of any kind.
- - If subscription for all 100,000 units have not been received
by July 31, 1999, subject to an extension at the sole
discretion of Balanced Living for an additional 30 days, all
funds received will be refunded to subscribers without
interest or deductions.
- - Subscribers will have no right to return or use of their funds
during the offering period.
- - An investor's purchase of units may not exceed 10% of that
investor's net worth.
- - There is no public market for Balanced Living common stock.
- - Information about the Warrants:
- Class A Warrants allow the purchase of one (1) share of
common stock for $3.00
- Class B Warrants allow the purchase of one (1) share of
common stock for $5.00
- Class C Warrants allow the purchase of one (1) share of
common stock for $10.00.
- All of the warrants are valid until December 31, 2003,
when they will expire.
The Date of this Prospectus is May , 199
COVER
<PAGE>
[Inside Front Cover]
No person has been authorized to give any information or to make any
representations in connection with this offering other than those
contained in this prospectus and, if given or made, that information
and representations must not be relied on as having been authorized by
Balanced Living. This prospectus is not an offer to sell or a
solicitation of an offer to buy any of the securities it offers to any
person in any jurisdiction in which that offer or solicitation is
unlawful. Neither the delivery of this prospectus nor any sale
hereunder shall, under any circumstances, create any implication that
the information in this prospectus is correct as of any date later
than the date of this prospectus.
Notice to New York Residents
The Attorney General of the State of New York has not passed on or
endorsed the merits of this offering. Any representations to the
contrary is unlawful.
[This Space Left Blank Intentionally]
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PROSPECTUS SUMMARY FOR BALANCED LIVING
This is a brief summary of the information in this prospectus. We
encourage you to read the entire prospectus before you decide whether and
how much to invest in the units.
- - Balanced Living
Balanced Living, Inc. ("Balanced Living") is a newly formed Colorado
corporation with no operating history and under the management of persons
with limited experience in starting and successfully developing a new
company. The business of Balanced Living initially will be conducted
through its wholly owned subsidiary, The Balanced Woman, Inc., ("Balanced
Woman") also a relatively new Colorado corporation.
Balanced Living was organized by women for the benefit of women, and
to function as part of the personal growth/life management industry (a
rapid growing industry designed to provide self-help and self-
improvement-related products and services to individuals). It offers
seminars, personal growth experiences and products that assist women in
living more balanced and purposeful lives.
Balanced Living will earn revenue for the following:
- Seminars.
- Products.
- Circles of Women.
For detailed information about these activities see "Information
About Balanced Living" page 13.
- - Balanced Living's Financial History and Current Position
Balanced Living was formed on July 1, 1998 and acquired Balanced
Woman on July 14, 1998. Balanced Woman was formed on January 26, 1998.
Balanced Living has earned total revenues since inception of $24,783
(through March 31, 1999) and experienced a net loss of ($357,885) for the
same period. At March 31, 1999, Balanced Living had cash on hand of
$37,139 and a negative net worth of ($357,885).
- - How will Balanced Living use the Net Proceeds of this offering?
Balanced Living estimates that it will have $151,660 available from
this offering after expenses if the total offering is sold. Any funds
raised through this offering will be used to implement the seminars and
products described above, including salaries and expenses of the
management team during the start-up period. See "Use of Proceeds."
- - Becoming a Shareholder
You must complete and sign a subscription agreement and submit that
with your investment money. If your investment is not more than ten
percent of your net worth you will be accepted as a shareholder. When
your subscription has been accepted, you will receive a countersigned
copy of your subscription agreement and an acknowledgment letter along
with your share certificates.
- - Escrow of Investor Funds.
All investor subscription funds received will deposited into a
separate escrow account pending receipt of subscription totaling the full
$200,000. See "Plan of Distribution."
[This Space is Left Blank Intentionally]
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RISK FACTORS
An investment in the units involves a high degree of risk and
should only be made by persons who can afford to lose up to their
entire investment. Before purchasing units, you should consider
carefully the following risk factors, in addition to the other
information in this prospectus.
RISKS INHERENT IN BALANCED LIVING
- - Balanced Living's Limited Operating History.
Balanced Living was formed in July 1998, and is in the development
stages of its business plan. It has no significant assets, has just
begun business operations, and considers 1998 and early 1999 to be a
period of research and development. There is no assurance that upon
completion of this offering Balanced Living will be able to continue
successfully implementing its business plan or that it will ever operate
profitably.
- - Balanced Living's Limited Capital and Need for Additional Capital.
With the exception of approximately $320,000 in equity purchases from
the founders and a few private investors, Balanced Living has no
significant assets or operating capital. Balanced Living's auditors deem
Balanced Living a going concern and Balanced Living is totally dependent
upon receipt of the proceeds of this offering to provide the working
capital necessary to continue the development of its business. Even so,
upon successful completion of the offering , the working capital
available to Balanced Living will be limited. Balanced Living has no
commitments for additional cash funding beyond the proceeds expected to
be received from this offering. In the event that the proceeds from this
offering are not sufficient to move Balanced Living to internal funding
and profitability, Balanced Living may need to seek additional financing
from commercial lenders or other sources, including additional sales of
equity, for which it presently has no commitments or arrangements.
- - Balanced Living's Limited Management.
Balanced Living will be substantially dependent upon its current
management team, only 2 of which are employees. See "Management." Three
other key personnel are functioning as independent contractors and are
involved with other businesses. Balanced Living also relies heavily on
the training, teaching methods, and curriculum of Rose Blackham, which is
provided to Balanced Living by independent contract. Currently, Ms.
Blackham is the chief facilitator of Balanced Living's seminars, although
not an officer or director. The stability and growth of Balanced Living
would be significantly compromised if Ms. Blackham were unable or
unwilling to perform these responsibilities. Balanced Living does not
carry key person life insurance with respect to any employee or
contractor, and has no employment agreements.
- - Balanced Living's Conflicts of Interest and Non-Arms-Length
Transactions.
Many of the services and goods acquired by Balanced Living have been
and will likely come from sources connected in some way with members of
Balanced Living's management team. For example, members of management
have supplied operating capital to Balanced Living and may do so in the
future by means of loans or purchases of equity. Some members of the
management team have other interests which could give rise to conflicts
with respect to the amount of time devoted to Balanced Living. There is
no assurance such conflicts of time and interests will be resolved
favorably to Balanced Living.
- - Risks of Insufficient Funding for Balanced Living and Unavailability
of such Financing.
Balanced Living has earned only limited revenues to date and is
primarily dependent upon the proceeds of this offering to proceed with
its business plan. See "Plan of Operations" page 11. There is no
assurance that Balanced Living will raise the full amount of this
offering. The failure to substantially complete this offering puts the
success of Balance Living in jeopardy. Investors
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<PAGE>
are entitled to the return of their investment if less than the full
offering is sold.
Balanced Living believes that the proceeds of this offering will be
sufficient to implement its business plan. Moreover Balanced Living
cannot ascertain with any degree of certainty the future capital
requirements for the full development and production of its seminars,
products and inventory, and may need to raise more funds than are sought
in this offering. There can be no assurance that additional financing
will be available to Balanced Living on acceptable terms, if at all.
- - Balanced Living's Year 2000 Risks.
Balanced Living faces risks from the Year 2000 computer problem in
three areas:
- its own computer systems;
- its appliances and equipment with embedded chips; and
- the possibly non-compliant systems of its third party vendors
and service providers.
While Balanced Living believes that its own computerized information
processing systems are "Y2K" compliant with four digit dating and
recognizing 2000 as a leap year, it is still in the early stages of
assessing its non-computer equipment for non-compliant embedded chips.
Balanced Living is also in the very earliest stages of assessing and
communicating with its key vendors and service providers to determine
their Y2K compliance. In a worst case scenario, Balanced Living may not
be able to present its seminars because of disruptions in transportation
systems, building locations, or utility services. In the event of
significant economic turmoil from Y2K occurrences, the demand for
Balanced Living's seminars and products may be significantly reduced.
Suppliers of its private label products may not be able to ship
sufficient quantities to meet Balanced Living's needs. Balanced Living's
own offices may be closed by equipment or utility failures or possible
civil unrest.
RISKS RELATED TO THE NATURE OF
BALANCED LIVING'S BUSINESS
- - Balanced Living's Uncertain Market Acceptance.
Balanced Living's business plan is based upon the experience of the
"Balanced Woman" Seminars given to date and the observed market
acceptance of related products and services. There are no assurances of
general market acceptance of Balanced Living's products and services.
Balanced Living's business will be subject to all the risks associated
with the packaging and introduction of new seminars and product lines for
sale into the competitive self- improvement seminar market.
- - Balanced Living's Intellectual Property Risks.
Balanced Living relies primarily on copyright laws and employee and
third party nondisclosure agreements to protect its intellectual
property. Balanced Living has completed the registration and copyright of
its trademarks, word mark, service mark, and the copyright of all of the
materials used in the seminars. Rose Blackham has transferred all rights
to any pre-existing concepts and materials to Balanced Living.
Unauthorized copying of its products and services could damage Balanced
Living significantly. Although Balanced Living is not aware that any of
its products and services are materially infringing the rights of others,
it is possible they are. If so, Balanced Living could have to modify its
products and services, at substantial possible cost. Balanced Living
might be subject to lawsuits if it is alleged that it is infringing on
the property rights of others.
- - The General Economic Situation.
Balanced Living provides products and services that are not essential
to the support of life. In the event of significant economic downturns
in the United States or the World caused by any or all of a number of
potential causes, the demand for Balanced Living's seminars and products
may be significantly reduced.
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RISKS RELATED TO
BALANCED LIVING'S OFFERING
- - Best Efforts Offering/No Prior Firm Commitments for Balanced Living.
The units are offered on a "best-effort, all or none" basis with no
underwriter assistance or firm commitment from any investor or dealer. No
assurance can be given that all of the units will be sold. However,
escrow provisions have been made to insure that if subscriptions for all
the units are not received within the offering period, plus any
extensions, all funds received will be promptly refunded to subscribers
without interest or deductions. During the offering period, subscribers
will receive no interest on their funds nor have any use or right to
return of the funds.
- - Benefits to Present Balanced Living Shareholders; Continued Control.
There are 762,681 shares of Balanced Living's common stock (not
including any shares underlying stock options or warrants) presently
issued and outstanding of which 643,212 shares were purchased by the
founders of Balanced Living for a total aggregate consideration of
$89,421. Immediately after completion of this offering, assuming the
full $200,000 is sold, Jeannene Barham and Rose Blackham, will together
own 75% of the then outstanding common stock, for which they will have
paid an average $0.139 per share; and investors who converted their notes
payable to equity and investors in this offering will own the other 25%,
for which they will have paid $2.00 per share (without regard to the
warrants included in the units). Thus, investors in this offering will
contribute to capital of Balanced Living a disproportionately greater
percentage than Jeannene Barham and Rose Blackham. Moreover, the current
shareholders will continue to control Balanced Living through their
majority common share voting ability. See "Dilution."
- - Broad Discretion to Use Offering Proceeds.
Management will have wide discretion as to the allocation, priority
and timing of the allocation and spending of funds raised from this
offering. The use of the proceeds of the offering may vary significantly
from those outlined in this prospectus depending on numerous factors,
including the success that Balanced Living has testing and marketing its
products. Investors purchasing the units will be entrusting their funds
to Balanced Living's management, upon whose judgement the investors must
depend. See "Use of Proceeds" and "Management."
- - Arbitrary Determination of Offering Price.
The public offering price of the units offered hereby was arbitrarily
determined by Balanced Living without the advice of an underwriter. The
price bears no relationship to Balanced Living's assets, book value, net
worth or other recognized criterion of value. In no event should the
public offering price be regarded as an indicator of any future market
price of the units.
- - There May Not Be A Public Trading Market.
Prior to this offering, there was no public market for Balanced
Living's common stock, and the offering price for the units was
determined arbitrarily by the board of directors.
Balanced Living does not currently meet the numerical requirements
(such as income, stockholders' equity and number of public shares
outstanding) to have its shares listed on a United States stock exchange
or quoted on the NASDAQ over-the-counter market. As soon as it meets
those requirements, Balanced Living intends to apply for a trading
listing such that its common stock can be followed on public information
services over the Internet or in the financial trade publications. Until
any listing, Balanced Living has not yet decided whether to utilize the
provisions of Rule 15c2-11 under the Securities Exchange Act to enable
limited public trading in its common stock. It is unlikely that
sufficient shares will be outstanding in the foreseeable future to
support a public market in Balanced Living's common stock. The price of
the units, after the completion of this offering, can vary due to general
economic conditions and forecasts, Balanced Living's general business
condition, the release of Balanced Living's financial reports and sales
of shares, which were outstanding prior to this offering. See "Units
Eligible For Future Resale."
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- - Balanced Living's State Blue Sky Registration; Restricted Resales of
the Securities.
Balanced Living has not made application to register the Securities
in any states except:
- Colorado; and
- New York
Balanced Living will seek to obtain an exemption from registration
to offer and sell the units in various other state jurisdictions and may
also make additional application to register the units in some states.
Purchasers of units in this offering must be residents of such
jurisdictions which either provide an applicable exemption or in which
the units are registered. In order to prevent resale transactions in
violations of states' securities laws, public stockholders may only
engage in resale transactions in the units in such jurisdictions in which
an applicable exemption is available or a blue sky application has been
filed and accepted. As a matter of notice to the holders thereof, the
common stock and warrant certificates will contain information with
respect to resale of the securities. Further Balanced Living will advise
its market makers, if any, of such restriction on resale.
Such restriction on resales may limit the ability of investors to
resell the units purchased in this offering.
Several additional states may permit secondary market sales of the
units:
- Once or after certain financial and other information with
respect to Balanced Living is published in a recognized
securities manual such as Standard & Poor's Corporation Records.
- After a certain period has elapsed from the date hereof.
- Pursuant to exemptions applicable to certain investors.
- - Some Units Owned By Earlier Investors Could Be Sold After The
Offering, Affecting The Resale Price.
The owners of 762,681 shares of Balanced Living's common stock will
be able to sell 100,000 of these shares any time after July 1, 1999;
500,000 shares at any time after July 14, 1999; and 162,681 shares at any
time after April 30, 2000, assuming a public market exists at such times.
Whenever any shares of Balanced Living's common stock are sold, it could
cause the pending resale share price, if any, to go down and might keep
it from rising. See "Shares Eligible for Future Resale."
- - Statutory And Charter Limitations Could Deter An Acquisition Of
Balanced Living.
The laws under which Balanced Living is chartered deny voting rights
to persons trying to acquire control, subject to approval by the other
shareholders. Balanced Living's articles of incorporation and bylaws
also contain provisions, which allow shareholders to increase the quorum
or voting requirement for shareholders. These provisions would make it
relatively difficult to authorize a merger or other business combination,
to change the board of directors or to amend charter provisions. This
could deter an acquisition of Balanced Living that might otherwise be of
benefit to shareholders who are not part of management. See "Description
of Common Stock."
- - The "Penny Stock" Rules Could Make Selling Balanced Living Units More
Difficult.
Balanced Living's common stock might be defined as a "penny stock"
pursuant to Rule 3a51-1 under the Securities and Exchange of Act if:
- The shares were to be traded at a price less than $5.00 per share.
- Balanced Living had not yet met certain financial size and volume
levels.
- The shares were not registered on a national securities exchange
or quoted on the NASDAQ system.
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A "penny stock" is subject to Rules 15g-1 through 15g-10 of the
Securities and Exchange Commission. Those rules require securities
broker-dealers, before effecting transactions in any "penny stock,":
- To deliver to the customer, and obtain a written receipt for a
disclosure document set forth in Rule 15g-10. (Rule 15g-2)
- To disclose certain price information about the stock (
Rule 15g-3)
- To disclose the amount of compensation received by the broker-
dealer (Rule 15g-4) or any "associated person" of the broker-
dealer (Rule 15g-5)
- To send monthly statements to customers with market and price
information about the "penny stock." (Rule 15g-6)
All of these requirements discourage or preclude recommendations
of "penny stocks" by brokers.
Balanced Living's common stock could also become subject to Rule
15g-9, which requires the broker-dealer, in some circumstances, to
approve the "penny stock" purchasers account under certain standards and
deliver written statements to the customer with information specified in
the rules. (Rule 15g-9) These additional broker-dealers from effecting
transactions and limit the ability of purchasers in this offering to sell
their shares into any secondary market for Balanced Living's common
stock.
- - Balanced Living's Officers' And Directors' Liabilities Are Limited.
Balanced Living's articles of incorporation provide that Balanced
Living will indemnify any officer, director or former officer or
director, to the full extent permitted by law. This could include
indemnification for liabilities under securities laws enacted for
shareowner protection, although, in the opinion of the federal Securities
and Exchange Commission, that indemnification is against public policy.
- - Balanced Living's Officers or Directors May Purchase Up To 20% of the
Units in this Offering.
Balanced Living may make sales of units to officers and directors
of Balanced Living and that such persons may purchase up to 20,000 of the
units offered hereby, although they have made no commitment to do so.
Such purchases shall be made for investment purposes only and in a manner
consistent with a public offering of Balanced Living's units. Such
purchases will increase the percentage of securities being held by the
officers and directors.
- - Effect of Purchases of Balanced Living Units By Officers, Directors
and Affiliates.
Officers and directors of Balanced Living may purchase units sold
in this offering under the same terms and conditions as the public
investors. Such purchases, if made, will be in compliance with rule 10b-
6 and be for investment purposes only and not for redistribution (i.e.,
no present intention to distribute or resell the securities). To the
extent of any such purchases for investment purposes only, a portion of
the units from this offering will not enter the "public float." (The
public float is the amount of free-trading securities, which are
immediately resalable in the trading market.) Such reduction means that
there are less securities for the public investors to purchase and resell
and may cause a lack of liquidity in any trading of Balanced Living's
shares.
Also, such a reduction in the public float may make possible the
commitment of public investors in the absence of public demand
for the offering.
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USE OF PROCEEDS
The uses of the proceeds available to Balanced Living from the sale
of the units in this offering are estimated below, assuming that all of
the units are sold. There is no assurance that all of the units will be
sold. Balanced Living expects to use the net proceeds over the coming
12-month period for general corporate purposes, primarily as outlined
below, assuming success of the offering.
PURPOSE AMOUNT PERCENT
------- ------ -------
Estimated Offering Expenses $48,340 24.1%
Debt Reduction $70,000 35%
Salaries $40,500 20.3%
Marketing & Advertising $8,000 4%
Working Capital $33,160 16.6%
------- ------
Total $200,000 100%
Offering Expenses. These include legal counsel fees and costs,
accounting fees and costs, printing costs, mailing and travel expenses,
escrow fees and costs, and related costs. This amount also includes a
reserve for possible commissions payable to registered broker dealers who
may be asked to assist in the offer and sale of the units. A maximum of
$20,000 is reserved for this purpose and management believes that no
broker dealer assistance likely will be required.
Debt Reduction. This amount represents what is currently owed on
Balanced Woman notes payable.
Salaries. This amount is what Balanced Living estimates it will take
to help defray the cost of maintaining four full-time employees over the
next 12 months.
Marketing and Advertising. This amount represents what Balanced
Living estimates it will cost to purchase and print advertising
brochures, mailing lists, postage, advertisements printed in magazines,
newspapers, or tabloids, and the cost of paying commissions to independent
sales representative.
Working Capital. This amount represents what Balanced Living
estimates it will take to cover its operating expenses not associated with
any of the above listed uses. It will cover office supplies, referral
fees, telephones, office equipment, rents, professional fees, insurance
liability/casualty and workers comp, repairs and maintenance and other
expenses associated with the day-to-day operations of Balanced Living.
None of the proceeds raised hereby will be used to make any loans to
Balanced Living's promoters, management or their affiliates or associates
of any of Balanced Living's shareholders.
None of Balanced Living's officers, directors or their affiliates
will receive any personal financial gain from the proceeds of this
offering except for reimbursement for out-of-pocket offering expenses.
No assurance can be given that any of such potential conflicts of interest
will be resolved in favor of Balanced Living or will otherwise not cause
Balanced Living to lose potential opportunities.
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DILUTION
The following table shows, on a pro forma basis as of March 31, 1999,
the difference between existing shareholders (not including existing
options or warrants to buy shares) and new investors purchasing units in
this offering (without respect to the warrants).
SHARES TOTAL
PURCHASED CONSIDERATION AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------------------------------------------------------
Existing
Shareowners 762,681(1) 88% $328,348 62% $0.43
New Investors 250,000(2) 29% $500,000 38% $2.00
Total 862,681 100% $528,348 100%
_________________
(1) Does not include options or warrants now outstanding.
(2) Includes shares acquired in debt conversions subsequent to
March 31, 1999.
(3) Does not include the Class A, Class B or Class C Warrants
included in the units.
On March 31, 1999, Balanced Living had a pro-forma negative net
book value of ($24,537), or a negative ($0.03) per share, based on
762,681 shares outstanding (600,000 shares outstanding plus 162,681 shares
subsequently issued in debt conversions). The net book value per share
is equal to Balanced Living's total assets, less its total liabilities
and divided by its total number of shares of common stock outstanding.
After giving effect to the sale of the units at the public offering price
of $2.00 per unit, and the application of the estimated net offering
proceeds, the pro forma net book value of Balanced Living, as of March
31, 1999, would have been $127,123, or $0.15 per share, respectively.
This represents an immediate increase in net book value of $0.18 per
share or approximately 83% to existing shareowners, and an immediate
dilution of $1.82 per share or approximately 91% to new investors
purchasing shares in this offering. The following table illustrates the
per share dilution in net book value per share to new investors:
Public offering price per Unit $2.00
Pro forma net book value ($0.03)
per share as of March 31, 1999
Increase per share attributed to $0.18
investors in this offering
Pro forma net book value $0.15
per share as of March 31, 1999,
adjusted for completion of this offering
Net book value dilution $1.82
per share to new investors
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results
Balanced Living is a new enterprise and a development stage company.
Its revenues to date have been marginal, and there is no prior year or
quarter period to effectively compare operating results.
As of March 31, 1999, Balanced Living was operating at a loss.
Balanced Living anticipates becoming profitable in 2000, although there
can be no assurance of this result. Although Balanced Living presented
its seminars to approximately 360 people in 1998, the majority of these
persons were complimentary participants used to evaluate for development
purposes and build reputation of referrals. This is typical for a seminar
start-up company and accounts for the relatively low level of revenue
earned in 1998.
Plan Of Operations
Balanced Living's plan of operation for the next 12 months is to
raise funds through this offering, present "Balanced Woman" seminars,
train additional facilitators, advertise and market its seminars and
products and continue to develop new products and seminar materials. In
addition to providing capital to help defray the cost of salaries and
marketing, management believes that a principal use of the offering
proceeds will be to provide initial working capital to continue
operations until sufficient revenues are generated to cover such
operating expenditures internally.
Upon successful completion of this offering, Balanced Living will
recognize a net amount of $151,660. Of this amount $70,000 would be used
to reduce Balanced Living's short term debt and $8,000 would be used for
marketing and advertisement. Balanced Living will use $40,500, along with
current revenues, on payroll for a staff of four and $31,160 for
operating expenses which would include rent, utilities, and direct
seminar expenses. Balanced Living believes that its inventory is
sufficient for the next 12 months of projected operations, and R&D has
been put on hold until Balanced Living can generate sufficient revenues.
Inasmuch as there is no assurance that this offering will be
successful or that Balanced Living will receive any net proceeds
therefrom, there can be no assurance that Balanced Living will be able to
maintain its current operations and continue to conduct seminars. There
is also no assurance that Balanced Living will be able to sell enough of
its products in inventory or attract enough participants to its seminars
to generate enough business to operate profitably without the support of
this offering, as discussed.
Balanced Living's Business Plan Progress
The information in this prospectus other than historical
information is "forward looking information" presenting management's
beliefs and estimates about the future. These beliefs, plans and
estimates are subject to significant risks. See "Risk Factors."
Many national women's magazines, i.e., such as, "Women's Day,
"McCalls", and "Self Magazine" have published personal growth articles
such as the importance of nurturing your body, mind, and spirit. Dr.
Andrew Weil's best selling book, Spontaneous Healing, also speaks of the
need to nurture our body, mind, and spirit for good health and well-being
which is a key component of personal growth. Oprah Winfrey's talk show
this past year and up to the present time has featured experts and guests
who specialize in personal growth for women, having identified this as a
rapidly growing area of interest for women. As stated on the New York
Times web site, www.nytimes.com, on February 8, 1999, in the
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technology segment: "Microsoft is set to introduce a new web site for
women hoping to capture what many feel is the fastest growing market on
the internet." Internet sites such as www.allaboutwomen.com devote much
of their home page to personal growth and self-care subject matters.
Balanced Living has reviewed many articles in magazines such as
"McCalls, March 1998", "Self Magazine", 1998 and "Inc. Magazine", May 19,
1998 and "Fast Company Magazine" February/March, 1999 which support
Balanced Living's curriculum. Topics that support Balanced Woman's seven
principles are studied in these articles, and these articles are showing
that women are placing a high value on meaningful, life enhancing
products that focus on:
- Relationships and networking
- Relevant factual information
- Time efficiency management
- Reputation and support
- Brand loyalty, and
- The opinion of others.
In June of 1998, Gateway to the Women's Network stated on its web
page www.womensnetwork.com that in 1997, women spent $80.3 billion on
these self-improvement products and services. These expenditures
included self-help books, personal services, journals, and other related
personal growth products.
Balanced Living is positioned to offer a series of three seminars,
multiple products and other services to re-enforce and support seminar
participants seeking a balanced life. After Balanced Living's first
developmental year, a market appeal has been established for Balanced
Living seminars and products. This experience has proven that word-of-
mouth advertising and relationship marketing, which is based on personal
contacts with a potential customer due to an existing relationship or a
referral from a satisfied customer is a strong influencing factor in
Balanced Living's growth and market penetration.
During 1998, Balanced Living designed and produced seminar
curriculum and participant materials, and launched seminars in Salt Lake
City, Utah and Newport Beach, California. Twelve seminars were taught,
averaging thirty women per seminar. Many of these early seminars earned
less per participant than projected for future seminars as a result of
complimentary tickets provided to community opinion leaders to encourage
word of mouth advertising.
Balanced Living currently has seven customized Balanced Woman
products, including:
- A short "affirmation book" called A Balanced Woman Knows
- "Balanced Woman Collection" CD
- "Picture This" Packet
- Balanced Woman bookmarks
- Seven Balanced Woman Principles "Jewel Cards"
- "Balanced Woman" T-Shirts
- "Sarah Smiles" bean bag doll
Balanced Living is also selling private label personal care products,
which are purchased at wholesale and sold at 100% mark-up. Product sales
at seminars are steadily increasing, ranging at $3.70 per person in the
first seminars to a current level of over $6.55 per person, compared with
Balanced Living's own $5.00 per person target for the first year.
Balanced Living's plan of operation through May, 2000 includes
increasing the number of customers served in Salt Lake City, Utah and
Denver, Colorado through seminar offerings both to the public and
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corporate clients, as well as increasing the average per person revenue
for each seminar as paying patrons increase and complimentary tickets
decline. In the past 4 months the seminar operations have improved the
paid participant attendance from an average of 19 per seminar to 40, and
the number of referrals given by satisfied customers has increased 54%.
Balanced Living to date has held an average of 2 seminars per month. With
the addition of 2-3 additional certified trainers, Balanced Living will
now target an average of 6 seminars each month for a target total of
eighty eight (88) seminars expected to be taught through May, 2000.
Balanced Living's average participant fee income is planned to increase
from $100 (due to introductory specials) to an average seminar fee of
$195. Balanced Living has successfully increased its participant fee from
$100 to $135 in the past 60 days and is now ready to raise its fee to
$195 as of July 1, 1999. In the personal development seminar industry,
the average fee for a principle-based personal growth program is well
over $200 for a full day program. For example, the Lifedesigns program,
which is similar to the Balanced Woman program, is $525 for their 2 day
event; and The Personal Best, level one program is $399 for their 1 day
event. It is Balanced Living's present intention to keep the 1 day event
under $200 to help insure that most women can afford to attend.
Balanced Living intends to add two independent contractors to
facilitate its additional planned seminars, each of whom will be paid a
teaching fee for each seminar taught. Each trainer will complete an
extensive train-the-trainer program by June 1, 1999, and will be prepared
to facilitate seminars for the remainder of 1999 and beyond. Gross
seminar income is planned to average $5,000 per seminar (25-40
participants @ $195), bringing in approximately $30,000 (6 seminars @
$5000) per month, beginning June 1, 1999. Balanced Living hopes to
complete the presentation of eighty eight (88) seminars through May,
2000, bringing in an approximate total seminar revenue of $442,570.
Projected product sales revenue of $5,867 (This amount is calculated at
$5 for each public seminar participant only (corporate seminars do not
sell product) and is based on current Balanced Living public seminar
product sales results of $6.55 per participant) will be in addition to
the projected $442,570 in seminar revenues, bringing total Company
projected revenues through May, 2000 to $448,437.
Balanced Living projects direct seminar expenses to be maintained
at the current average of $2,500 per seminar, for a total of $15,000 in
such projected expenses each month. The overall Company projected
expense budget, based on current experience, is expected to be
approximately $510,000 through May, 2000. The projected $61,563 net loss
is to be covered by the proceeds of this offering. Balanced Living does
not expect to begin operating on a profitable basis until January, 2000,
at which time Balanced Living expects monthly income revenues will begin
to exceed monthly operating expenses. (This budget includes salaries for
four full time employees.)
Assuming the success of this offering and Balanced Living's ability
to eventually operate on a profitable basis, Balanced Living would at such
time try to develop and add these eight new products to the Balanced
Living product line.
- A new full-size hard cover book called The Balanced Woman
- "The Balanced Woman Journal"
- A woman's clearing journal
- Meditation CD (2)
- "Balanced Woman" Seminar cassette series
- "Sara" Coloring Book
- "What" Box
Balanced Living will also be purchasing an "inner-child" CD at
wholesale and selling it at retail at the seminars. Balanced Living will
maintain an average of 50% mark-up on all products it distributes at its
seminars.
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The foregoing forward-looking statements could be negatively
impacted by an inability to recruit, hire, and retain skilled seminar
facilitators, or a copyright infringement of Balanced Living's unique
curriculum materials and products and resulting litigation, as well as
the failure to raise a substantial portion of this Offering. The risks
discussed earlier in this prospectus (See "Risks", at page 3) could also
negatively effect Balanced Living's ability to meet its projection in
1999. To combat these potentially harmful conditions, Balanced Living has
secured the assistance of an intellectual rights attorney and is taking
every measure possible to protect and copyright all materials. Because
skilled trainers will be key to Balanced Living's growth, time and
attention is being placed into recruitment efforts. There is already an
adequate pool of candidates from which to select.
Liquidity And Capital Resources
Balanced Living requires the investor capital to continue the
development of its business plan. While it has been able to borrow
needed operating capital from its founders to date, these sources have
indicated an unwillingness to continue to advance funds to the Company.
Balanced Living will depend on the funds to be raised in this offering to
stay in business and to implement its business plan. If this offering is
unsuccessful, Balanced Living will be left to attempt to raise investor
capital through other offerings or placements at different prices or
configurations. Balanced Living has limited cash funds and may not be
able to retain the needed professional assistance if another offering
were necessary because this offering failed.
INFORMATION ABOUT BALANCED LIVING
An Overview Of Balanced Living
Balanced Living produces and presents values-oriented/personal
growth seminars and products aimed at women. Balanced Living operates
through its wholly owned subsidiary, Balanced Woman. Balanced Woman
earns revenues and profits from its seminars, products and service
offerings.
Upon completion of this offering, Balanced Living will become subject
to the informational filing requirements of the Securities Exchange Act
of 1934, as amended ("Exchange Act"). Balance Living expects to file all
required annual and quarterly reports. Balanced Living intends to furnish
its shareowners with annual reports containing financial statements
audited by an independent public accounting firm after the end of its
fiscal year on December 31.
Balanced Living does not currently intend to pay cash dividends on its
common stock and does not anticipate paying such dividends at any time in
the foreseeable future. At present, Balanced Living will follow a policy
of retaining all of its earnings, if any, to finance development and
expansion of its business.
History And Development Of Balanced Living
Balanced Living was incorporated in Colorado, on July 1, 1998.
Balanced Living's corporate offices are located at 6375 South Highland
Drive, Suite D, Salt Lake City, Utah 84121. Balanced Living's web page
address is and telephone and fax numbers are:
- Voice: (801) 424-1624
- Facsimile: (801) 424-1626
- www. balancedwoman. com
Balanced Living was formed to be a holding company and financing
vehicle for Balanced Woman, and perhaps other companies or projects. On
July 14, 1998, Balanced Living acquired all of the
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outstanding shares of common stock of Balanced Woman in exchange for
shares of the common stock of Balanced Living in a tax free exchange with
the shareholders of Balanced Woman shown on Balanced Woman's records at
that date. Currently Balanced Living has no other business plan than to
function as the holding company and financial support for Balanced Woman.
The business concept for Balanced Woman was conceived in 1997 when
several of the founders of Balanced Living attended a seminar presented
by Rose Blackham in Orange County, California. Ms. Blackham had
previously taught this program in California and Colorado for several
years. After experiencing the positive response of the thirty
participants at the Orange County seminar, Ms. Blackham and the other
attending founders of Balanced Living conceived the concept of a seminar
company.
Balanced Woman was formed as a Colorado corporation in January 1998
as a company owned, managed and developed by women to provide services
and products that would support and assist women. The ten founders of
Balanced Living provided seed capital, and the first pilot seminar was
organized and presented by Balanced Woman in February 1998 in Salt Lake
City, Utah.
In June 1998, Balanced Woman presented a seminar outside of the Salt
Lake City market by organizing a seminar in Newport Beach, California.
Balanced Woman perceived positive response from the Newport Beach
seminar, and management felt that its business concept was showing market
acceptance.
Balanced Living is now actively engaged in program refinement and
product development. Balanced Living is currently testing seven products
in the marketplace. During the remainder of 1999, Balanced Living plans
to continue to test seminar formats, varying the seminar hours, venues,
and pricing structures. The curricula, pricing and marketing systems
will be fine-tuned as research continues.
Balanced Living's Business Model
Balanced Living teaches a curriculum and offers products and
services that are based on Balanced Woman's Seven Principles of Balance:
- The Sacred
- Self-Care
- Relationships
- Play
- Home/Career
- Financial Serenity
- Personal Vision.
The product and service line includes seminars, membership-based
Circles of Women, and "Balanced Woman" Products. Balanced Living also
publishes a bi-monthly newsletter, which can be purchased through an
annual subscription or as part of the Circles of Women membership
package.
What follows is a brief description of Balanced Living's primary
service and product offerings:
Seminars
- --------
Balanced Woman currently offers a series of three seminars based on
The Seven Balanced Woman Principles. Seminar I is a one-day program;
Seminar II and III are both two and one-half day programs which teach the
participants more in depth how to implement the principles into their
daily lives. The Balanced Family, Balanced Relationships, and The
Balanced Man, as well as other related seminars, will be developed and
presented as an extension of the Balanced Living curriculum within one to
three years.
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Wholesale/Retail Products
- -------------------------
Balanced Living has created seven unique and innovative products
that invite women to actively share and live Balanced Woman principles.
Each product has a meaningful purpose and has been created to support
women in living the Seven Balanced Woman principles.
Circles of Women
- ----------------
The Circles of Women membership has been established to provide a
supportive and nurturing setting in which eight to twelve women come
together monthly to be encouraged and supported in living Balanced Woman
Principles and to be motivated to express their personal vision.
Business Plan
- -------------
Balanced Living has successfully launched two of its "Balanced
Woman Seminar" series, a one-day seminar and a two and half day seminar,
and is selling a full-range of "Balanced Woman" products to seminar
participants. Catalog, direct sales, and wholesale sales to retail
outlets and boutiques are still in planning and negotiation as of the
date of this prospectus.
Market
- ------
The primary market for Balanced Living's services and products
includes women in all walks of life. The women's personal growth/life
management market has increased dramatically in the last 10 years. See
"Business Plan Progress."
Marketing Plan
- --------------
Balanced Living's marketing strategy has been designed with
multiple approaches. For example, through relationship marketing, which
is based on personal contacts with a potential customer due to an existing
relationship or a referral from a satisfied customer, Balanced Living has
achieved a high percentage of seminar sales. This strategy saves on
marketing expenditures.
Mass marketing (advertising to women throughout the general public,
instead of to a more narrow group or specific type of women) and vertical
marketing (entails advertising or selling to a specific group of women
within a specific industry; for example women who are real estate agents,
or women who belong to a specific organization or association) promotions
are made more effective because of cross marketing relationships
(advertising or selling products or services in multiple ways. For
example, a customer who subscribes to Balanced Living's newsletter will
receive invitations to attend Balanced Living seminars, and all of
Balanced Living's products will include information about Balanced
Living's seminar series). Balanced Living is forming alliances with
chambers of commerce, women's associations, key business affiliations,
and independent sales associates.
Advertising and Publicity
- -------------------------
Balanced Living recognizes that a key to its success is becoming a
widely known name. To accomplish this goal, Balanced Living is designing
its product offerings and advertising brochures with common themes, logos
and styles. These products and services will be marketed at and also
sold separately from "Balanced Woman" seminars, thus taking advantage of
bookstores and gift shop advertising opportunities.
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Seminar Related
- ---------------
Balanced Living has joined and/or will join the chamber of commerce
in each of its business markets. In Salt Lake City, Balanced Living is
participating in the Chamber of Commerce Women's Forum. This will
increase Balanced Living's visibility and exposure within the business
community and leverage its business potential across the state. Balance
Living will try to repeat this model in other cities and states. Balanced
Living is also actively participating in local women's business
associations and business networks. Balanced Living has begun networking
with several potential seminar-sponsoring organizations, and anticipates
having a large number of local and national sponsoring companies with
special women interests, who will financially sponsor and endorse our
seminars, conferences and events.
Product Related
- ---------------
Management of Balanced Living has met with several publishers to
discuss and plan the development and publication of Balanced Living's
first book, The Balanced Woman.
Several consultants and contract development firms have been
contacted to negotiate the arrangements for the design, development, and
production of Balanced Living's products scheduled within the first phase
product line. Management is also working with several women's datebook
planner companies to begin plans for production of Balanced Living's
customized datebook planner schedule for the second line of products.
Several individuals with experience in retailing women's apparel and
self-care products have contacted Balanced Living and are interested in
contracting for the "private labeling" of products for Balanced Living.
Customer Base
- -------------
Balanced Living's current customer base is made up of a broad
segment of the women's market. Products and services are designed to
appeal equally to women from a wide range of lifestyles. Seminar
evaluations consistently show positive responses from a wide variety of
market segments, income levels, and educational/professional backgrounds.
As its customer-base grows, Balanced Living will collect, compile, and
analyze customer characteristics, enabling Balanced Living to create a
very detailed and specific customer profile for each of the service and
product lines they produce and offer.
Current Products & Services
- ---------------------------
Balanced Living is positioned to offer a three-part seminar series
based on:
- Seven specific principles
- Proprietary products that will support and reinforce "Balanced
Woman" principles
- "Circle of Women" memberships, designed to bring women together
monthly in small groups in a safe and nurturing environment, to
share, support, and connect.
Product offerings include:
- The Balanced Woman Knows. book
- The Balanced Woman Collection CD
- The Jewel Cards
- "Sara Smiles" Bean Bag Doll
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- Fortune Cooking Greeting Card
- Picture this Packet
- Balanced Woman Bookmarks
- Self-care Product Line
- The Balanced Woman Interludes CD
- The Balanced Woman "T" shirt
For instance, the "Balanced Woman Collection", a CD of the music
played throughout the first seminar has proven popular. Also, the full-
sized hardcover The Balanced Woman book is expected to be published by
winter 1999.
Seminars
- --------
Currently Balanced Living is offering its seminars through the
facilitation of Rose Blackham, a founder of Balanced Woman. Growth in
revenues from Balanced Living Seminars will come from multiple
facilitators in multiple locations. The "Balanced Woman Training
Academy", a "train-the-trainer" program is designed to train, develop and
certify high-quality, effective and inspiring trainers to facilitate each
of the seminars will leverage the curriculum and allow for many more
seminars than could be possible thorough Ms. Blackham alone.
Products
- --------
Ten Balanced Living products are now being designed and in various
stages of completion and production, of which, seven are currently being
offered for sale at seminars and through other marketing methods.
Management has targeted winter 1999 to have completed and published The
Balanced Woman, a book that will compliment Balanced Living seminars as
well as provide independent revenue opportunity. By this same date,
management intends to complete and produce all of the initial 10 items in
its product line. In addition to the customized products developed and
produced by Balanced Living, products will also be purchased from other
sources and sold with the private "Balanced Woman" label through various
distribution channels, including retail outlets, web sites, catalogues,
etc.
Circles of Women
- ----------------
One of the keys to maximizing on-going revenues from "Balanced
Woman" Seminars is the "Circles of Women" program, providing on-going
mentoring and support to women who wish to continue a program of life
change as started at a seminar. Management has launched the first
Balanced Living "Circle of Women" in the Salt Lake City market and has
created the materials and systems necessary to support Circles of Women
in both the Utah and Colorado market.
Balanced Living's Competition
The financial and personal development information industry, while
large, is highly fragmented into many niches with some competitors being
successful in only certain niches, and with no company having acquired
dominance in the industry.
Many competitors have products and services that are marketed as
being similar, but Balanced Living believes that its customers can quickly
distinguish the difference between its products and services and those of
competitors. Balanced Living believes that its strong testimonial base
of satisfied customers is a growing competitive advantage.
Balanced Living competes primarily with a large number of privately-
and publicly owned, educational and publishing companies providing
personal and financial development information through
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a variety of media. Some competitors have greater financial, marketing,
distribution, technical and other resources than the Company. Some examples
of competitors in this general personal development market are:
- Anthony Robbins & Associates
- Nightingale-Conant Corporation
- Franklin-Covey, Inc.
- American Marketing Systems, Inc.
- David G. Phillips Publishing Company, Inc.
- Agora, Inc.
- Ted Nicholas & Associates, Inc.
- Whitney Leadership Group
- The Hume Group, Inc.
Balanced Living's Operations
Accounting, purchasing, inventory control, scheduling, order
processing, warehousing and shipping activities for Balanced Living are
still under design and development, and exist in only the most
rudimentary levels. Balanced Living expects that independent contractors
working for Balanced Living will perform production and major vendor
initial shipments. Balanced Living will maintain an order flow computer
record-keeping system to monitor customer fulfillment and cross selling.
This computer system will handle order entry, order processing, picking,
billing, accounts receivable, accounts payable, general ledger, inventory
control, catalog management and analysis and mailing list management.
Subject to credit terms and product availability, orders will typically
be shipped to customers within a short time of receiving an order. Third
party contractors will print and assemble Balanced Living's audio and
videotapes, manuals, transcripts, newsletters, software, inserts and the
boxes in which the products are shipped.
Legal Proceedings
As of the date of this prospectus, there is no pending litigation
involving Balanced Living.
Government Regulation
Balanced Living's business is subject to regulation under the federal
Telemarketing and Consumer Fraud and Abuse Prevention Act and state laws
applicable to consumer protection and telemarketing activities. See "Risk
Factors." Management believes that it is in substantial compliance with
all of the foregoing federal and state laws and the regulations
promulgated thereunder. Any claim that the Company is not in compliance
could result in judgments or consent agreements that required Balanced
Living to modify its marketing program. In the worst cases, enforcement
of fraud laws can result in forcing a business to close and to subject
the business and its management and employees to be subject to criminal
prosecution and civil damage actions.
Balanced Living's Employees
As of December 31, 1998, Balanced Living had three full-time
employees, Jeannene Barham, Deborah Smith, and Lisa Hawthorne and no
part-time employees. Employees are not represented by a labor union and
are not subject to any collective bargaining arrangement. Balanced
Living has never experienced a work stoppage and we believe that it has
good relations with its employees and contractors.
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Balanced Living's Independent Contractors
Balanced Living uses three independent contractors (Rose Blackham
for overall concept design and motivation and acting as the chief seminar
facilitator; Teri Sundh for sales and marketing; and Tammy Houchen for
clerical work). The independent contractors are otherwise employed and
may engage in business activities outside of Balanced Living. Ms.
Blackham is compensated through the issuance of an incentive stock option
and expense reimbursements. Mmes. Sundh and Houchen are compensated on a
cash basis. The arrangements with Mmes. Blackham, Sundh and Houchen are
oral in nature.
Balanced Living's Properties
Balanced Living rents the space in which its headquarters is
located at 6375 South Highland Drive, Suite D, Salt Lake City, Utah 84121.
This space contains two offices and a reception area, and comprises
approximately 600 square feet. It is occupied entirely by both Balanced
Living and Balanced Woman. This space is under lease by Balanced Living
for a ten (10) month period at $600 per month.
Management believes that this space will provide adequate office
space to meet Balanced Living's needs for the foreseeable future. The
independent contractors used by Balanced Living, as well as many of its
officers, work out of home based offices and keep limited supporting
files and other work for Balanced Living at their personal residences.
MANAGEMENT OF BALANCED LIVING
The following persons are the current executive officers and
directors of Balanced Living.
NAME AGE POSITION
---- --- --------
Jeannene N. Barham 61 President, Secretary/Treasurer and sole
Director of Balanced Living and of
Balanced Woman
Directors of Balanced Living are elected by the shareholders
annually, or as needed by the board of directors to fill vacancies.
Jeannene N. Barham is a founder of Balanced Living and of Balanced
Woman, and has held her current position since the inception of Balanced
Living and of Balanced Woman. During the last five years, Ms. Barham has
been director of public relations for the Focus Foundation, a non-profit
entity organized to help at-risk children. Between 1979 and 1990 she was
Vice President of Marketing and Operations at The Charles Hobbs Corp.
(time management seminars and products). She is active in community
affairs, and currently serves as National President of the Lambda Delta
Sigma sorority. Ms. Barham is the sister of Rose Blackham.
Other Key Personnel And Independent Contractors
Rose N. Blackham is a founder of Balanced Living and of Balanced
Woman, and has acted as chief facilitator in the company since the
inception of Balanced Woman. During the last five years, Ms. Blackham
has conducted management training and personal growth seminars as an
independent contractor and consultant. She has been involved in the
management training and personal development industry for over twenty
(20) years. Ms. Blackham is the originator of the "Balanced Woman"
concept and is the chief facilitator for "Balanced Woman" seminars.
Balanced Living regards Ms. Blackham as a visionary leader and presenter
See "Information About Balanced Living - Balanced Living's Independent
Contractors", page 20.
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The loss of Ms. Blackham's counsel and services would have a
material adverse impact on the Balanced Living. Ms. Blackham is the
sister of Jeannene Barham.
Lisa Hawthorne is a founder of Balanced Living and of Balanced
Woman and she assists with program and product development. During the
past five years she was employed full time by Franklin Quest Company,
Inc., first as International Operations Manager, and later as Director of
Management and Employee Training and Development.
Teri Sundh is a founder of Balanced Living and of Balanced Woman,
and has assisted with developing the sales and marketing strategy for
Balanced Living and Balanced Woman as an independent contractor. During
the last five years, Ms. Sundh has worked as Vice President of Public
Seminars for Franklin Quest Company, Inc. and as a consultant for
numerous other seminar training companies. Ms. Sundh continues to do
consulting work for various training companies.
Balanced Living's Executive Compensation
Balanced Living has not been in existence for a full year, and has
not paid compensation to anyone for such a period. The following table
sets forth the aggregate (total) compensation paid to the Chief Executive
Officer of Balanced Living. No executive officer was paid $100,000 or
more during the entire period of Balanced Woman's existence to the date
of this prospectus.
(a) (b) (c) (d)
Name And Principal
Position Year Salary $ Bonus $
- ------------------------------------------------------------------------
Jeannene Barham Since inception to $48,000 -0-
President and Chief March 31, 1999
Executive Officer
- ---------------
Explanation of Columns:
(c) SALARY: Total base salary earned during applicable period.
(d) BONUS: Any incentive award paid for results achieved during the
applicable period. Any amounts deferred at the election of the
executive are included in the reported amounts. There is no formula
or criteria for determining bonuses.
Balanced Living's Employment Agreements
No officer or employee of Balanced Living has an employment
agreement with Balanced Living at this time. If Balanced Living's
business plan proves initially successful, management intends to
recommend to the board of directors that the president and all key
employees be covered by employment agreements and non-compete provisions.
Balanced Living's Long Term Incentive Plan
On July 6, 1998, the board of directors of Balanced Living adopted
and the present stockholders approved, a 1998 Stock Option Plan, ("1998
Plan"). The 1998 Plan authorizes the granting of awards of up to
1,000,000 shares of common stock to Balanced Living's key employees,
officers, directors, consultants, advisors, and sales representatives.
Awards consist of stock options (both non-qualified options and options
intended to qualify as "Incentive" stock options under Section 422 of the
Internal Revenue Code of 1986, as amended), restricted stock awards,
deferred stock awards, stock appreciation rights and other stock-based
awards, as described in the 1998 Plan.
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The 1998 Plan is administered by the board of directors which
determines the persons to whom awards will be granted, the number of
awards to be granted and the specific terms of each grant, including the
vesting thereof, subject to the provisions of the 1998 Plan. In
connection with qualified stock options, the exercise price of each
option may not be less than 100% of the fair market value of the common
stock on the date of grant (or 110% of the fair market value in the case
of a grantee holding more than 10% of the outstanding stock of Balanced
Living). The aggregate fair market value of shares for which qualified
stock options are exercisable for the first time by such employee during
any calendar year may not exceed $100,000. Non-qualified stock options
granted under the 1998 Plan may be granted at a price determined by the
board of directors, not to be less than the fair market value of the
common stock on the date of grant.
The 1998 Plan also contains certain change in control provisions
which could cause options and other awards to become immediately
exercisable and restrictions and deferral limitations applicable to other
awards to lapse in the event any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
including a "group" as defined in Section 13(d), but excluding certain
stockholders of Balanced Living, became the beneficial owners of more than
25% of Balanced Living's outstanding shares of common stock.
Balanced Living's Options And Restricted Stock Grants
The founders of Balanced Living each purchased 50,000 stock options
from the Company for $500. Pursuant to such options each founder has:
- An option to purchase up to an aggregate of 50,000 shares of
common stock at an exercise price of $1.00 per share.
- An option that has a duration of five years from date of vesting.
- An option providing for the vesting of 10,000 shares each year
for the first five years.
- An option in which shares of the option are subject to
adjustments in the event of Balanced Living's declaration of:
- Stock dividends
- Stock splits
- Reclassification
- Occurrence of other similar events.
Balanced Living has reserved 500,000 shares of common stock for
issuance of the options, and the board of directors will administer the
options. At July 31, 1998, 450,000 options were issued and 50,000 more
were issued November 4, 1998.
No shares of common stock have been granted to any employee or
contractor to date. Balanced Living has agreed to compensate Rose
Blackham for her services to Balanced Living in incentive stock options
to be issued under Balanced Living's 1998 Stock Option Plan in amounts to
be negotiated. Shares of restricted stock are restricted in that, they
are subject to the resale restrictions of Rule 144 of the Securities and
Exchange Commission and possible vesting requirements imposed by Balanced
Living.
22
<PAGE>
Balanced Living's Director Compensation
Balanced Living has no arrangements pursuant to which directors have
been compensated to date. No such director compensation has been paid.
Balanced Living has no plans to pay directors' compensation.
BALANCED LIVING'S PRINCIPAL SHAREHOLDERS
The following table shows certain information known to Balanced
Living regarding the beneficial ownership of Balanced Living's common stock
as of March 31, 1999, and as adjusted to reflect the shares being sold
through this offering, for:
- Each shareholder known by Balanced Living to own beneficially 5% or
more of the outstanding shares of its common stock.
- Each director.
- All directors and executive officers as a group.
Balanced Living believes that these beneficial owners, based on
information they have furnished, have sole investment and voting power
with respect to their shares, subject to community property laws where
applicable.
Class of Before the After the
Name Security Offering Offering
- -------------------------------------------------------------------------
Jeanneane Barham Common stock 305,084 (40%) 305,084 (35%)
Rose Blackham Common stock 338,128 (44%) 338,128 (39%)
All directors and
executive officers
as a group
(1 person) Common stock 305,084 (40%) 305,084 (35%)
- ------------------------
1. Includes any shares that any person or group has the right to acquire
anytime before March 31, 1999, pursuant to options or other rights.
2. Assumes all 100,000 shares from the offering were sold and outstanding
at December 31, 1998.
3. Includes shares acquired in debt conversions subsequent to
March 31, 1999
CERTAIN TRANSACTIONS
All transactions between Balanced Living or Balanced Woman and
their officers, directors, and principal shareowners and their
affiliates will be approved by a majority of the disinterested directors
of Balanced Living, who do not have an interest in the transaction and who
had access, at Balanced Living's expense, to Balanced Living's or
independent legal counsel, and will be on terms no less favorable to
Balanced Living than could be obtained from unrelated third parties.
At the inception of Balanced Woman, Rose Blackham entered a
subscription agreement that required payment of $1,000 and the transfer
of the intellectual property rights of the "Balanced Woman" concept and
name to Balanced Woman in return for the issuance of 250,000 shares of
stock. Balanced Woman and Rose Blackham also entered into a defining
intellectual property transfer agreement. Jeannnene Barham entered into a
subscription agreement that required payment of $1,000 and for Ms. Barham
to be
23
<PAGE>
responsible for the management and recruitment of the management
team for day to day operations and the continued development of the
"Balanced Woman" concept in return for the issuance of 250,000 shares of
stock.
On July 5, 1998, in conjunction with the formation of Balanced
Living, both Jeannene Barham and Rose Blackham entered subscription
agreements requiring the payment of $500 each for 50,000 shares of Balanced
Living stock each.
On July 10, 1998, by written consent of the shareholders, of both
Balanced Living and Balanced Woman, approval was given for a resolution
by the board of directors, of both Balanced Living and Balanced Woman,
for approval of an agreement & plan of reorganization between the two
companies. Under the terms and conditions of this agreement, both
Jeannene Barham and Rose Blackham where issued, upon the receipt and
cancellation of their Balanced Woman certificates for 250,000 shares of
stock each, 250,000 shares of Balanced Living stock each.
Ten women who assisted in forming Balanced Living acquired stock
options covering a total of 500,000 shares of Balanced Living common
stock at an exercise price of $1.00 per share. These options are for
50,000 shares each and vest over a five-year period with 10,000 shares
vesting for each option holder each year, assuming goals outlined in the
option agreements are met. The 10 founders of Balanced Living are:
- Rose Blackham
- Jeannene Barham
- Terri Sundh
- Lisa Hawthorne
- Linda Ford
- Carole F. Madsen
- Gail Showalter Soderling
- Carol N. Jensen
- Barbara Ann Curl
- Keri McQuire
On April 30, 1999, $86,421 in notes had their unpaid principal
amount and any accrued interest converted into units of Balanced Living
identical in terms and pricing as the units offered in this offering.
Rose Blackham converted her notes and accrued interest for 38,128 units
and Jeannene Barham converted her note and accrued interest for 5,084
units.
DESCRIPTION OF THE SECURITIES OF BALANCED LIVING
The Units
The units are specially created for the purposes of this offering.
Each unit consists of one (1) share of common stock, and one each of the
Class A, Class B and Class C Warrants, described below.
Balanced Living's Preferred Stock
Balanced Living has 10,000,000 shares of preferred stock authorized,
of which none are currently issued and outstanding. The board of
directors is permitted to issue preferred stock in series with differing
preferences and rights.
24
<PAGE>
Balanced Living's Common Stock
The authorized capital stock of Balanced Living consists of
50,000,000 shares of common stock, $0.001 par value, of which 600,000
shares were issued and outstanding on March 31, 1999. There were 2
holders of the common stock as of March 31, 1998. Subsequent to March 31,
1999 an additional 162,681 shares where issued in connection with a
conversion to equity by certain note holders. Presently there is a total
of 12 holders of the common stock.
Holders of the common stock are entitled to one vote per share on
all matters submitted to a vote of shareholders of Balanced Living and
may not cumulate votes for the election of directors. Holders of the
common stock have the right to receive dividends when, as, and if
declared by the board of directors from funds legally available therefor.
Upon liquidation of Balanced Living, holders of common stock are entitled
to share pro rata in any assets available for the distribution to
shareholders after payment of all obligations of Balanced Living. Holders
of common stock have no preemptive rights and have no rights to convert
their common stock into any other securities.
All shares of common stock have equal rights and preferences. All
shares of common stock now outstanding are fully paid for and non-
assessable.
Balanced Living has never paid a cash dividend on the common stock.
Balanced Living currently intends to retain all earnings, if any, to
increase the capital of Balanced Living to effect planned expansion
activities and to pay dividends only when it is prudent to do so and
Balanced Living's performance justifies such action. Holders of common
stock are entitled to receive dividends out of funds legally available
therefor when, as and if declared by Balanced Living's board of
directors.
Description Of Balanced Living's Warrants
Balanced Living has issued three classes of common stock purchase
warrants for inclusion in the units offered in this offering.
- Class A Redeemable Warrants allow the purchase of one (1) share
of common stock for $3.00.
- Class B Redeemable Warrants allow the same one (1) share
purchase, but at $5.00 per common share.
- Class C Redeemable Warrants allow the purchase of one (1) share
of Balanced Living common stock for $10.00. (When referred to
together, "the Warrants".)
- All of the Warrants are valid until December 31, 2003, when
they will expire.
All of the Warrants provide that Balanced Living is not obligated
to deliver shares of common stock pursuant to the exercise of a Warrant
unless a registration statement under the Securities Act of 1933, as
amended, with respect to the common stock underlying that Warrant is
effective at the Securities and Exchange Commission. Balanced Living has
filed a registration statement in connection with this offering, and will
use its best efforts to keep that registration statement, or a
replacement registration statement, current and effective as long as the
Warrants are outstanding and exercisable. There are costs associated
with keeping such a registration statement effective and current. There
can be no assurance that the company will be able at all times to
maintain an effective registration statement covering the Warrants.
25
<PAGE>
Balanced Living believes that the Warrants are qualified in those
states where the units themselves have been qualified by registration or
exemption from registration. The attempted exercise of a Warrant in a
state where such exercise would be unlawful will not be honored.
The number of shares of common stock that may be acquired through
exercise of the Warrants (now one (1) share per Warrant) will be adjusted
for all then outstanding and unexercised Warrants to give effect to any
recapitalization, stock dividend or stock split taking place at Balanced
Living with the respect to the outstanding common stock. Such
adjustments will be made by Balanced Living, as appropriate and notice of
such adjustments will be mailed to all record holders of the Warrants
then outstanding.
The Warrants may be redeemed by Balanced Living, in all or only in
part, at a redemption price of $0.01 per Warrant at any time after one
(1) year from the issue date of the Warrant, if the public market price
for Balanced Living's common stock (if there is any such market) equals
or exceeds the exercise price for the particular Warrant. Notice of any
such redemption will be given at least 30 days before the date fixed for
redemption. Any Warrant selected for redemption that is still
outstanding and unexercised on and after the date fixed for redemption
will cease to have the rights of a Warrant and will become only a right
to receive the $.01 per Warrant redemption price.
Warrants are freely transferable, subject to requirements of
applicable securities laws. Balanced Living has entered into a Warrant
Agreement with its transfer agent, Interwest Transfer of Salt Lake City,
Utah, to supervise the transfer and exercise of the Warrants. The form
of this Warrant Agreement was filed as an exhibit to the registration
statement of which this prospectus is a part.
LIMITATIONS ON OFFICERS' AND DIRECTORS' LIABILITY AND INDEMNIFICATION
Balanced Living's articles of incorporation provide that the
Company will indemnify any officer, director or former officer or director,
to the full extent permitted by law. This could include indemnification
for liabilities under securities laws enacted for shareowner protection.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of Balanced Living pursuant to the foregoing
provisions, or otherwise, we have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
BALANCED LIVING'S TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock will be
Interwest Transfer Company, Inc., 1981 E. 4800 South, Suite 100, Salt
Lake City, Utah 84117 (801) 272-9294.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, assuming the sale of all 100,000
units being offered, Balanced Living will have outstanding 862,681 shares
of common stock, not including the 1,183,043 shares now covered by
warrants and options, or the assumed total of 300,000 shares covered by
the Class A, Class B and Class C Warrants included in the units. Of the
outstanding shares, the shares of common stock sold in this offering will
be freely tradable without restriction or further registration under the
Securities Act, except for any shares purchased by an "affiliate" of
Balanced Living, which will be subject to the resale limitations of Rule
144 adopted under the Securities Act. All of the 762,681 shares that are
held by existing shareholders are "restricted" under Rule 144. Such
shares will become salable by complying with Rule 144 on various dates
after July 1, 1999. No shares are subject to any "lock-up" agreement or
similar arrangement.
26
<PAGE>
In general, under Rule 144 as currently in effect, a person (or
persons whose shares are aggregated) who has beneficially owned shares
for at least one year, including "affiliates" as that term is defined
under the Securities Act, is entitled to sell, within any three-month
period, a number of shares that does not exceed the greater of:
- One percent (1%) of the then outstanding shares of the common
stock.
- The average weekly trading volume in the common stock during
the four calendar weeks immediately preceding the date on which
the notice of sale is filed with the Commission.
Sales under Rule 144 are subject to certain requirements relating
to manner of sale, notice and availability of certain current public
information about Balanced Living. A person (or persons whose shares are
aggregated) who is not deemed to have been an "affiliate" of Balanced
Living at any time during the 90 days immediately preceding the sale and
who has beneficially owned shares for at least two years is entitled to
sell such shares under Rule 144(k) without regard to these limitations.
Balanced Living's common stock is not listed or quoted on any
organized exchange or other trading market, nor has Balanced Living
applied for a formal listing or quotation. Balanced Living does not
currently meet the numerical requirements to have its shares listed on a
United States stock exchange or quoted on the NASDAQ over-the-counter
market. A trading market may not develop or be sustained. The post-
offering fair value of Balanced Living's common stock, whether or not any
secondary trading market develops, is variable and may be impacted by the
business and financial condition of Balanced Living, as well as factors
beyond Balanced Living's control. Sales of substantial amounts of shares
in any public market could cause lower market prices and even make it
difficult for Balanced Living to raise capital through a future offering
of its equity securities.
PLAN OF DISTRIBUTION FOR THIS OFFERING
No Broker-Dealer Or Selling Agent Now Planned
Balanced Living is offering 100,000 units of Balanced Living's
securities through Ms. Jeannene Barham on a "best-efforts, all or none"
basis. Each unit consists of:
- one (1) share of $.001 par value common stock
- one (1) Class A common stock purchase Warrant
- one (1) Class B common stock purchase Warrant
- one (1) Class C common stock purchase Warrant
at a total purchase price of $2.00 per unit. The offering will be
managed by the Ms. Barham without any underwriter, and without any
underwriting discounts or sales commissions. Jeannene Barham will receive
no sales commissions or other compensation, except for reimbursement of
expenses actually incurred on behalf of Balanced Living for such
activities. In connection with her efforts, she will rely on the "safe
harbor" provisions of Rule 3a4-1 of the Securities and Exchange Act of
1934 (the "1934 Act"). Generally speaking, Rule 3a4-1 provides an
exemption from the broker/dealer registration requirements of the 1934
Act for associated persons of an issuer.
Offering proceeds will be deposited no later than noon of the next
business day after receipt into an escrow account supervised by A. Robert
Thorup, Esq. of the law firm of Ray Quinney & Nebeker, 5th Floor, 79 South
Main Street, Salt Lake City, Utah 84111, pending receipt of subscriptions
totaling $200,000. If subscription for all 100,000 units have not been
received by July 31, 1999, subject to an extension at the sole discretion
of Balanced Living for an additional 30 days, all funds received will be
refunded to subscribers without interest thereon nor deductions
therefrom. Subscribers will have no
27
<PAGE>
right to return or use of their funds during the offering period.
No one has made any commitment to purchase any or all of the units.
Rather, Ms. Barham will use her best efforts to find purchasers for the
units.
Balanced Living retains the right to utilize the services of
broker/dealers who are members of the National Association of Securities
Dealers, Inc. ("NASD") to offer and sell the units. Balanced Living
reserves the right to pay commissions in connection with sales
effectuated through participating broker/dealers in an amount not to
exceed 10% of the sales price for sale effectuated by them. Prior to the
involvement of any participating broker/dealer in the offering, Balanced
Living must obtain a no objection position from the NASD regarding any
contemplated compensation and arrangements. In view of the Commission's
Division of Corporation Finance any participating broker/dealer that
sells securities in this offering will be deemed an underwriter as
defined in Section 2(11) of the Securities Act of 1933, as amended.
Further, Balanced Living will amend the prospectus and the registration
statement of which it is a part by post-effective amendment to identify a
selected participating broker/dealer.
Balanced Living reserves the right to reject any subscription in
full or in part and to terminate the offering at any time. Officers,
directors present shareholders of Balanced Living and persons associated
with them may be sold some of the units. However, officers, directors
and their affiliates shall not be permitted to purchase more than 20% of
the units sold hereunder and such purchases will be held for investment
and not for resale. In addition, no proceeds from this offering will be
used to finance any such purchases.
EXPERTS
The Consolidated balance sheets of Balanced Living, Inc. as of
December 31, 1998 and the related statements of operations, stockholders'
deficit and cash flows for the period ended December 31, 1998, included
in this prospectus, have been included herein in reliance on the report
of Pritchett, Siler & Hardy, P.C. independent certified public
accountants, given on the authority of that firm as experts in accounting
and auditing.
LEGAL MATTERS
Ray Quinney & Nebeker PC has passed on certain legal matters for
Balanced Woman and for Balanced Living in connection with this offering.
No attorney at Ray Quinney & Nebeker is related by blood or otherwise to
any affiliate of Balanced Living or of Balanced Woman, nor does any
attorney at Ray Quinney & Nebeker beneficially own any of the securities
of Balanced Living or of Balanced Woman.
WHERE CAN YOU FIND ADDITIONAL INFORMATION
A Registration Statement on Form SB-2, including amendments thereto,
relating to the units offered hereby has been filed with the Securities
and Exchange Commission. This prospectus does not contain all of the
information set forth in the registration statement and the exhibits and
schedules thereto. Statements contained in this prospectus as to the
contents of any contract or other document referred to are not
necessarily complete and in each instance reference is made to the copy
of such contract or other document filed as an exhibit to the
registration statement, each such statement being qualified in all
respects by such reference. For further information with respect to
Balanced Living and the units offered hereby, reference is made to such
registration statement, exhibits and schedules. A copy of the
registration statement may be inspected by anyone without charge at the
commission's principal office located at:
28
<PAGE>
Securities and Exchange Commission
450 Fifth Street, N.W.,
Washington, D.C. 20549
Northeast Regional Office
- -------------------------
Securities and Exchange Commission
7 World Trade Center, 13th Floor,
New York, New York, 10048
Midwest Regional Office
- -----------------------
Securities and Exchange Commission
Northwest Atrium Center,
500 West Madison Street,
Chicago, Illinois 60661-2511
Copies of all or any part thereof may be obtained from the public
reference branch of the commission upon the payment of certain fees
prescribed by the commission. The commission also maintains a site on
the world wide web at http://www.sec.gov that contains information
regarding registrants that file electronically with the commission.
29
<PAGE>
BALANCED LIVING, INC. AND SUBSIDIARY
[A Development Stage Company]
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999 (UNAUDITED)
AND
DECEMBER 31, 1998
PRITCHETT, SILER & HARDY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
F-1
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
CONTENTS
PAGE
- Independent Auditors' Report 1
- Consolidated Balance Sheets, March 31,
1999 (unaudited)and December 31, 1998 2
- Consolidated Statements of Operations, for the
three months ended March 31, 1998 (unaudited),
from inception on January 26, 1998 through
December 31, 1998 and from inception on January
26, 1998 through March 31, 1999 (unaudited) 3
- Consolidated Statement of Stockholders' Deficit,
from the date of inception on January 26, 1998 through
December 31, 1998 and March 31, 1999 (unaudited) 4
- Consolidated Statements of Cash Flows, for the
three months ended March 31, 1999 (unaudited),
from inception on January 26, 1998 through
December 31, 1998 and from inception on January
26, 1998 through March 31, 1999 (unaudited) 5
- Notes to Consolidated Financial Statements 6 - 13
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
BALANCED LIVING, INC. AND SUBSIDIARY
Salt Lake City, Utah
We have audited the accompanying consolidated balance sheet of Balanced
Living, Inc. and subsidiary [a development stage company]
at December 31, 1998, and the related consolidated statements
of operations, stockholders' deficit and cash flows from inception on January
26, 1998 through December 31, 1998. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements audited by us present
fairly, in all material respects, the consolidated financial position of
Balanced Living, Inc. and Subsidiary as of December 31, 1998, and the
consolidated results of their operations and their cash flows for the period
from inception through December 31, 1998, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 13 to the consolidated
financial statements, the Company was only recently formed and has not yet
established profitable operations, has incurred losses through December 31,
1998 amounting to $275,489, has current liabilities in excess of current
assets and has a stockholders deficit. These factors raise substantial doubt
about the Company's ability to continue as a going concern. Management's
plans in regards to these matters are also described in Note 13. The
consolidated financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
The accompanying consolidated balance sheet as of March 31, 1999 and the
related consolidated statements of operations, stockholders' deficit and cash
flows for the three month period ended March 31, 1999 and from inception on
January 26, 1998 through March 31, 1999 were not audited by us, and,
accordingly, we do not express an opinion on them.
/s/ Pritchett, Siler & Hardy, P.C.
April 7, 1999
Salt Lake City, Utah
F-3
<PAGE>
BALANCED LIVING, INC. AND SUBSIDIARY
[A Development Stage Company]
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31,
1999 December 31,
(unaudited) 1998
___________ ___________
CURRENT ASSETS:
Cash in bank $ 37,139 $ 56,663
Inventory 12,027 13,227
Prepaid assets 600 600
___________ ___________
Total Current Assets 49,766 70,490
EQUIPMENT, net 4,190 3,272
___________ ___________
$ 53,956 $ 73,762
___________ ___________
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 8,026 $ 5,870
Notes payable - related party 390,000 330,000
Accrued liabilities 5,815 5,379
___________ ___________
Total Current Liabilities 403,841 341,249
___________ ___________
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $.001 par value,
10,000,000 shares authorized,
no shares issued and outstanding - -
Common stock, $.001 par value,
50,000,000 shares authorized,
600,000 shares issued and
outstanding 600 600
Paid in capital 7,400 7,400
Deficit accumulated during the
development stage (357,885) (275,487)
___________ ___________
Total Stockholders' Equity
(Deficit) (349,885) (267,487)
___________ ___________
$ 53,956 $ 73,762
___________ ___________
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
BALANCED LIVING, INC. AND SUBSIDIARY
[A Development Stage Company]
CONSOLIDATED STATEMENTS OF OPERATIONS
From Inception
For the Three From Inception on January 26,
Months Ended on January 26, 1998 Through
March 31, 1998 Through March 31,
1999 December 31, 1999
(unaudited) 1998 (unaudited)
_____________ _______________ _______________
REVENUE $ 9,869 $ 14,914 $ 24,783
COST OF SALES 6,435 27,325 33,760
_____________ _______________ _______________
GROSS PROFIT (LOSS) 3,434 (12,411) (8,977)
_____________ _______________ _______________
EXPENSES:
General and
administrative 81,642 248,096 329,738
_____________ _______________ _______________
OPERATING LOSS (78,208) (260,507) (338,715)
OTHER INCOME (EXPENSE):
Interest expense (4,190) (14,980) (19,170)
_____________ _______________ _______________
LOSS BEFORE INCOME TAXES (82,398) (275,487) (357,885)
CURRENT TAX EXPENSE - - -
DEFERRED TAX EXPENSE - - -
_____________ _______________ _______________
NET LOSS $ (82,398) $ (275,487) $ (357,885)
_____________ _______________ _______________
LOSS PER COMMON SHARE:
Basic loss per share $ (.14) $ (.76) $ (.86)
_____________ _______________ _______________
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
BALANCED LIVING, INC. AND SUBSIDIARY
[A Development Stage Company]
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
FROM THE DATE OF INCEPTION ON JANUARY 26, 1998
THROUGH DECEMBER 31, 1998 AND
MARCH 31, 1999 (UNAUDITED)
Deficit
Accumulated
Common Stock During the
_____________________ Paid in Development
Shares Amount Capital Stage
__________ __________ ___________ ____________
BALANCE, January 26, 1998 - $ - $ - $ -
Issuance of 100,000 shares
common stock for cash,
February 10, 1998 at $.01
per share 100,000 100 900 -
Effect of reorganization of
the Company through the
issuance of 500,000 shares
of common stock to acquire
"The Balanced Woman, Inc."
pursuant to agreement and
plan reorganization on
July 14, 1998 500,000 500 1,500 -
Consideration received for
the grant of 500,000
non-qualified stock options,
at $.01 per underlying share
of stock - - 5,000 -
Net loss for the period ended
December 31, 1998 - - - (275,487)
__________ __________ ___________ ____________
BALANCE, December 31, 1998 600,000 600 7,400 (275,487)
Net loss for the three months
ended March 31, 1999
(unaudited) - - - (82,398)
__________ __________ ___________ ____________
BALANCE, March 31, 1999
(unaudited) 600,000 $ 600 $ 7,400 $(357,885)
__________ __________ ___________ ____________
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
BALANCED LIVING, INC. AND SUBSIDIARY
[A Development Stage Company]
CONSOLIDATED STATEMENTS OF CASH FLOWS
From Inception
For the Three From Inception on January 26,
Months Ended on January 26, 1998 Through
March 31, 1998 Through March 31,
1999 December 31, 1999
(unaudited) 1998 (unaudited)
_____________ _______________ _______________
Cash Flows Used by Operating
Activities:
Net loss $ (82,398) $(275,487) $(357,885)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Depreciation 168 364 532
Changes in assets and
liabilities:
Increase in inventory 1,200 (13,227) (12,027)
Increase in prepaid
assets - (600) (600)
Increase in accounts
payable 2,156 5,870 8,026
Increase in accrued
liabilities 436 5,379 5,815
_____________ _______________ ________________
Net Cash Used by
Operating Activities (78,438) (277,701) (356,139)
_____________ _______________ ________________
Cash Flows Used by Investing
Activities:
Equipment purchases (1,086) (3,636) (4,722)
_____________ _______________ ________________
Net Cash Used by
Investing Activities (1,086) (3,636) (4,722)
_____________ _______________ ________________
Cash Flows Provided by Financing
Activities:
Proceeds from options granted - 5,000 5,000
Proceeds from common stock
issuance - 3,000 3,000
Proceeds from notes payable
issuance 60,000 330,000 390,000
_____________ _______________ ________________
Net Cash Provided by
Financing Activities 60,000 338,000 398,000
_____________ _______________ ________________
Net Increase in Cash 56,663 56,663 37,139
Cash at Beginning of Period (19,524) - -
_____________ _______________ ________________
Cash at End of Period $ 37,139 $ 56,663 $ 37,139
_____________ _______________ ________________
Supplemental Disclosures of Cash Flow information:
Cash paid during the period for:
Interest $ 4,190 $ 14,980 $ 19,170
Income taxes $ - $ - $ -
Supplemental schedule of Noncash Investing and Financing Activities:
For the period ended December 31, 1998:
The Company entered into a reorganization with The Balanced Woman,
Inc. wherein the shareholders of The Balanced Woman retained 500,000
shares of stock in the Company.
The accompanying notes are an integral part of these consolidated financial
statements.
F-7
<PAGE>
BALANCED LIVING, INC. AND SUBSIDIARY
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - The Balanced Woman, Inc. ("Subsidiary") was organized under the
laws of the State of Colorado on January 26, 1998. During July, 1998 the
Company was reorganized through a stock for stock exchange with Balanced
Living, Inc. ("Parent") [See Note 2]. Balanced Living, Inc. a Colorado
corporation, was organized on July 1, 1998. The Company has not raised
significant revenue from planned principal operations and is considered a
development stage company as defined in SFAS No. 7. The Company is engaged in
the business of holding motivational seminars, and selling books and other
motivational products. The Company has, at the present time, not paid any
dividends and any dividends that may be paid in the future will depend upon
the financial requirements of the Company and other relevant factors. The
company expects to adopt December 31st as its fiscal year end.
Consolidation - The consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiary, The Balanced Woman, Inc. All
significant intercompany transactions have been eliminated in consolidation.
Inventories - Inventories are stated at the lower of cost or market. Cost is
determined by the first-in, first-out method.
Equipment - Equipment is carried at cost and is depreciated over the
estimated useful life of the equipment using the straight line method.
Revenue Recognition - The company's revenue comes from holding motivational
seminars and selling motivational products (books, cards, CD's, etc.).
Revenue is recognized when the services are rendered or the product is
delivered.
Loss Per Share - The computation of loss per share is based on the weighted
average number of shares outstanding during the period presented in accordance
with SFAS 128 "Earnings Per Share". Diluted loss per share is not presented
because its effect is antidilutive.
Statement of Cash Flows - For purposes of the statement of cash flows, the
Company considers all highly liquid debt investments purchased with a maturity
of three months or less to be cash equivalents.
Accounting Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosures of contingent assets and liabilities at the date
of the financial statements, and the reported amount of revenues and expenses
during the reported period. Actual results could differ from those estimated.
Fair Value of Financial Instruments - Management estimates that the carrying
value of financial instruments on the consolidated financial statements
approximates their fair values.
F-8
<PAGE>
BALANCED LIVING, INC. AND SUBSIDIARY
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
Restatement - The financial statements have been restated to reflect the
reorganization of the Company pursuant to a stock for stock exchange [See Note
2]. All references to common stock and the numbers of shares issued and
outstanding have been restated to reflect the shares of common stock issued in
the reorganization.
NOTE 2 - BUSINESS REORGANIZATION
On July 14, 1998 the Company entered into an Agreement and Plan of
Reorganization wherein Parent acquired all the issued and outstanding shares
of common stock of Subsidiary in a stock for stock exchange. Parent issued
500,000 shares of common stock in the exchange. Parent and Subsidiary had
similar ownership at the time of reorganization and were considered to be
entities under common control. Accordingly, the reorganization has been
recorded in a manner similar to a pooling of interests.
NOTE 3 - INVENTORIES
Inventories consisted of finished goods in the amount of $13,227 at December
31, 1998 and $12,027 at March 31, 1999 (unaudited).
NOTE 4 - EQUIPMENT
Equipment consists of the following:
Estimated March 31,
Useful Lives December 31, 1999
in Years 1998 (unaudited)
___________ ___________ ___________
Office equipment 5 - 7 $ 3,636 $ 4,722
___________ ___________
3,636 4,722
Accumulated depreciation (364) (532)
___________ ___________
$ 3,272 4,190
___________ ___________
Depreciation expense for the period ended December 31,1998 was $364 and for
the three month period ended March 31, 1999 (unaudited) was $168.
F-9
<PAGE>
BALANCED LIVING, INC. AND SUBSIDIARY
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - NOTES PAYABLE
During 1998, the Company issued subordinated demand notes payable to various
officers, shareholders, and consultants in the amount of $330,000. The notes
bear interest at a rate of 10% per annum with quarterly interest payments, the
notes are due on September 1, 1999. Note-holders can demand payment of the
unpaid principal plus accrued interest in order to purchase other equity
opportunities in the Company of equal value at any time prior to the maturity
date. As of December 31, 1998, interest payments have been made in the amount
of $11,816. The notes are subordinated by 80,000 warrants to purchase one
share of the Company's stock at $1 per share [See Note 6].
During the three month period ended March 31, 1999 (unaudited), the Company
raised an additional $60,000 through
issuing additional subordinated demand notes payable, $60,000 of which came
from a private investor. Warrants for 30,000 shares of common stock were
included in the transaction.
NOTE 6 - CAPITAL STOCK
Common Stock - In connection with its acquisition of Subsidiary on July
14, 1998, the Company issued 500,000 shares of its previously authorized, but
unissued common stock [See Note 2]. The Subsidiary had previously been funded
with $2,000.
During January, 1998, the Company issued 100,000 shares of common stock in
connection with the organization of the Company at $.01 per share. Total
proceeds amounted to $1,000.
Stock Warrants - During 1998, Subsidiary issued 165,000 common stock warrants
to various officers, directors and consultants in conjunction with the
issuance of subordinated notes payable [See Note 5]. Due to the
reorganization of the company [See note 2], the warrants of Subsidiary were
cancelled, and re-issued under the same terms by Parent during 1998. Each
warrant grants the holder the right to purchase one share of the Company's
common stock at a price of $1 per share. The warrants may be exercised at any
time prior to March 1, 2003. An additional 30,000 warrants were issued
subsequent to December, 1998.
Stock Option Plan - During January, 1998 the Company implemented its 1998
stock option plan. The plan provides for 1,000,000 shares of common stock to
be reserved for issuance to officers, directors, employees and consultants as
employment incentives. As of December 31, 1998, no options have been issued
under the plan. Options granted vest over a five year period and are
exercisable at $1 per share. As of December 31, 1998 no options had vested.
Non-Qualified Stock Options - As of December 31, 1998, the Company has issued
a total of 500,000 options outside of the 1998 stock option plan to various
officers, directors and consultants of the Company. These options are
exercisable at $1 per share, and vest over a five-year period, based upon
certain conditions specified in the option agreement. The options expire five
years from the date of vesting. As of December 31, 1998, no options had
vested.
F-10
<PAGE>
BALANCED LIVING, INC. AND SUBSIDIARY
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - CAPITAL STOCK [Continued]
A summary of the status of the options granted under the Company's stock
option plans and other agreements at December 31, 1998 and changes during the
period then ended is presented in the table below:
March 31, 1999
1998 (unaudited)
_________________________ _________________________
Weighted Average Weighted Average
Shares Exercise Price Shares Exercise Price
_________ _______________ _________ _______________
Outstanding at beginning
of period - $ - - $ -
Granted 500,000 1.00 500,000 1.00
Exercised - - - -
Forfeited - - - -
Canceled - - - -
_________ ____________ __________ ___________
Outstanding at end of
period 500,000 $ 1.00 500,000 $ 1.00
_________ ____________ __________ ___________
Exercisable at end of
period - $ 1.00 - $ 1.00
_________ ____________ __________ ___________
Weighted average fair
value of options
granted 500,000 $ - 500,000 $ -
_________ ____________ __________ ___________
The fair value of each option granted is estimated on the date granted
using the Black-Scholes option pricing model with the following weighted-
average assumptions used for grants during the period ended December 31,
1998: risk-free interest rate of 4.879%, expected dividend yield of 0%,
expected life of 5 years, and expected volatility of 0%.
A summary of the status of the options outstanding under the Company's
stock option plans and other agreements at December 31, 1998 is presented
below:
Options Outstanding Options Exercisable
________________________________________ _________________________
Weighted-
Average Weighted- Weighted-
Range of Remaining Average Average
Exercise Number Contractual Exercise Number Exercise
Prices Outstanding Life Price Exercisable Price
________ ______________ ____________ __________ _____________ ___________
$1.00 500,000 5 years $1.00 0 $1.00
F-11
<PAGE>
BALANCED LIVING, INC. AND SUBSIDIARY
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - CAPITAL STOCK [Continued]
The Company accounts for its option plans and other option agreements under
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees", and related interpretations. Accordingly, since all options
granted were granted with exercise prices at market value or above, no
compensation cost has been recognized in the accompanying financial
statements. Had compensation cost for these options been determined based
on the fair value at the grant dates for awards under these plans and other
option agreements consistent with the method prescribed by Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation", the Company's net income and earnings per common share would
have been the proforma amounts as indicated below:
Period Ended
Period Ended March 31,
December 31, 1999
1998 (unaudited)
_____________ _____________
Net Loss As reported $ (275,487) $ (82,398)
Proforma $ (275,487) $ (82,398)
Loss per share As reported $(.76) $(.14)
Proforma $(.76) $(.14)
NOTE 7 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes". SFAS
109 requires the Company to provide a net deferred tax asset/liability equal
to the expected future tax benefit/expense of temporary reporting differences
between book and tax accounting methods and any available operating loss or
tax credit carryforwards. At December 31, 1998 the Company has available
unused operating loss carryforwards of approximately $275,459, which may be
applied against future taxable income and which expire in 2013.
The amount of and ultimate realization of the benefits from the operating loss
carryforwards for income tax purposes is dependent, in part, upon the tax laws
in effect, the future earnings of the Company, and other future events, the
effects of which cannot be determined. Because of the uncertainty surrounding
the realization of the loss carryforwards the Company has established a
valuation allowance equal to the tax effect of the loss carryforwards and,
therefore, no deferred tax asset has been recognized for the loss
carryforwards. The net deferred tax assets are approximately $93,000 as of
December 31, 1998 with an offsetting valuation allowance of the same amount
resulting in a change in the valuation allowance of approximately $93,000
during 1998.
F-12
<PAGE>
BALANCED LIVING, INC. AND SUBSIDIARY
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 - LOSS PER SHARE
The following data shows the amounts used in computing loss per share for the
period ended December 31, 1998.
Weighted-Average
Loss Shares Per-Share
(Numerator) (Denominator) Amount
____________ ________________ ___________
Basic loss per share
Net loss $ (275,487) 362,436 $ (.76)
___________
Effect of dilutive securities
Warrants - -
Options - -
____________ ________________
Diluted loss per share
Net loss + assumed
conversions $ (275,487) 362,436 $ (.76)
____________ ________________ ___________
The Company had at December 31, 1998, options and warrants to purchase
500,000 and 80,000 shares of common stock , respectively, at prices of
$1.00 per share, that were not included in the computation of diluted loss
per share because their effect was anti-dilutive (the exercise price of the
options and warrants was greater than the average market price of the
common shares).
NOTE 9 - COMMITMENTS
The Company has agreed to compensate a majority shareholder of, and
independent contractor to, the Company for her services to the Company in
shares of the Company's restricted common stock. The exact number of shares
has yet to be negotiated with the board of directors of the Company, and may
be subject to vesting rights imposed by the Company. No amounts have been
accrued in the accompanying financial statements for this agreement to issue
stock.
NOTE 10 - SUB-LEASE AGREEMENT
During 1998, the Company entered into an agreement to sub-lease office
space. The term of the lease is 10.5 months, with no option to renew. The
agreement terminates on June 1, 1999. Total base rent amounts to $6,300
and is due in monthly installments of $600.
NOTE 11 - RELATED PARTY TRANSACTIONS
Management Compensation - The Company paid $42,000 in salary to the Company's
President/Secretary-Treasurer during the period ended December 31, 1998.
Shareholder Advance - During the period ended December 31, 1998, the Company
made advances to the President/Secretary-Treasurer of the Company totaling
$1,000. The advances were non-interest bearing and were repaid in full, prior
to December 31, 1998.
F-13
<PAGE>
BALANCED LIVING, INC. AND SUBSIDIARY
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 - RELATED PARTY TRANSACTIONS [Continued]
Notes Payable - As of December 31, 1998 the Company had outstanding
subordinated demand notes payable to various officers, directors, shareholders
and consultants totaling $330,000 [See Note 5]. Of the notes, $10,000 were
issued to the Company's President/Secretary-Treasurer, and $50,000 were issued
to a majority shareholder.
Stock Warrants - During the period ended December 31, 1998, the Company issued
80,000 common stock warrants to various officers, directors and consultants
[See Note 6]. Of the 80,000 warrants, 5,000 were issued to the Company's
President/Secretary-Treasurer, and 25,000 were issued to a majority
shareholder.
Stock Options - During the period ended December 31, 1998, The Company issued
500,000 stock options to various officers, directors and consultants [See Note
6]. Of the 500,000 options, 50,000 were issued to the Company's
President/Secretary-Treasurer, and 50,000 were issued to a majority
shareholder.
NOTE 12 - DEVELOPMENT STAGE COMPANY
The Company was formed with a very specific business plan. However, the
possibility exists that the Company could expend virtually all of its working
capital in a relatively short time period and may not be successful in
establishing on-going profitable operations.
NOTE 13 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles which contemplate continuation of the
Company as a going concern. However, the Company was only recently formed,
has not yet established profitable operations, has incurred significant losses
since inception, and has a stockholder's deficit. The Company also has
current liabilities in excess of current assets (a working capital
deficiency). These factors raise substantial doubt about the ability of the
Company to continue as a going concern. In this regard, management is
proposing to raise additional funds through loans and/or through additional
sales of its common stock which funds will be used to assist in establishing
on-going operations. There is no assurance that the Company will be
successful in raising this additional capital or achieving profitable
operations. The financial statements do not include any adjustments that
might result from the outcome of these uncertainties.
F-14
<PAGE>
BALANCED LIVING, INC. AND SUBSIDIARY
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14 - SUBSEQUENT EVENTS
Proposed Public Offering of Common Stock - The Company plans to file a
registration statement with the United States Securities and Exchange
Commission on Form SB-2 under the Securities Act of 1933. The Company
proposes to sell 200,000 "Units" at a price of $2 per Unit, which price has
been arbitrarily determined by the Company. Each Unit consists of one share
of the Company's $.001 par value common stock sold at $2 per share, one "Class
A Warrant" to purchase one share of common stock at $3 per share, one "Class B
Warrant" to purchase one share of common stock at $5 per share, and one "Class
C Warrant" to purchase one share of common stock at $10 per share. All
warrants issued under the offering will expire on December 31, 2003. The
warrants are callable if, after one year from the issuance date, public
trading develops and trading occurs for at least 20 consecutive days. The
warrants are callable at $.01 per warrant upon 30 days notice by the Company
to warrant holders. The Units will be offered and sold by officers of the
Company, who will receive no sales commissions or other compensation in
connection with the offering, except for reimbursement of expenses actually
incurred on behalf of the Company in connection with the offering. If a
registered broker dealer is used in selling any of the units, a 10% sales
commission will be paid to those broker dealers who assist in selling the
units. The Company has not incurred any stock offering costs as of December
31, 1998, but any such costs will be netted against the proceeds of the
proposed public offering.
Subordinated Demand Notes-Payable - Subsequent to December, 1998 the Company
issued additional subordinated demand notes payable for proceeds totaling
$60,000. Warrants for 30,000 shares of common stock were also issued in the
transaction.
Retirement of Notes Payable - Subsequent to the date of this audit, the
Company retired $320,000 of the principal balance of Subordinated Demand
Notes Payable and $5,348 of accrued interest for the issuance of common stock
at $2.00 per share for a total of 162,681 shares of common stock issued.
Partial shares were rounded up to the next whole share. The Company also
issued with each share of of common stock, one "Class A Warrant" to purchase
one share of common stock at $3 per share, one "Class B Warrant" to purchase
one share of common stock at $5 per share, and one "Class C Warrant" to
purchase one share of common stock at $10 per share. All warrants issued will
expire on December 31, 2003. The warrants are callable if, after one year
from the issuance date, public trading develops and trading occurs for at
least 20 consecutive days. The warrants are callable at $.01 per warrant
upon 30 days notice by the Company to warrant holders.
F-15
<PAGE>
No dealer, salesman or other person
is authorized to give any
information or to make any BALANCED
representations other than those
contained in this prospectus in LIVING
connection with the offer made
hereby. If given or made, such INC.
information or representations must
not be relied upon as having been
authorized by the
Company. This prospectus does not
constitute an offer to sell or a
solicitation of an offer to buy any
of the securities covered hereby in
any jurisdiction or to any person
to whom it is unlawful to make such
offer or solicitation in such
jurisdiction. Neither the delivery
of this prospectus nor any sale
made hereunder shall, in any
circumstances, create any
implication that there has been no
change in the affairs of Balanced
Living since the date hereof. 100,000
COMMON STOCK UNITS
TABLE OF CONTENTS
Item Page
Prospectus Summary..............3
Risk Factors....................4
Risks Inherent in PROSPECTUS
Balanced Living..............4 --------
Risks Related to the
Nature of Balanced
Living's Business............5
Risks Related to Balanced
Living's Offering............6
Use of Proceeds.................9
Dilution.......................10
Management's Discussion
& Analysis of Financial
Condition and Results of
Operations.....................11
Information About
Balanced Living................14
Management of Balanced
Living.........................20 [LOGO]
Balanced Living's
Principal Shareholders.........23
Certain Transactions...........23
Description of Common
Stock of Balanced Living.......24
Shares Eligible for
Future Sale....................26
Balanced Living's
Plan of Distribution...........27
Experts........................28
Legal Matters..................28
Where Can You Find
Additional Information.........28
Balance Living's Financial
Statements
Notes to Financial Statements F-1 MAY , 1999
BACK COVER PAGE OF PROSPECTUS
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. Indemnification of Directors and Officers
The statutes, charter provisions, bylaws, contracts or other
arrangements under which controlling persons, directors or officers of
the registrant are insured or indemnified in any manner against any
liability which they may incur in such capacity are as follows:
Section 7-109-102 of the Colorado Code grants authority to a
Colorado corporation to indemnify officers and directors as follows:
(1) Except as provided in subsection (4), below, a corporation
may indemnify a person made a party to a proceeding because
the person is or was a director against liability incurred in
the proceeding if:
(a) The person conducted himself or herself in good faith; and
(b) The person reasonably believed:
(I) In the case of conduct in an official capacity with
the corporation, that his or her conduct was in the
corporation's best interests; and
(II) In all other cases, that his or her conduct was at
least not opposed to the corporation's best interests;
and
(c) In the case of any criminal proceeding, the person had no
reasonable cause to believe his or her conduct was unlawful.
(2) Indemnification is appropriate as to a director's conduct
with respect to an employee benefit plan for a purpose the
director reasonably believed to be in the interests of the
participants in or beneficiaries of the plan is conduct that
satisfies the requirement of subparagraph (II) of paragraph (b)
of (1), above. A director's conduct with respect to an employee
benefit plan for a purpose that the director did not reasonably
believe to be in the interests of the participants in or
beneficiaries of the plan shall be deemed not to
satisfy the requirements of paragraph (a) of (1), above.
(3) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its
equivalent is not, of itself, determinative that the director
did not meet the statutory standard of conduct.
(4) A corporation may not indemnify a director:
(a) In connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to
the corporation; or
(b) In connection with any other proceeding charging that the
director derived an improper personal benefit, whether or
not involving action in an official capacity, in which
proceeding the director was adjudged liable on the basis that
he or she derived an improper personal benefit.
(5) Indemnification must be limited to reasonable expenses
incurred in connection with the proceeding.
(6) The articles of incorporation, the bylaws or an agreement
made by the corporation may provide that the expenses of officers and
directors incurred in defending a civil or criminal action, suit or
30
<PAGE>
proceeding must be paid by the corporation as they are incurred and in
advance of the final disposition of the action, suit or proceeding,
upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by a court
of competent jurisdiction that he is not entitled to be indemnified by
the corporation. The provisions of this subsection do not affect any
rights to advancement of expenses to which corporate personnel other
than directors or officers may be entitled under any contract or
otherwise by law.
The registrant's Articles of Incorporation limit liability of its
Officers and Directors to the full extent permitted by the Colorado
Business Corporation Act.
ITEM 25. Other Expenses of Issuance and Distribution*
The following table sets forth the estimated costs and expenses
to be paid by Balanced Living in connection with the offering
described in the Registration Statement.
Amount
SEC registration fee $ 590
Blue sky fees and expenses $ 2,000
Printing and shipping expenses $ 500
Contingent Broker Commissions $ 20,000
Legal fees and expenses $ 20,000
Accounting fees and expenses $ 4,000
Transfer, Escrow and Miscellaneous expenses $ 1,250
Total $ 48,340
* All expenses except SEC registration fee are estimated.
ITEM 26. Recent Sales of Unregistered Securities
On July 1, 1998, 100,000 shares of unregistered Balanced Living
common stock were issued to Ms. Barham and Ms. Blackham (50,000 each)
in return for $500.00 that each contributed to the capital of Balanced
Living. These shares were issued in reliance on the exemption found
in Section 4(2) of the Securities Act and corollary state exemptions.
Both Ms. Blackham and Ms. Barham were qualified as accredited
investors at the time of this transaction and had access to Balanced
Living's financials and other financial, corporate and business
information and records.
On July 14, 1998, Balanced Living agreed to issue 250,000 shares
of unregistered common stock to each of Ms. Barham and Ms. Blackham in
exchange for their shares of equal number in The Balanced Woman, Inc.
This offering was conducted in reliance on Section 4(2) of the
Securities Act and state corollary exemptions. Both Ms. Blackham and
Ms. Barham qualified as accredited investors at the time of this
transaction and had access to Balanced Living's financials and other
financial, corporate and business information and records.
On July 15, 1998, Balanced Living borrowed $160,000 from seven
persons and in that connection issued a total of 80,000 warrants to
purchase a total of 80,000 shares of Balanced Living's common stock,
at $1.00 per share, to these same persons. Balanced Living believes
that these notes and warrants were issued under the exemption of
Section 4(2) of the Securities Act, and corollary state exemptions.
Each of these persons were sophisticated and knowledgeable, and were
involved with the formation of Balanced Living and had access to
Balanced Living's financials and other financial, corporate and
business
31
<PAGE>
information and records. Moreover each of these persons had
the economic ability to lose the enter amount of their investment
without a material adverse effect on their ongoing ability to provide
for their families or their dependents.
On August 12, 1998, Balanced Living borrowed $25,000 from Jolley
Family Trust and in that connection issued a total of 12,500 warrants
to purchase a total of 12,500 shares of Balanced Living's common
stock, at $1.00 per share to this same investor. Balanced Living
believes that these notes and warrants were issued under the exemption
of Section 4(2) of the Securities Act, and corollary state exemptions.
This investor is sophisticated and knowledgeable, and was involved
with the formation of Balanced Living and had access to Balanced
Living's financials and other financial, corporate and business
information and records. Moreover each of these persons had the
economic ability to lose the enter amount of their investment without
a material adverse effect on their ongoing ability to provide for
their families or their dependents.
On August 24, 1998, Balanced Living borrowed $40,000 from Carol
N. Jensen and in that connection issued a total of 20,000 warrants to
purchase a total of 20,000 shares of Balanced Living's common stock,
at $1.00 per share to this same investor. Balanced Living believes
that these notes and warrants were issued under the exemption of
Section 4(2) of the Securities Act, and corollary state exemptions.
This investor is sophisticated and knowledgeable, and was involved
with the formation of Balanced Living and had access to Balanced
Living's financials and other financial, corporate and business
information and records. Moreover each of these persons had the
economic ability to lose the enter amount of their investment without
a material adverse effect on their ongoing ability to provide for
their families or their dependents.
On October 30, 1998, Balanced Living borrowed $25,000 from Rose
Blackham and in that connection issued 12,500 warrants to purchase a
total of 12,500 shares of Balanced Living's common stock, at $1.00 per
share, to same investor. Balanced Living believes that these notes and
warrants were issued under the exemption of Section 4(2) of the
Securities Act, and corollary state exemptions. Ms. Blackham was
qualified as an accredited investors at the time of this transaction
and had access to Balanced Living's financials and other financial,
corporate and business information and records.
On November 4, 1998, Balanced Living borrowed $5,000 from Linda
Ford and in that connection issued a total of 2,500 warrants to purchase
a total of 2,500 shares of Balanced Living's common stock, at $1.00 per
share, to Ms. Ford. Balanced Living believes that these notes and
warrants were issued under the exemption of Section 4(2) of the
Securities Act, and corollary state exemptions. This investor is
sophisticated and knowledgeable, and was involved with the formation
of Balanced Living and had access to Balanced Living's financials and
other financial, corporate and business information and records.
Moreover each of these persons had the economic ability to lose the
enter amount of their investment without a material adverse effect on
their ongoing ability to provide for their families or their
dependents.
On December 4, 1998, Balance Living borrowed $ 40,000 from Kim
and Shannon Lundgren and in that connection issued a total of 20,000
warrants to purchase a total of 20,000 shares of Balanced Living's
common stock, at $1.00 per share, to such investor. Balanced Living
believes that these notes and warrants were issued under the exemption
of Section 4(2) of the Securities Act, and corollary state exemptions.
This investor is accredited and had access to Balanced Living's
financials and other financial, corporate and business information and
records. Moreover each of these persons had the economic ability to
lose the enter amount of their investment without a material adverse
effect on their ongoing ability to provide for their families or their
dependents.
On December 4, 1998, Balance Living borrowed $25,000 from Kent G.
and Marianne C. Stephens and in that connection issued a total of
12,500 warrants to purchase a total of 12,500 shares of Balanced
Living's common stock, at $1.00 per share, to Kent G. and Marianne C.
Stephens. Balanced Living believes that these notes and warrants were
issued under the exemption of Section 4(2) of the Securities Act, and
corollary state exemptions. This investor is sophisticated and
knowledgeable and had access to Balanced Living's financials and other
financial, corporate and business information and records. Moreover
each of these persons had the economic ability to lose the enter
amount of their investment without a material adverse effect on their
ongoing ability to provide for their families or their dependents.
32
<PAGE>
On December 9, 1998, Balanced Living borrowed $10,000 from Neidda
Shehady and in that connection issued a total of 5,000 warrants to
purchase a total of 5,000 shares of Balanced Living's common stock, at
$1.00 per share, to Ms. Shehady. Balanced Living believes that these
notes and warrants were issued under the exemption of Section 4(2) of
the Securities Act, and corollary state exemptions. This investor is
sophisticated and knowledgeable and had access to Balanced Living's
financials and other financial, corporate and business information and
records. Moreover this investor had the economic ability to lose the
enter amount of their investment without a material adverse effect on
their ongoing ability to provide for their families or their
dependents.
On March 15, 1999, Balanced Living borrowed $60,000 from Rose
Blackham and in that connection issued 30,000 warrants to purchase a
total of 30,000 shares of Balanced Living's common stock, at $1.00 per
share, to same investor. Balanced Living believes that these notes and
warrants were issued under the exemption of Section 4(2) of the
Securities Act, and corollary state exemptions. Ms. Blackham was
qualified as an accredited investors at the time of this transaction
and had access to Balanced Living's financials and other financial,
corporate and business information and records.
On April 30, 1999, Balanced Living had 12 of Balanced Woman's note
holders accepted an offer approved by the board of directors of
Balanced Living to convert their unpaid principal amount and any
accrued interest into Balanced Living units @ $2.00 per unit. A total
of $328,517 was converted to 162,765 units. Each unit will consist of
one share of Balanced Living, Inc. common stock, one Class A Warrant
exercisable at $3.00, one Class B Warrant exercisable at $5.00 and one
Class C Warrant exercisable at $10.00. All of the warrants are valid
until December 31, 2003, when they expire. Balanced Living believes
that these shares and warrants were issued under the exemption of
Section 4(2) of the Securities Act, and corollary state exemptions.
Each of these persons were sophisticated and knowledgeable, and were
involved with the formation of Balanced Living and had access to
Balanced Living's financials and other financial, corporate and
business information and records. Moreover each of these persons had
the economic ability to lose the enter amount of their investment
without a material adverse effect on their ongoing ability to provide
for their families or their dependents.
ITEM 27. Exhibits
Index SEC Reference
Exhibit No. Document
*3.1 Articles of Incorporation
*3.2 By-Laws
*4.1 Agreement & Plan of Reorganization with The Balanced
Woman, Inc.
*4.2 Stock Option Agreement with Jeannene Barham
*4.3 Stock Option Agreement with Rose Blackham
*4.4 Stock Option Agreement with Terri Sundh
*4.5 Stock Option Agreement with Lisa Hawthorne
*4.6 Stock Option Agreement with Linda Ford
*4.7 Stock Option Agreement with Carole F. Madsen
*4.8 Stock Option Agreement with Gail Showalter Soderling
33
<PAGE>
*4.9 Stock Option Agreement with Carol N. Jensen
*4.10 Stock Option Agreement with Barbara Ann Curl
*4.11 Stock Option Agreement with Keri McGuire.
*4.12 Form of Promissory Note used with private investors
*4.13 Form of Securities Purchase Agreement used with private
investors
*4.14 Form of $1.00 per share Warrants used with private
investors
*5 Opinion on Legality
*10.1 Stock Option Plan
+10.2 Intellectual Property Transfer Agreement
*21 Subsidiaries of the small business issuer
+24.1 Consent of Pritchett, Siler & Hardy P.C.
*24.2 Consent of Counsel to Issuer (included in Exhibit 5)
*27 Financial Data Schedule
*99.1 Form of Subscription Agreement
*99.2 Form of Class A Warrant
*99.3 Form of Class B Warrant
*99.4 Form of Class C Warrant
*99.5 Form of Warrant Agreement with Trust Agreement
*99.6 Lease Agreement
+99.7 Escrow Impoundment Agreement
- -----------------
* Previously filed
+ To be filed by amendment
ITEM 28. Undertakings
Subject to the terms and conditions of Section 15(d) of the
Securities Exchange Act of 1934, the undersigned Registrant hereby
undertakes to file with the Securities and Exchange Commission such
supplementary and periodic information, documents, and reports as may
be prescribed by any rule or regulation of the Commission heretofore
or hereafter duly adopted pursuant to authority conferred to that
section.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to its Articles of
Incorporation or provisions of the Nevada Revised Statutes, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question,
whether or not such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
The Registrant hereby undertakes to:
(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration
statement to: (i) Include any prospectus required by section
10(a)(3) of the Securities Act; (ii) Reflect in the
prospectus any facts or events which, individually or
together, represent a fundamental change in the information
in the registration statement.
34
<PAGE>
Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and (iii)
Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act treat
each post-effective amendment as a new registration statement
of the securities offered, and the offering of the securities
at that time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the
offering.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
has met all of the requirements of filing on Form SB-2 and has
authorized this Registration Statement to be signed on its behalf by
the undersigned, in Salt Lake City, Utah, on May 12, 1999.
Balanced Living, Inc.
By: /s/ Jeannene Barham
---------------------------------------
Jeannene Barham, Chief Executive Officer,
Director, and President
Pursuant to the requirements of the Securities Act of 1933, this
amendment to Registration Statement has been signed by the following
persons in the capacities and on the date indicated.
Signatures Title Date
- ---------- ----- ----
/s/ Jeannene Barham
- --------------------
Jeannene Barham Chief Executive Officer May 12, 1999
President, Chief Financial
Officer and Director
35
<PAGE>
A S S I G N M E N T
WHEREAS, I, Rose Blackham, a resident of Colorado, having a
postal mailing address of 225 Monroe Street, Denver, Colorado
80206, have adopted, used, and am using, and am the owner of
certain right, title and interest in and to the mark THE
BALANCED WOMAN (hereinafter referred to as the "Mark") in
Trademark Application No. 75/349,450, together with teaching
concepts, character names like "Sara"; and written materials
intended to be contained in a book called "The Balanced Woman"
(the "Intellectual Property"); and
WHEREAS, The Balanced Woman, Inc. (hereinafter referred to
as "ASSIGNEE"), a corporation duly organized and existing under
the laws of the State of Utah, having a business address of 6375
South Highland Drive, SLC, Utah 84121, is desirous of acquiring
the entire right, title, and interest in and to the Mark and the
Intellectual Property, and all good will associated therewith
and the above-identified Application;
NOW, THEREFORE, in consideration of one dollar ($1.00) and
other good and valuable consideration paid to the ASSIGNOR by
the ASSIGNEE, the receipt and sufficiency of which is hereby
acknowledged, THE ASSIGNOR HEREBY ASSIGNS TO THE ASSIGNEE any
and all right, title and interest which it may hold in and to
the Mark and to the Intellectual Property, including any and all
common law rights associated therewith, used in connection with
materials used in marketing and presentation of personal growth
seminars, classes and media presentations, eg workbooks,
audio/video tapes, newsletters and stationery, International
Class 016, the above identified application, and any
registration issuing therefrom, together with the goodwill of
the business symbolized by and associated with the Mark.
The ASSIGNOR hereby authorizes and requests the United
States Commissioner of Patents and Trademarks to issue any and
all certificates of registration of the Mark to the ASSIGNEE as
the owner of the entire interest of said Mark, for the sole use
and benefit of the said ASSIGNEE, its successors, assigns and
legal representatives.
ASSIGNEE hereby grants to ASSIGNOR a right of first refusal
in the event that ASSIGNEE decides to sell or otherwise assign
its interest in said Mark and/or in said Intellectual Property,
provided that such right shall not be triggered if there is a
sale of the stock of ASSIGNEE or the sale of all or
substantially all of ASSIGNEE's assets.
This Assignment and Agreement shall be binding upon any and
all successors of the ASSIGNOR.
/s/ Rose Blackham
Rose Blackham
STATE OF UTAH )
: ss
COUNTY OF SALT LAKE )
Before me personally appeared Rose Blackham and
acknowledged the foregoing instrument to be his free act and
deed this ______ day of ___________________, 1999.
Residing at/My commission expires:
_____________________________
Notary Public ________________________________
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part
of this Amendment Number 2 to the Registration Statement on Form SB-2
for Balance Living, Inc., of our report dated April 7, 1999,
relating to the December 31, 1998 financial statements of Balanced
Living, Inc., which appears in such Prospectus. We also consent
to the reference to us under the heading "Experts".
/s/ Pritchett, Siler & Hardy, P.C.
PRITCHETT, SILER & HARDY, P.C.
May 13, 1999
Salt Lake City, Utah
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
financial statements for the three months ended March 31, 1999 and
the period from inception (January 26, 1998) through December 31, 1998,
and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-26-1998
<PERIOD-END> MAR-31-1999 DEC-31-1998
<CASH> 37,139 56,663
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 12,027 13,227
<CURRENT-ASSETS> 49,766 70,490
<PP&E> 4,722 3,636
<DEPRECIATION> 532 364
<TOTAL-ASSETS> 53,956 73,762
<CURRENT-LIABILITIES> 403,841 341,249
<BONDS> 0 0
0 0
0 0
<COMMON> 600 600
<OTHER-SE> (350,485) (268,087)
<TOTAL-LIABILITY-AND-EQUITY> 53,956 73,762
<SALES> 9,869 14,914
<TOTAL-REVENUES> 9,869 14,914
<CGS> 6,435 27,325
<TOTAL-COSTS> 6,435 27,325
<OTHER-EXPENSES> 81,642 248,096
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 4,190 14,980
<INCOME-PRETAX> (82,398) (275,487)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (82,398) (275,487)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (82,398) (275,487)
<EPS-PRIMARY> (.14) (.76)
<EPS-DILUTED> (.14) (.76)
</TABLE>
FUND IMPOUND AGREEMENT
NAME OF ISSUER: BALANCED LIVING, INC.
DATE EFFECTIVE WITH SEC: __________________
EXPIRATION DATE: ___________________________
THE OFFICERS AND DIRECTORS OF BALANCED LIVING, INC.
HEREBY AGREES TO DELIVER, BY NOON OF THE BUSINESS DAY AFTER
RECEIPT, and with names and addresses of investors at time
deposit is made, funds to be applied to an escrow account
in the amount of: $200,000 to
A. Robert Thorup, Esq.
5th Floor, 79 South Main Street, SALT LAKE CITY, UT 84111
as escrow agent, the papers, money, or property hereinafter
described, to be held and disposed of by said escrow agent
in accordance with the duties, instructions, and upon the
terms and conditions hereinafter set forth to which the
undersigned
hereby agree:
1. Escrow agent (hereinafter called the "escrow agent") is
not a party to, or bound by any agreement which may be
evidenced by or arises out of the following instructions.
2. The escrow agent and its officers, agents, and
employees, act hereunder as a depository only, and are
not responsible or liable in any manner whatever for
serving as escrow agent in this matter or for the
sufficiency, correctness, genuineness or validity of any
instrument deposited with it hereunder, or with respect
to the form or execution of the same, or the identity,
authority, or rights of any person executing or
depositing the same.
3. The escrow agent shall not be required to take or be
bound by notice of any default by any person, or to take
any action with respect to such default involving any
expense or liability, unless notified in writing is
given an officer of the escrow agent of such default by
the undersigned or any of them, and unless it is
indemnified in a manner satisfactory to it against any
such expense or liability.
4. The escrow agent shall be protected in acting upon any
notice, request, waiver, consent, receipt or other paper
or document believed by the escrow agent to be genuine
and to be signed by the proper party or parties.
5. The escrow agent shall not be liable for any error in
judgment or for any act done or step taken or omitted by
it in good faith or for any mistake or fact or law, or
for anything which it may do or refrain from doing in
connection herewith, except its own willful misconduct.
6. The escrow agent shall not be answerable for the default
or misconduct of any agent, attorney, or employee acting
on behalf of the Issuer.
7. In the event of any disagreement between the
undersigned(s)or any of them, and/or the person or
persons named in the foregoing instructions, and/or any
other person, resulting in adverse claims and demands
being made in connection with or for any papers, money
or property involved herein or affected hereby, the
escrow agent shall be entitled at its option to refuse
to comply with any such claim or demand, so long as such
disagreement shall continue, and in so refusing the
escrow agent may make no delivery or other disposition
of any money, papers or property involved herein or
affected hereby and in so doing the escrow agent shall
not be or become liable to the undersigned or any of
them or to any person named in the foregoing
instructions for its failure or refusal to comply with
such conflicting or adverse demands; and the escrow
agent shall be entitled to continue so to refrain and
refuse so to act until:
a. The rights of the adverse claimants have been
finally adjudicated in the court assuming and having
jurisdiction of the parties and the money, papers
and property involved herein or affected hereby
an/or
b. All differences shall have been adjusted by
agreement and the escrow agent shall have been
notified thereof in writing signed by all of the
interested parties.
8. The papers, documents, money or property subject to this
escrow (if other than already named) are as follows:
a. Balanced Living shall deliver to escrow agent
within 48 hours if receipt any and all Investor
funds and checks subscribing for Units in
Balanced Living, Inc.'s offering of Units
registered with the Securities and Exchange
Commission.
b. Balanced Living shall deliver to escrow agent
within 48 hours of receipt any and all
subscription agreements and ancillary documents
signed and submitted by investors in Balanced
Living, Inc.'s offering of Units registered
with the Securities and Exchange Commission.
These documents shall clearly specify the
address of the investor for use by the escrow
agent in its actions under Section 9.
And including such items as may be described on
attached schedules.
9. The other duties of the escrow agent under the terms of
this agreement are as follows:
a. If $200,000 in investor subscription funds for
the Balanced Living offering of Units
registered with the Securities and Exchange
Commission is not deposited with the escrow
agent by July 31, 1999 or within an additional
period of thirty days if extended by the
Company, then escrow agent shall immediately
return all such investor funds and documents to
the named investors directly, without interest
or deduction of any kind..
b. When $200,000 has been deposited with the
escrow agent, and all other escrow requirements
have been met, the escrow agent shall deliver
to Balanced Living the full amount of all
investor funds then on deposit, together with
all interest earned on such amount, and shall
deliver to Balanced Living all investor
documents in escrow agent's possession.
10. The escrow agent will be named as depository only and
has not passed in any way upon the merits or
qualifications of the security and makes no
recommendation with regard to its purchase. The escrow
agent does not authorize the use of its name by any
person for the promotion or sale of the security
11. Special requirements:
None
12. Fees for the usual services of the escrow agent under
terms of this agreement are set forth below, All such
fees shall be computed on a fiscal or calendar year
period adjusted for any fractional part thereof except
that a fee for any period shall not be less than the
minimum fee indicated.
a. In the event the fees charged and due the escrow
agent remain unpaid for a period of one year, the
escrow agent shall have the right, and is hereby
authorized in its role and absolute discretion to
discontinue the escrow, terminate all duties
hereunder, close all accounting or other records,
and to destroy all documents, records and files or
to retain such items in a dormant account status
subject to the escheat laws of the State of Utah.
b. All fees charged shall be paid as follows:
c. The initial escrow fee shall be $ 500.00
d. The minimum escrow fee shall be $ 0.00 PER DEPOSIT
e. For fee for any check issued in refunding to
subscribers $ 10.00
f. In addition to the escrow fee paid or agreed upon at
the inception of this escrow, the parties agree to
pay a reasonable compensation for any extra services
rendered or incurred by the escrow agent including a
reasonable attorney's fee if disputes arise or
litigation is threatened or commences which requires
the escrow agent to refer such dispute to its
attorneys.
13. After release of escrow, the duties, responsibilities
and liability of every kind and character under the
escrow agreement shall cease and terminate.
ISSUER:
Balanced Living, Inc.
/s/ Jeannene Barham
Jeannene Barham, President
ESCROW AGENT:
/s/ A. Robert Thorup
A. Robert Thorup, Esq.
