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Page 1 of 12 pages
(sequentially numbered
document)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 10-QSB
[x] QUARTERLY REPORT PURSUANT TO Section 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 1996
or
[] TRANSITION REPORT PURSUANT TO Section 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition from to
--------- ---------
Commission File Number: 0-15807
HEALTH & LEISURE, INC.
-----------------------
(Exact name of Small Business Issuer as specified in its charter)
Delaware 31-1190725
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
203 East Broad Street, Columbus, Ohio 43215
-----------------------------------------------
(Address of principal executive offices)
(614) 228-2225
------------------------
(Issuer's telephone number)
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the Issuer was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
Common stock, par value $0.01 17,325,427
- ----------------------------- --------------------------------
(Class) (Outstanding at August 10, 1996)
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Page 2 of 12 pages
HEALTH & LEISURE, INC.
Table of Contents
Page #
------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at June 30, 1996
and December 31, 1995 3 - 4
Consolidated Statements of Operations for
the six months ended June 30, 1996
and 1995 5
Consolidated Statements of Changes in
Shareholders' Equity for the period March 13,
1985 (date of inception) to June 30, 1996 6 - 7
Consolidated Statements of Cash Flows for the
six months ended June 30, 1996 and 1995 8
Notes to the Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
Signature Page 12
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Page 3 of 12 pages
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
HEALTH & LEISURE, INC.
(a development stage company)
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30,
1996 December 31,
(Unaudited) 1995
----------- ------------
<S> <C> <C>
Current Assets:
Cash $ 2,537 $ 3,178
----------- ------------
Furniture and Fixtures, less
accumulated depreciation -0- -0-
----------- ------------
Total Assets $ 2,537 $ 3,178
=========== ============
</TABLE>
See notes to consolidated financial statements.
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Page 4 of 12 pages
LIABILITIES
<TABLE>
<CAPTION>
June 30,
1996 December 31,
(Unaudited) 1995
---------- ----------
<S> <C> <C>
Current Liabilities:
Accounts payable - trade $ 12,619 $ 22,733
Accrued officer wages 282,000 270,000
Accrued interest - officer 52,365 44,135
Current portion of long-term debt 9,500 12,000
---------- ----------
Total current liabilities 356,484 348,868
---------- ----------
Other Liabilities:
Long-term debt, less current
portion:
Officer 201,615 205,615
Bank 17,739 2,149
---------- ----------
219,354 207,764
---------- ----------
SHAREHOLDERS' EQUITY (DEFICIT)
Preferred Stock, $.01 par value:
Authorized - 10,000,000 shares
Issued and outstanding - none
Common Stock, $.01 par value:
Authorized - 20,000,000 shares
Issued and outstanding - 17,325,427
shares 173,254 173,254
Additional Paid-In Capital 1,213,236 1,213,236
Deficit Accumulated During the Develop-
ment Stage (1,959,791) (1,939,944)
---------- ----------
Total shareholders' equity
(deficit) (573,301) (553,454)
---------- ----------
Total Liabilities and Shareholders'
Equity (Deficit) $ 2,537 $ 3,178
========== ==========
</TABLE>
See notes to consolidated financial statements.
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Page 5 of 12 pages
HEALTH & LEISURE, INC.
(a development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, June 30,
------------------------ -------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Consulting Income $ 9,000 9,000 $ 38,000 $ 18,000
Operating Expenses:
Administrative and
general 19,709 37,217 48,560 71,147
---------- ---------- ---------- ----------
Operating loss (10,709) (28,217) (10,560) (53,147)
---------- ---------- ---------- ----------
Other Income
(Expense):
Other income 65
Interest expense (4,784) (4,101) (9,287) (8,443)
---------- ---------- ---------- ----------
(4,784) (4,101) (9,287) (8,378)
---------- ---------- ---------- ----------
Net Loss $ (15,493) (32,318) $ (19,847) $ (61,525)
========== ========== =========== ===========
Net Loss Per Common
Share $ (0.001) (0.002) $ (0.001) $ (0.004)
========== ========== =========== ===========
Weighted Average
Shares Outstanding
During the Period 17,325,427 17,325,427 17,325,427 17,325,427
========== ========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
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Page 6 of 12 pages
HEALTH & LEISURE, INC.
(a development stage company)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
(Unaudited)
For the period March 13, 1985 (date of inception)
through June 30, 1996
<TABLE>
<CAPTION>
Deficit
Accumulated Total
Common Stock Capital in During Shareholders'
Issued Excess of Development Equity
Shares Amount Par Stage (Deficit)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Proceeds from Initial
Issuance of Common
Stock on March 13,
1985, inception 300,000 $ 3,000 $ 3,000 $ 6,000
Retroactive Effect of
Recapitalization of
Health & Leisure,
Inc. 7,700,000 77,000 (3,000) $ (27,049) 46,951
---------- ---------- ---------- ---------- ----------
Balance, March 13,
1985, inception,
as restated 8,000,000 80,000 (27,049) 52,951
Net Loss for the
Period (96,722) (96,722)
---------- ---------- ---------- ----------
Balance, December 31,
1985 8,000,000 80,000 (123,771) (43,771)
Proceeds from Issuance
of Common Stock, net
of related costs of
$25,610 1,000,000 10,000 64,390 74,390
Proceeds from Exercise
of Series A Warrants 625,427 6,254 614,661 620,915
Net Loss for the Year (230,969) (230,969)
---------- ---------- ---------- ---------- ----------
Balance, December 31,
1986 9,625,427 96,254 679,051 (354,740) 420,565
Proceeds from Exercise
of Options 140,000 1,400 (550) 850
Proceeds from Exercise
of Series A Warrants 10,000 100 9,900 10,000
Issuance of Shares
Pursuant to Finders
Fee Agreement 200,000 2,000 2,000
Costs Incurred in
Obtaining Capital (25,580) (25,580)
Net Loss for the Year (374,614) (374,614)
---------- ---------- ---------- ---------- ----------
Balance, December 31,
1987 9,975,427 99,754 662,821 (729,354) 33,221
Dividend, 498,771
Shares of Entrepreneur,
Inc. (14,689) (14,689)
Net Loss for the Year (242,711) (242,711)
---------- ---------- ---------- ---------- ----------
Balance, December 31,
1988 9,975,427 99,754 662,821 (986,754) (224,179)
</TABLE>
See notes to consolidated financial statements.
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Page 7 of 12 pages
HEALTH & LEISURE, INC.
(a development stage company)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT) - Continued
(Unaudited)
For the period March 13, 1985 (date of inception)
through June 30, 1996
<TABLE>
<CAPTION>
Deficit
Accumulated Total
Common Stock Capital in During Shareholders'
Issued Excess of Development Equity
Shares Amount Par Stage (Deficit)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance, December 31,
1988 9,975,427 99,754 662,821 (986,754) (224,179)
Debt Conversion 2,000,000 20,000 100,000 120,000
Common Shares Issued 1,500,000 15,000 95,000 110,000
Contribution of
Capital 106,415 106,415
Net Loss for the Year (156,153) (156,153)
---------- ---------- ---------- ---------- ----------
Balance, December 31,
1989 13,475,427 134,754 964,236 (1,142,907) (43,917)
Common Shares Issued 3,850,000 38,500 241,500 280,000
Net Loss for the Year (490,642) (490,642)
---------- ---------- ---------- ---------- ----------
Balance, December 31,
1990 17,325,427 173,254 1,205,736 (1,633,549) (254,559)
Net Loss for the Year (22,323) (22,323)
---------- ---------- ---------- ---------- ----------
Balance, December 31,
1991 17,325,427 173,254 1,205,736 (1,655,872) (276,882)
Net Loss for the Year (78,322) (78,322)
---------- ---------- ---------- ---------- ----------
Balance, December 31,
1992 17,325,427 173,254 1,205,736 (1,734,194) (355,204)
Donated Capital 7,500 7,500
Net Loss for the Year (85,884) (85,884)
---------- ---------- ---------- ---------- ----------
Balance, December 31,
1993 17,325,427 173,254 1,213,236 (1,820,078) (433,588)
Net Loss for the Year (61,810) (61,810)
---------- ---------- ---------- ---------- ----------
Balance, December 31,
1994 17,325,427 173,254 1,213,236 (1,881,888) (495,398)
Net Loss for the Year (58,056) (58,056)
---------- ---------- ---------- ---------- ----------
Balance, December 31,
1995 17,325,427 173,254 1,213,236 (1,939,944) (553,454)
Net Loss for the Period (19,847) (19,847)
---------- ---------- ---------- ---------- ----------
Balance, June 30, 1996 17,325,427 $ 173,254 $1,213,236 $(1,959,791) $ (573,301)
========== ========== ========== =========== ==========
</TABLE>
See notes to consolidated financial statements.
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Page 8 of 12 pages
HEALTH & LEISURE, INC.
(a development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------
1996 1995
---- ----
<S> <C> <C>
Cash Flows From Operating Activities:
Net loss $ (19,847) $ (61,525)
Adjustments to reconcile net loss
to net cash used by operating
activities:
Increase (decrease) in
liabilities:
Accounts payable (10,114) 15,767
Accrued expenses 20,230 19,676
---------- ----------
Net cash used by oper-
ating activities (9,731) (26,082)
---------- ----------
Cash Flows From Financing Activities:
Principal payments on bank debt (4,910) (3,359)
Proceeds from bank debt 18,000 4,772
Proceeds of borrowings from officer 30,000
Repayment of borrowings from officer (4,000)
---------- ----------
Net cash provided by
financing activities 9,090 31,413
---------- ----------
Net Increase (Decrease) in Cash (641) 5,331
Cash, beginning of period 3,178 -0-
---------- ----------
Cash, end of period $ 2,537 $ 5,331
========== ==========
Supplemental Disclosure of Cash Flows
Information:
Cash paid for interest $ 811 $ 767
========== ==========
</TABLE>
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Page 9 of 12 pages
HEALTH & LEISURE, INC.
(a development stage company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - BASIS OF PRESENTATION
The financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been omitted pursuant to
such rules and regulations. The information provided in this
report reflects all adjustments that are, in the opinion of
management, necessary to present fairly the results of
operations for these periods. The results for the six months
ended June 30, 1996, are not necessarily indicative of the
results to be expected for the full fiscal year.
These financial statements should be read in conjunction with
the audited financial statements of the Company contained in
its report on Form 10-K for the year ended December 31, 1995.
<PAGE> 10
Page 10 of 12 pages
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
RESULTS OF OPERATIONS
The Company is a "developmental stage company." In July 1987, the Company began
marketing to the general public, in the United States, disposable chemical heat
pads as hand and body warmers. The market for the heat pads did not develop on a
scale anticipated by management and the distribution of the heat pads did not
result in profitable operations. As a result, in February 1990, the Company
entered into a new line of business, the marketing of long distance telephone
services. Because of the lack of revenues and cash flow, the need for additional
capitalization and the risk of liability exposure, management of the Company
though it was in the best interest to discontinue its involvement. In 1992, the
Company transferred its interest in the long distance telephone service joint
venture to its former partner in the joint venture, in exchange for a full
release of liability and an indemnification. As a result, the Company is no
longer in the business of marketing long distance telephone services. During the
quarter ended June 30, 1996, the Company continued to provide pharmaceutical
consulting to pharmacy chains in order to fund Company expenses, but the Company
does not consider this consulting ongoing business operations and is searching
for a business with which the Company can combine, acquire or otherwise
affiliate.
During the second quarter of 1996, the Company provided pharmaceutical
consulting which resulted in consulting revenue of $9,000 compared to consulting
revenues of $9,000 during the second quarter of 1995.
Administration and general expense decreased from $37,217 for the three months
ended June 30, 1995 to $19,709 for the three months ended June 30, 1996, or
approximately 47%. The administrative and general expense decreased from $71,147
for the six months ended June 30, 1995 to $48,560 for the six months ended June
30, 1996, or approximately 32%. These decreases occurred because in 1995 the
Company had incurred additional expenses in order to file Form 10-K's and 10-Q's
for the periods from December 31, 1991 through December 31, 1994 and these
expenses did not reoccur in 1996. In addition, less funds were expended for
travel. The Company is continuing to search for businesses with which it can
combine. The expenses incurred during the quarter ended June 30, 1996, by the
Company, include the salary of the Company's president, $6,000, that was accrued
but not paid, professional fees, travel, and other administrative expenses.
LIQUIDITY AND CAPITAL RESOURCES
During the quarter ended June 30, 1996, the Company's operations were funded by
receipt of consulting fees, unpaid salaries to the Company's president in the
amount of $6,000 accrued interest payable to the Company's president in the
amount of $4,115 and by receipt of an additional bank loan of $18,000.
<PAGE> 11
Page 11 of 12 pages
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits - None
b) No Form 8-K reports were filed or required during
the quarter.
<PAGE> 12
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Issuer
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
HEALTH & LEISURE, INC.
Date August 10, 1996 by/S/ Robert M. Feldman
------------------------ ---------------------
Robert M. Feldman
President and Director
Date August 10, 1996 by/S/ Burton Schildhouse
------------------------ ----------------------
Burton Schildhouse
Secretary, Treasurer and
Director
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000774657
<NAME> HEALTH & LEISURE, INC.
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 2,537
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,537
<CURRENT-LIABILITIES> 356,484
<BONDS> 219,354
0
0
<COMMON> 173,254
<OTHER-SE> 1,213,236
<TOTAL-LIABILITY-AND-EQUITY> 2,537
<SALES> 0
<TOTAL-REVENUES> 38,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 48,560
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,287
<INCOME-PRETAX> (19,847)
<INCOME-TAX> 0
<INCOME-CONTINUING> (19,847)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (19,847)
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
