U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended June 30, 2000
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 333-69415
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BALANCED LIVING, INC.
-----------------------------------
(Name of Small Business Issuer in its Charter)
COLORADO 87-0575577
------------------------------- --------------------------
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
5525 South 900 East, Suite 110
Salt Lake City, Utah 84117
-------------------------
(Address of Principal Executive Offices)
Issuer's Telephone Number: (801) 262-8844
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Company was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)
Check whether the issuer has filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. Yes____ No ___
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each of the Issuer's
classes of common equity, as of the latest practicable date:
June 30, 2000
Common - 867,849 shares
DOCUMENTS INCORPORATED BY REFERENCE
NONE.
Transitional Small Business Issuer Format Yes X No
--- ---
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The Consolidated Financial Statements of the Company required
to be filed with this 10-QSB Quarterly Report were prepared by management and
reviewed by independent auditors and commence on the following page, together
with related Notes. In the opinion of management, the Consolidated Financial
Statements fairly present the financial condition of the Company.
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2000
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
CONTENTS
PAGE
Accountants' Review Report 1
Unaudited Condensed Balance Sheets, June 30,
2000 and December 31, 1999 2
Unaudited Condensed Statements of Operations,
for the three and six months ended
June 30, 2000 and 1999 and from inception on
January 26, 1998 through June 30, 2000 3
Unaudited Condensed Statements
of Cash Flows, for the six months ended
June 30, 2000 and 1999 and from inception on
January 26, 1998 through June 30, 2000 4
Notes to Unaudited Condensed
Financial Statements 5 - 10
<PAGE>
ACCOUNTANTS' REVIEW REPORT
Board of Directors
BALANCED LIVING, INC.
Salt Lake City, Utah
We have reviewed the accompanying condensed balance sheet of Balanced Living,
Inc. [a development stage company] as of June 30, 2000 and the related
condensed statements of operations for the three and six months ended June 30,
2000 and for the period from inception on January 26, 1998 through June 30,
2000, and cash flows for the six months ended June 30, 2000 and for the period
from inception on January 26, 1998 through June 30, 2000. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review consists
principally of inquiries of Company personnel and analytical procedures
applied to financial data. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed financial statements reviewed by us, in order
for them to be in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
Balanced Living, Inc. will continue as a going concern. As discussed in Note
7 to the financial statements, Balanced Living, Inc. has incurred losses since
its inception and has not yet been successful in establishing profitable
operations, raising substantial doubt about its ability to continue as a going
concern. Management's plans in regards to these matters are also described in
Note 7. The financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
PRITCHETT, SILER & HARDY, P.C.
July 1, 2000
Salt Lake City, Utah
<PAGE>
<TABLE>
BALANCED LIVING, INC.
[A Development Stage Company]
<CAPTION>
CONDENSED BALANCE SHEETS
[Unaudited See Accountants' Review Report]
ASSETS
<S> <C> <C>
June 30, December 31,
2000 1999
___________ ___________
ASSETS OF DISCONTINUED OPERATIONS $ - $ 3,619
___________ ___________
$ - $ 3,619
___________ ___________
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Net current liabilities of discontinued
operations $ - $126,625
___________ ___________
Total Current Liabilities - 126,625
___________ ___________
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,
867,849 shares issued and outstanding 1,697 1,432
Additional paid in capital 639,165 609,430
Deficit accumulated during the
development stage (640,862) (733,868)
___________ ___________
Total Stockholders' Equity (Deficit) - (123,006)
___________ ___________
$ - $ 3,619
___________ ___________
</TABLE>
Note: The balance sheet at December 31, 1999 was taken from the audited
financial statements at that date and condensed.
The accompanying notes are an integral part of these unaudited financial
statements.
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
[CAPTION]
CONDENSED STATEMENTS OF OPERATIONS
[Unaudited See Accountants' Review Report]
<TABLE>
For the Three For the Six From Inception
Months Ended Months Ended on January 26,
June 30, June 30, 1998 Through
June 30,
2000 1999 2000 1999 2000
<S> <C> <C> <C> <C> <C>
REVENUE $ - $ - $ - $ - $ -
EXPENSES:
General and administrative 30,000 48 30,000 48 67,410
OPERATING LOSS (30,000) (48) (30,000) (48) (67,410)
OTHER INCOME (EXPENSE):
Interest expense - - - - -
LOSS BEFORE INCOME TAXES (30,000) (48) (30,000) (48) (67,410)
CURRENT TAX EXPENSE - - - - -
DEFERRED TAX EXPENSE - - - - -
LOSS FROM CONTINUING
OPERATIONS BEFORE
DISCONTINUED OPERATIONS (30,000) (48) (30,000) (48) (67,410)
DISCONTINUED OPERATIONS:
Loss from operations of The
Balanced Woman, Inc. (91,241) (100,763)(176,061)(193,723)(872,519)
Gain on disposal of The
Balanced Woman, Inc. 299,067 - 299,067 - 299,067
NET INCOME (LOSS) $ 177,826 $(100,811)$ 93,006(193,771)$(640,862)
LOSS PER COMMON SHARE:
Loss from continuing operation: (.02) (.00) (.02) (.00) (.05)
Loss from operation of The
Balance Woman, Inc. (.06) (.10) (.12) (.23) (.67)
Gain from disposal of The
Balance Woman, Inc .20 - .20 - .23
Basic loss per share $ .12 $ (.10) $ .06 $ (.23) $ (.49)
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
financial statements.
<PAGE>
<TABLE>
BALANCED LIVING, INC.
[A Development Stage Company]
CONDENSED STATEMENTS OF CASH FLOWS
[Unaudited See Accountants' Review Report]
<CAPTION>
From Inception
For the Six on January 26,
Months Ended 1998 Through
June 30, June 30,
_____________________ ________________
2000 1999 2000
_____________________ ________________
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net Income (loss) $ 93,006 $ (193,771) $ (640,862)
Adjustments to reconcile net loss
to net cash used by operating
activities:
Depreciation 407 404 1,509
Non-cash expense 5,000 35,362 82,862
Gain on disposal of Subsidiary (299,067) - (299,067)
Changes in assets and liabilities:
(Increase) decrease in inventory 463 1,566 (4,152)
(Increase) decrease in prepaids - 34,795 (600)
(increase) in deferred stock
offering costs - (30,690) -
Increase in accounts payables 5,687 24,820 37,521
Increase (decrease) in accrued
expense 13,732 (3,487) 14,511
Net Cash Used by Operating
Activities (180,772) (131,001) (808,278)
Cash Flows From Investing Activities:
Equipment purchases - (1,086) (4,722)
Net Cash Used by Investing Activities - (1,086) (4,722)
Cash Flows From Financing Activities:
Proceeds from options granted - - 5,000
Proceeds from common stock issuance 25,000 - 228,000
Proceed from related-party payable - 19,584 -
Proceeds from issuance of warrants
and notes payable 150,000 60,000 580,000
Net Cash Provided by Financing
Activities 175,000 79,584 813,000
Net Increase in Cash (5,772) (52,503) -
Cash at Beginning of Period 5,772 56,663 -
Cash at End of Period $ - $ 4,160 $ -
Supplemental Disclosures of Cash Flow information:
Cash paid during the period for:
Interest $ - $ - $ 24,880
Income taxes $ - $ - $ -
Supplemental schedule of Noncash Investing and Financing Activities:
For the six months ended June 30, 2000:
None.
For the six months ended June 30, 1999:
None.
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
financial statements.
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED 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"). 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. During
June 2000, the Company spun off the Subsidiary, discontinuing the
operations of the subsidiary, for the cancellation of all outstanding
options and warrants of the Parent. 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.
Condensed Financial Statements The accompanying financial statements
have been prepared by the Company without audit. In the opinion of
management, all adjustments ( which include only normal recurring
adjustments) necessary to present fairly the financial position,
results of operations and cash flows at June 30, 2000 and 1999 and for
the periods then ended have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these condensed financial statements be read in conjunction with
the financial statements and notes thereto included in the Company's
December 31, 1999 audited financial statements. The results of
operations for the periods ended June 30, 2000 are not necessarily
indicative of the operating results for the full year.
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 No. 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.
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
Recently Enacted Accounting Standards Statement of Financial
Accounting Standards (SFAS) No. 132, "Employer's Disclosure about
Pensions and Other Postretirement Benefits", SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities", SFAS No. 134,
"Accounting for Mortgage-Backed Securities ", SFAS No. 135, "Rescission
of FASB Statement No. 75 and Technical Corrections", SFAS No. 136,
"Transfers of Assets to a not for profit organization or charitable
trust that raises or holds contributions for others", and SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities
deferral of the effective date of FASB statement No. 133 ( an amendment
of FASB Statement No. 133.)," were recently issued. SFAS No. 132, 133,
134, 135, 136 and 137 have no current applicability to the Company or
their effect on the financial statements would not have been
significant.
Restatement - The financial statements have been restated for all
periods presented to reflect a 1.65 for 1 forward stock split effective
June 2000.
Reclassification - The financial statements for the periods prior to
June 30, 2000 have been reclassified to conform with the June 30, 2000
financial statements.
NOTE 2 DISCONTINUED OPERATIONS
During the second quarter of 2000, the Company adopted a plan to privately
spin-off and discontinue the operations of The Balanced Woman, Inc.
The Balanced Woman, Inc. is reported as a discontinued operation for
the six months ended June 30, 2000. Net sales related to The Balanced
Woman, Inc. for the six months ended 2000 and 1999 were $5,663 and
$24,858, respectively. These amounts have been reclassified to loss
from operations of The Balanced Woman, Inc. in the accompanying
statement of operations.
The following is a condensed proforma consolidated statement of
operations that reflects what the presentation would have been for the
six months ended June 30, 2000 and 1999 without the reclassifications
required by "discontinued operations" accounting principles:
2000 1999
___________ ___________
Net Sales $ 5,663 $ 24,858
Cost of goods sold (12,244) (27,901)
Other operating expenses (175,208) (119,871)
Other income (expense) (24,272) (70,857)
___________ ___________
Net loss $ (206,061) $(193,771)
___________ ___________
Loss per share $ (.14) $ (.23)
________________________
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 2 DISCONTINUED OPERATIONS [Continued]
Net Assets/(liabilities) of Balance Woman, Inc. consisted of the
following and have been reclassified in the accompanying financial
statements:
June 30, December 31,
2000 1999
___________ ___________
Cash $ - $ 5,772
Inventories - 4,615
Prepaid expenses - 600
Property and equipment - 3,619
Current liabilities - (32,613)
Notes payable related party - (105,000)
Loss on disposal of discontinued segment - -
Loss from operations of discontinued
Operations - -
___________ ___________
Net asset/(liability) of discontinued
operations $ - $ (123,007)
___________ ___________
NOTE 3 NOTES PAYABLE
During 1999, the Company's subsidiary issued subordinated demand notes
payable to an officer and shareholder, of the Company in the amount of
$105,000. The notes bear interest at a rate of 10% per annum with
quarterly interest payments, the notes are due on demand. 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. During the six months
ended June 30, 2000 the Company issued an additional $150,000. Accrued
interest as of June 30, 2000 was $14,511. The note and related accrued
interest were included in the liabilities of the subsidiary that was
spun off during June 2000.
NOTE 4 CAPITAL STOCK
Common Stock During May 1999, The Company issued 4,125,000 shares of
common stock for $25,000 and effectively change control company. The
Company also issued 165,000 share of common stock for services rendered
valued at $5,000. During June 2000, In anticipation of a merger (see
Note 8), 4,025,000 shares of common stock were contributed back to the
Company and cancelled.
In connection with its acquisition of Subsidiary on July 14, 1998, the
Company issued 825,000 shares of its previously authorized, but unissued
common stock. The Subsidiary had previously been funded with $2,000.
During January, 1998, the Company issued 165,000 shares of common stock
in connection with the organization of the Company at $.0165 per share.
Total proceeds amounted to $1,000.
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 4 CAPITAL STOCK [Continued]
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. Due to the
reorganization of the Company, 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. All amounts were expensed in
1999. An additional $30,000 was expensed in 1999 and will be amortized
over the life of the note. During June 2000, the warrants were cancelled
in connection with the spin off of the subsidiary Balance Woman, Inc.
NOTE 5 - 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 June
30, 2000 the Company has available unused operating loss carryforwards
of approximately $640,000, which are restricted due to the change in
control in the Company, which may be applied against future taxable
income and which expire in 2019.
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 $220,000 as of June 30, 2000 with
an offsetting valuation allowance of the same amount resulting in a
change in the valuation allowance of approximately $80,000 during the
six months ended June 30, 2000.
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 6 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 For the Six From Inception
Months Ended Months Ended on January 26,
June 30, June 30, 1998 Through
June 30,
2000 1999 2000 1999 2000
Loss from continuing
operations applicable
to common shareholders
(Numerator) $ (30,000) $ (48) $ (30,000) $ (48) $ (67,410)
Loss from discontinued
operations applicable
to common shareholders
(numerator) (207,826)(100,763) (123,006)(193,723) (573,452)
Gain on disposal of
discontinued operation 299,067 - 299,067 - 299,067
Weighted average
number of common
outstanding used
in loss per share
during the period
(Denominator) 1,533,874 990,000 1,482,913 847,790 1,293,885
Dilutive earnings (loss) per share was not presented, as its effect is
anti-dilutive.
<PAGE>
BALANCED LIVING, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 7 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
has incurred losses since its inception and has not yet been successful
in establishing profitable operations. These factors raise substantial
doubt about the ability of the Company to continue as a going concern.
In this regard, management is hopeful that it can generate adequate
capital through improved operations and reductions in expenditures. If
necessary, management will raise additional funds through loans and/or
through additional sales of its common stock. 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.
NOTE 8 SUBSEQUENT EVENTS
On May 30, 2000, the Company executed a Letter of Intent to acquire Wizzard
Software Corporation wherein the Company purchased 13,090,000 shares or
approximately 96% of Wizzard's outstanding common stock through the
issuance of 13,446,950 shares of the Company. The transaction was
accounted for as a purchase wherein Wizzard became a 96% owned subsidary
of the Company. In connection with the purchase the Company was renamed
Wizzard Software Corporation.
Item 2. Management's Discussion and Analysis or Plan of Operation.
Plan of Operation.
------------------
During the quarter ended June 30, 2000, the Company's sole director
and executive officer and its principal stockholders who owned in excess of a
majority of its outstanding voting securities determined that it would be in
the best interests of the Company, its stockholders and its wholly-owned
subsidiary, The Balanced Woman, Inc., a Colorado corporation ("Balanced
Woman"), to separate the present or proposed business operations of the
Company and the Balanced Woman. This was accomplished by conveying all of the
outstanding shares of the Balanced Woman that were owned by the Company to the
stockholders and certain warrant and option holders of the Company in exchange
for certain outstanding warrants or options to acquire common stock of the
Company that were owned by these stockholders and these warrant and option
holders.
Further, during this quarter, the Company executed a Letter of
Intent whereby the Company proposed to acquire a 96% interest in Wizzard
Software Corporation, a Delaware corporation ("Wizzard").
For additional information respecting these transactions, reference
is made to the 8-K Current Report of the Company dated May 30, 2000, which has
been previously filed with the Securities and Exchange Commission and is
incorporated herein by reference. See Item 7.
If the Wizzard proposal is not completed, the Board of Directors
will determine which industries or fields of endeavor in which the Company
will focus its efforts in the future and adopt a Business Plan outlining the
steps necessary to engage in these business operations.
Results of Operations.
---------------------
At June 30, 2000, the Company had $0 in assets and $0 in
liabilities. The Company had no revenues for the three months ended June
30, 2000 and 1999, with $30,000 and $48 in expenses, for net income and losses
of $177,826 and ($100,811), respectively. The Company had no revenues for the
six months ended June 30, 2000 and 1999, with $30,000 and $48 in expenses, for
net income and losses of $93,006 and ($193,771), respectively.
The Company had a net income of $177,826 primarily from discontinued
operations for the period ended June 30, 2000; and a net loss of ($100,811)
for the period ended June 30, 1999. The Company had a loss from discontinued
operations of ($91,241) in 2000 and ($100,763) in 1999, respectively, with a
gain on discontinued operations in 2000 of 299,067 for a net income of $93,006
for the six months ended June 30, 2000.
Liquidity.
---------
At June 30, 2000, the Company had no current assets, with no current
liabilities of $0. Total stockholder's equity was ($0).
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None; not applicable.
Item 2. Changes in Securities.
None; not applicable.
Item 3. Defaults Upon Senior Securities.
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
None; not applicable.
Item 5. Other Information.
None; not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Annual Report for the year ended December 31, 1999.*
(b) Reports on Form 8-K.
8-K Current Report dated May 10, 2000, filed with the
Securities and Exchange Commission on June 21, 2000.
*Incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned thereunto duly authorized.
BALANCED LIVING, INC.
Date: 21-Aug-00 By/s/Jeffrey Hardman
--------- ------------------------
Jeffrey Hardman, Director
and President
Date: 8/21/2000 By/s/Joel Hardman
--------- ------------------------
Joel Hardman, Director
Secretary
