As filed with the Securities and Exchange Commission on June 4, 1999
Registration No. 333-69415
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pre-effective Amendment 3
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
[graphic]
BALANCED LIVING, INC.
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
------------------
Investing in Balanced Living involves significant risks .
Investors need to read the "Risk Factors" beginning on page 3
------------------
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
------------------
Neither the Securities and Exchange Commission and state securities
regulators have not approved or disapproved these securities, or
determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
------------------
- There are no prior agreements for the purchase of these common
stock units. If all 100,000 units are not purchased, the
offering will be cancelled and all investor funds will be
refunded without interest or deduction of any kind.
- Balanced Living's President, Jeannene Barham, will attempt to
offer and sell all of the units. She may use a registered broker
dealer to assist her, although at this time no such broker has
been identified. If a broker-dealer is used, we will allow a
maximum commission of 10% on broker sales.
- The $180,000 net proceeds to Balanced Living shown above is
before deduction of offering expenses estimated at $28,340,
including legal and accounting fees and printing costs.
- There is no public market for Balanced Living common stock.
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.
The date of this Prospectus is June , 1999
Cover
<PAGE>
PROSPECTUS SUMMARY
- - Balanced Living
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., 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.
We will earn revenue from the following activities:
- Putting on Seminars.
- Selling our Products.
- Sponsoring Circles of Women.
The Offering
- - Securities Offered 100,000 units consisting of 100,000 shares of
Balanced Living common stock, 100,000 class A warrants,
100,000 class B warrants, and 100,000 class C warrants.
- - Warrants The warrants each allow for the purchase of one ) share
of Balanced Living common stock. The Class A Warrants
have a $3.00 per share exercise price, the Class B
Warrants have a $5.00.exercise price, and the Class C
Warrants have a $10.00 exercise price. The warrants
will expire on December 31, 2003.
- - Use of Proceeds Net proceeds from this offering of $151,660 will
be used for debt reduction, implementation of seminars,
marketing expenditures and salaries. The balance of the
proceeds will be used for general corporate purposes,
including working capital. See "Use of Proceeds."
- - Escrow Account Subscription proceeds will be deposited into an escrow
account pending receipt of subscriptions totaling
$200,000 or termination of the offering.
- - Suitability Your purchase of units may not exceed ten percent of
your net worth.
- - This offering
will expire This offering will close whenever all of the units are
sold, or on July 31, 1999, subject to an extension at
the sole discretion of Balanced Living for an
additional 30 days.
- - Summary
Financial Data Balanced Living was formed on July 1, 1998 and
acquired Balanced Woman on July 14, 1998. We have
earned revenue, lost money on operations, and have cash
on hand as of March 31, 1999:
- Cash on hand $37,139
- Total Revenues to date $24,783
- Net loss to date ($357,885)
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RISK FACTORS
Risks related to Balanced Living
- - Balanced Living's limited operating history makes its success uncertain.
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. Upon completion of this offering it
will still be uncertain as to whether we can continue successfully
implementing our business plan or that we will ever operate profitably.
- - If Balanced Living does not obtain enough money to continue to
operate, investors will lose their investment.
With the exception of approximately $320,000 in equity purchases from
the founders and a few private investors, we have no significant assets
or operating capital. Balanced Living's auditors deem us a going
concern, being totally dependent upon receipt of the proceeds of this
offering to provide the working capital necessary to continue the
development of our business plan. Even so, upon successful completion
of the offering , the working capital available to us will be limited.
We have 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 us to internal
funding and profitability, we 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.
Additional financing may not be available to Balanced Living on
acceptable terms, if at all.
- - Balanced Living's limited management could compromise its success.
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 our 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. We do not carry key person life insurance with respect
to any employee or contractor, and we have no employment agreements.
- - The conflicts of interest of Balanced Living's managers may not be
resolved in its favor.
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
our management team. 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. We presently have no way of knowing
if any conflicts of time and interests will be resolved favorably to
Balanced Living.
Risks related to the nature of
Balanced Living's business
- - Balanced Living's products and services may not be accepted by women
in the market place.
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. We can not determine with any
accuracy the exact market share, if any, that we will be able to achieve
for 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 for women.
- - 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. We have completed the registration and copyright of our
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
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to Balanced Living. Unauthorized copying of its products and services
could damage us significantly. Although we are not aware that any of our
products and services are materially infringing the rights of others, it is
possible they are. If so, we could have to modify our 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.
- - Investors in Balanced Living will be investing in non-essential life
products and services.
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 our seminars and products may be
significantly reduced and we may not be able to generate enough revenue
to maintain operations.
Risks related to
Balanced Living's offering
- - The units must all be sold, or the offering will be cancelled.
We must sell all of the units to investors or we cannot keep any
investor money. 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.
- - The current shareholders of Balanced Living will benefit from this
offering and will continue to control the company.
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 the successful completion of this offering,
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.
- - If a public market develops, units owned by earlier investors could
be sold into that market, affecting the resale price for your units.
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."
- - The "penny stock" rules could make reselling your 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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<PAGE>
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 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.
- - Balanced Living may face liability related to an unregistered
offering of securities.
In April 1999, Balanced Living agreed to convert $325,348 of debt
represented by demand notes into 162,681 common stock units with the
same terms and at the same price as the units in this offering. This
avoided default in these debt instruments and created borrowing power
for Balanced Living as it pursued registration of the units in this
offering with the Securities and Exchange Commission. Although Balanced
Living believes this use of units to reduce debt was exempt from
registration under the Securities Act of 1933, the Commission may allege
that the exchange was not exempt and was a violation of Section 5 of the
Securities Act. Such action, if taken by the Commission, could have a
materially adverse effect on our ability to raise capital in the future,
and could cost significantly and unexpectedly to defend.
[SPACE INTENTIONALLY LEFT BLANK]
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<PAGE>
USE OF PROCEEDS
The net proceeds to Balanced Living from the sale of the units is
estimated to be $151,660 after deducting estimated offering expenses of
$28,340 for legal, accounting and printing in connection with the
offering, and after assuming that $20,000 is spent for sales commissions
to get all of the units sold, although we do not now plan to use brokers
if we do not need them. If we get them, we intend to use the net
proceeds over the coming 12-month period for general corporate purposes,
primarily as outlined below:
Amount %
-------- ---
Gross proceeds $200,000
Net proceeds $151,660 100%
Uses of Net Proceeds Amount %
-------------------- -------- ---
Debt reduction $70,000 46%
Salaries $40,500 27%
Marketing and advertising $8,000 5%
Working capital $33,160 22%
--------- -----
Total $151,660 100%
Debt reduction. This amount represents what is currently owed on
Balanced Woman demand notes that are now 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 we estimate it will take
to cover our 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 our 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. Balanced Living may
lose potential opportunities if potential conflicts of interest can not
be resolved in its favor.
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<PAGE>
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()2) 88% $328,348 62% $0.43
New Investors 250,000(3) 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) book value 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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<PAGE>
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. We
anticipate becoming profitable in 2000, but may not be profitable due to
unknown circumstances that could arise that would have a material affect
on our ability to implement our business plan. Although we presented
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 or from other financing sources
Upon successful completion of this offering, we will recognize a net
amount of at least $151,660. Of this amount $70,000 would be used to
reduce our short term demand debt and $8,000 would be used for marketing
and advertisement. We 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. We believe
that our 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.
Without the net proceeds of this offering, or some other financing
source not now known to us, we believe we will be unable to sell enough
products in inventory or attract enough participants to our seminars to
generate enough business to maintain operations and operate profitably.
Balanced Living's business plan progress
The information in this prospectus other than historical information,
and specifically the information set out in this section, is forward
looking information presenting management's beliefs and estimates about
the future. These beliefs, plans and estimates are subject to
significant risks, including 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 successfully complete 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 projections in 1999. To combat these potentially harmful
conditions, we have 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. The previous projections are only projections and it is most
likely that actual results will differ, and may significantly differ
materially from those anticipated in the stated projections as a result
of certain factors that may occur that may or may not be within the
control of Balanced Living.
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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 has frequently 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 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.
We have 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.
We are 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 our
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 our
growth and market penetration.
During 1998, we 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
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We 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 is based on
- the funding received from this offering
- ongoing revenues generated by seminar and product sales
- increased revenue from more seminars in more markets.
We expect to increase the number of customers served in Salt Lake
City, Utah and Denver, Colorado through seminar offerings both to the
public and 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. We have successfully increased our
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.
We intend 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.
We project 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 we
expect 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, we would at such time try
to develop and add these eight new products to the Balanced Living
product line.
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- 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. We will maintain an
average of 50% mark-up on all products it distributes at its seminars.
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.
We 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, we 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.
- - Impact of Year 2000
The year 2000 risk is the result of computer programs being written
using two digits rather than four digits to define the applicable year.
Computer programs that have sensitive software may recognize a date
using "00" as the year 1900 rather than the year 2000. As a result,
computer systems and/or software used by may companies and governmental
agencies may need to be upgraded to comply with year 2000 requirements
or risk system failure or miscalculations causing disruptions of normal
business activities.
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 we believe that our 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. We are 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, we may not be able to present our 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 our seminars and products may be
significantly reduced. Suppliers of its private label products may not
be able to ship sufficient quantities to meet our needs. Balanced
Living's own offices may be closed by equipment or utility failures or
possible civil unrest.
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INFORMATION ABOUT BALANCED LIVING
An overview of Balanced Living
We produce and present 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. Balance Living expects to file all required annual
and quarterly reports. We intend to furnish our 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, we 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 *
* Information contained in Balanced Women's web site should not be
considered a part of this prospectus.
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 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.
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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 we plan 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. We 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.
Wholesale/retail products
We have 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
We have 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.
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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.
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, we have 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). We are forming alliances with
chambers of commerce, women's associations, key business affiliations,
and independent sales associates.
Advertising and publicity
We recognize that a key to our success is becoming a widely known
name. To accomplish this goal, we are designing our 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.
Seminar related
We have 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. We 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. We have 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.
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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, we 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 and services
We are 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
- "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 we are offering our 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.
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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. We believe that our strong testimonial base of
satisfied customers is a growing competitive advantage.
We compete primarily with a large number of privately-and publicly
owned, educational and publishing companies providing personal and
financial development information through 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. We expect that independent contractors working for
Balanced Living will perform production and major vendor initial
shipments. We will maintain an order flow computer record-keeping
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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.
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 March 31, 1999, we 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.
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.
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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
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.
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(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. 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.
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.
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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.
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. We have 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.
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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 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. Balanced
Woman warrants were also canceled and Balanced Living warrants issued
under the terms and conditions of this agreement. Rose Blackham was
issued 25,000 Balanced Living warrants to purchase a total of 25,000
shares of Balanced Living's common stock, at $1.00 per share and
Jeannene Barham was issued 5,000 Balanced Living warrants to purchase a
total of 5,000 shares of Balanced Living's common stock, at $1.00 per
share
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
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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 October 30, 1998, Balanced Living borrowed $25,000 from Rose
Blackham and in that connection issued 25,000 warrants to purchase a
total of 12,500 shares of Balanced Living's common stock, at $1.00 per
share, to Rose Blackham
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 Rose Blackham.
On April 30, 1999, $86,421 in demand notes held by Ms. Barham and Ms.
Blackham had their unpaid principal amount and any accrued interest
converted into Balanced Living common stock units 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. These
conversions of demand notes, together with the conversion of other
demand notes, saved us significant ongoing interest expense and
increased our borrowing capacity by reducing existing debt.
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.
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.
-22-
<PAGE>
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.
- 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, and we
will likely wait to incur those costs until there is an increase in the
fair market value our common shares to a point where exercising the
warrants makes economic sense.
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.
-23-
<PAGE>
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 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.
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.
-24-
<PAGE>
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
- - Arbitrary determination of offering price.
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 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.
- - No broker-dealer or selling agent now planned
Balanced Living is offering 100,000 units of Balanced Living's
securities through Ms. Jeannene Barham, without any underwriter
assistance or firm commitment from any investor or dealer. 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. Generally speaking, Rule 3a4-1 provides an
exemption from the broker/dealer registration requirements of the 1934
Act for associated persons of an issuer.
Balanced Living retains the right to utilize the services of
broker/dealers who are members of the National Association of
Securities Dealers, Inc. 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.
-25-
<PAGE>
- - Escrow of investor funds
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
right to return or use of their funds during the offering period.
- - Balanced Living may reject your subscription
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.
- - There May Not Be A Public Trading Market.
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.
- - 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.
- - 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.
-26-
<PAGE>
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:
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
-27-
<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. AND SUBSIDIARY
[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, 1999 (unaudited)
and 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)
and 1998 (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] as of 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 $278,192, 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.
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 expenses 54,833 35,395
___________ ___________
Total Current Assets 103,999 105,285
EQUIPMENT, net 4,190 3,272
___________ ___________
$108,189 $ 108,557
___________ ___________
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 74,900 44,900
Deficit accumulated during the
development stage (371,152) (278,192)
___________ ___________
Total Stockholders' Equity
(Deficit) (295,652) (232,692)
___________ ___________
$108,189 $ 108,557
___________ ___________
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
For the Three From Inception
Months Ended Inception on January 26,
March 31, on January 26, 1998 Through
_______________________ 1998 Through March 31,
1999 1998 December 31, 1999
(unaudited) (unaudited) 1998 (unaudited)
___________ ___________ _____________ ______________
REVENUE $ 9,869 $ 1,876 $ 14,914 $ 24,783
COST OF SALES 6,435 1,245 27,325 33,760
___________ ___________ _____________ ______________
GROSS PROFIT (LOSS) 3,434 631 (12,411) (8,977)
___________ ___________ _____________ ______________
EXPENSES:
General and
administrative 81,642 31,112 248,096 329,738
___________ ___________ _____________ ______________
OPERATING LOSS (78,208) (30,481) (260,507) (338,715)
OTHER INCOME (EXPENSE):
Interest expense (14,752) - (17,685) (32,437)
___________ ___________ _____________ ______________
LOSS BEFORE INCOME
TAXES (92,960) (30,481) (278,192) (371,152)
CURRENT TAX EXPENSE - - - -
DEFERRED TAX EXPENSE - - - -
___________ ___________ _____________ ______________
NET LOSS $(92,960) $(30,481) $(278,192) $(371,152)
___________ ___________ _____________ ______________
LOSS PER COMMON
SHARE:
Basic loss per share $ (.16) $ (.05) $ (.47) $ (.62)
___________ ___________ _____________ ______________
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 sharem 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 -
Consideration received for
the grant of 37,500 stock
warrants, at $1.00 per
warrant - - 37,500 -
Net loss for the period ended
December 31, 1998 - - - (278,192)
____________ ____________ _________ ___________
BALANCE, December 31, 1998 600,000 600 44,900 (278,192)
Consideration received for
the grant of 30,000 stock
warrants, at $1.00 per
warrant - - 30,000 -
Net loss for the three months
ended March 31, 1999
(unaudited) - - - (92,960)
____________ ____________ _________ ___________
BALANCE, March 31, 1999
(unaudited) 600,000 $ 600 $74,900 $(371,152)
____________ ____________ _________ ___________
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
For the Three From Inception
Months Ended Inception on January 26,
March 31, on January 26, 1998 Through
_______________________ 1998 Through March 31,
1999 1998 December 31, 1999
(unaudited) (unaudited) 1998 (unaudited)
___________ ___________ _____________ ______________
Cash Flows Used by
Operating Activities:
Net loss $(92,960) $(30,481) $(278,192) $(371,152)
Non-cash operating items 30,000 - 37,500 67,500
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 (10,730) (13,227) (12,027)
Increase in prepaid
assets (19,438) - (35,395) (54,833)
Increase in accounts
payable 2,156 87 5,870 8,026
Increase in accrued
liabilities 436 635 5,379 5,815
___________ ___________ _____________ _____________
Net Cash Used by
Operating Activities (78,438) (40,489) (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 issuance
of warrants and notes
payable 60,000 94,500 330,000 390,000
___________ ___________ _____________ _____________
Net Cash Provided by
Financing Activities 60,000 94,500 338,000 398,000
___________ ___________ _____________ _____________
Net Increase in Cash (19,524) 54,011 56,663 37,139
Cash at Beginning of
Period 56,663 - - -
___________ ___________ _____________ _____________
Cash at End of Period $ 37,139 $ 54,011 $ 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 Company issued 37,500 warrants at
$1.00 per warrant charged against prepaid interest expense.
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 on the same terms as above.
Because the Company was proposing a future stock offering at $2.00 per share,
37,500 warrants that were issued during December, 1999 were deemed to have a
value of $1.00 per warrant. Accordingly, $37,500 was recorded as prepaid
interest expense and is being amortized over the life of the notes. Prepaid
interest expenses of $30,000 was also recorded during March, 1999 (unaudited)
for the warrants issued during March, 1999.
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. The Company has accrued additional interest
expense for warrants issued after November 1999 as the exercise price of the
warrants were less than the arbitrary value of $2.00 proposed for the
Company's upcoming stock offering. During 1998 $37,500 was capitalized as
prepaid interest expenses and is being amortized over the life of the note.
An additional $30,000 was capitalized in 1999 and will be amortized over the
life of the note.
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.
F-10
<PAGE>
BALANCED LIVING, INC. AND SUBSIDIARY
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - CAPITAL STOCK [Continued]
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.
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 Weighted
Average Average
Exercise Exercise
Shares Price Shares 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 $(278,192) $(92,960)
Proforma $(278,192) $(92,960)
Loss per share As reported $ (.47) $ (.16)
Proforma $ (.47) $ (.16)
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 $278,192, which may be
applied against future taxable income and which expire in 2018.
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 show the amounts used in computing loss per share and
the effect on income and the weighted average number of shares of
dilutive potential common stock for the periods presented:
For the Three From Inception
Months Ended Inception on January 26,
March 31, on January 26, 1998 Through
_______________________ 1998 Through March 31,
1999 1998 December 31, 1999
(unaudited) (unaudited) 1998 (unaudited)
___________ ___________ _____________ ______________
Loss from continuing
operations applicable
to common shareholders
(Numerator) $(92,960) $(30,481) $(278,192) $(371,152)
___________ ___________ _____________ ______________
Weighted average number
of common shares
outstanding used in
loss per share during
the period
(Denominator) 600,000 600,000 600,000 600,000
___________ ___________ _____________ ______________
Dilutive earnings (loss) per share was not presented, as its effect is anti-
dilutive.
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
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.
F-13
<PAGE>
BALANCED LIVING, INC. AND SUBSIDIARY
[A Development Stage Company]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
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 100,000 "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 and 30,000 warrants for
proceeds totaling $60,000.
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 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
representations other than those
contained in this prospectus in
connection with the offer made
hereby. If given or made, such
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.
TABLE OF CONTENTS
Item Page
Prospectus Summary 2
Risk Factors 3
Risks related to Balanced Living 3
Risks related to the nature of
Balanced Living's business 3
Risks related to Balanced
Living's offering 4
Use of Proceeds 6
Dilution 7
Management's Discussion & Analysis
of Financial Condition and
Results of Operations 8
Information About Balanced Living 12
Management of Balanced Living 18
Balanced Living's Principal Shareholders 20
Certain Transactions 21
Description of Common Stock of
Balanced Living 22
Limitations on Officers' & Directors'
Liability & Indemnification 24
Balanced Living's Transfer Agent &
Registrar 24
Shares Eligible for Future Sale 24
Balanced Living's Plan of Distribution 25
Experts 27
Legal Matters 27
Where Can You Find
Additional Information 27
Balance Living's Financial
Statements Notes to
Financial Statements F-1
Balanced
Living,
Inc.
100,000
Common Stock Units
PROSPECTUS
[graphic]
June , 1999
Back Cover
<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
-28-
<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 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.
-29-
<PAGE>
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 &
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.
-30-
<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, twelve holders of Balanced Living demand notes,
issued by Balanced Living from time to time since its inception, agreed
to convert a total of $325,348 in unpaid principal amount and accrued
interest into Balanced Living common stock units valued at $2.00 per
unit. This show of confidence in the Company by these lenders, including
Ms. Barham, Ms. Blackham and others involved with the founding of
Balanced Living, will increase borrowing capacity through reduced
indebtedness, and will reduce ongoing interest expense. The units used
for this conversion of debt are identical to the units being registered
here. Balanced Living believes that these units were issued and
exchanged under the exemption of Section 4(2) of the Securities Act, and
corollary state exemptions. Balanced Living also believes that the units
exchanged for demand debt in April 1999 should not be integrated with
this registration statement because three of the five factors used by the
Commission to determine integration are not present here:
(1) The funds advanced to the Company by these note holders was
provided in advance and outside of this registration statement,
and was the seed capital for the Company to begin exploring it
ability to function as a profit-making business. Each of these
persons were sophisticated and knowledgeable, and were involved
with the formation of Balanced Living. They 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.
The funds from this offering will move the Company from this initial
exploratory phase to the operating stage.
(2) The common stock units are the same securities used in both
the debt conversion and this registered offering. However the same
security is not determinative. The cash from these twelve persons
was provided to the Company in return for a demand note rather than
common stock.
(3) There is no argument that the arrangements with these twelve
persons are taking place at or about the same time as the Company is
trying to clear this offering through the Commission. However the
agreement with these note holders that they could demand their cash
in order to participate in a public offering of the Company was
established in most cases far ahead of the filing of the
registration statement. The Company had no cash with which to
respond to the demand rights of these note holders and had no
contractual choice but to provide units. Importantly, the units
issued to the note holders are restricted under Rule 144, while the
units offering through this registration statement will not be
covered by Rule 144 (unless purchased by a control person).
-31-
<PAGE>
(4) The twelve note holders agreed to exchange the right to obtain
cash from the Company for shares and warrants. In the offering,
being registered, cash is being obtained from investors. There is
no common consideration for the securities in the two situations.
(5) As noted in item (1), the funds were advanced to the Company
by these twelve as seed capital, while the funds to be raised in
this offering is for general business funding.
It is important to note that the twelve persons involved in the debt
conversion arrangements have a pre-existing relationship with the
Company and its management. Most of the twelve are themselves
founders of the Company. Others are related by blood or business
relations with the officers of the Company. At the time of the
decision to agree to the debt conversion, the Company was in a debtor-
creditor relationship with these twelve persons. It is also important
to note that no broadcast media was used in the discussions with these
twelve persons. Absent the metaphysical concept that the filing of a
registration statement puts the Company in an ongoing general
solicitation regardless of the facts and circumstances, there is clear
authority from the E.F. Hutton line of no-action letters that these
note conversions did not involve general solicitation.
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
*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 Demand Promissory Note used with seed capital 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; + = Filed
with this amendment)
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<PAGE>
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.
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.
-33-
<PAGE>
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 June 4, 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 Chief Executive Officer June 4, 1999
Jeannene Barham President, Chief Financial
Officer and Director
-34-
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Amendment Number 3 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".
PRITCHETT, SILER & HARDY, P.C.
June 4, 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> 103,999 105,285
<PP&E> 4,722 3,636
<DEPRECIATION> 532 364
<TOTAL-ASSETS> 108,189 108,557
<CURRENT-LIABILITIES> 403,841 341,249
<BONDS> 0 0
0 0
0 0
<COMMON> 600 600
<OTHER-SE> (296,252) (233,292)
<TOTAL-LIABILITY-AND-EQUITY> 108,189 108,557
<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> 14,752 17,685
<INCOME-PRETAX> (92,960) (278,192)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (92,960) (278,192)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (92,960) (278,192)
<EPS-BASIC> (.16) (.47)
<EPS-DILUTED> (.16) (.47)
</TABLE>
