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Page 1 of 13 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, 1998
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 5, 1998)
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HEALTH & LEISURE, INC.
Table of Contents
-----------------
Page #
------
PART I - FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
Consolidated Balance Sheets at June 30, 1998
and December 31, 1997 3 - 4
Consolidated Statements of Operations for
the six months ended June 30, 1998
and 1997 5
Consolidated Statements of Changes in
Shareholders' Equity for the period March 13,
1985 (date of inception) to June 30, 1998 6 - 8
Consolidated Statements of Cash Flows for the
six months ended June 30, 1998 and 1997 9
Notes to the Consolidated Financial Statements 10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 11
PART II - OTHER INFORMATION
-----------------
Item 6. Exhibits and Reports on Form 8-K 12
Signature Page 13
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PART I - FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
HEALTH & LEISURE, INC.
(a development stage company)
CONSOLIDATED BALANCE SHEETS
ASSETS
------
June 30,
1998 December 31,
(Unaudited) 1997
----------- ------------
Current Assets:
Cash $6,814 $281
------ ----
Furniture and Fixtures, less
accumulated depreciation -0- -0-
------ ----
Total Assets $6,814 $281
====== ====
See notes to consolidated financial statements.
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LIABILITIES
-----------
June 30,
1998 December 31,
(Unaudited) 1997
----------- ------------
Current Liabilities:
Accounts payable - trade $ 29,788 $ 27,642
Accrued officer wages 330,000 318,000
Accrued interest - officer 81,965 73,615
Current portion of long-term debt 8,867 10,080
----------- -----------
Total current liabilities 450,620 429,337
----------- -----------
Other Liabilities:
Long-term debt, less current
portion:
Officer 222,104 222,754
Bank 1,506
----------- -----------
222,104 224,260
----------- -----------
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 (2,052,400) (2,039,806)
----------- -----------
Total shareholders' equity
(deficit) (665,910) (653,316)
----------- -----------
Total Liabilities and Shareholders'
Equity (Deficit) $ 6,814 $ 281
=========== ===========
See notes to consolidated financial statements.
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<TABLE>
HEALTH & LEISURE, INC.
(a development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- -------------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Consulting Income $ 39,246 $ 21,500 $ 54,049 $ 43,000
Operating Expenses:
Administrative
and general 34,436 24,577 57,851 50,332
----------- ----------- ----------- -----------
Operating Income
(loss) 4,810 (3,077) (3,802) (7,332)
----------- ----------- ----------- -----------
Other Income
(Expense):
Interest expense (4,336) (4,670) (8,792) (9,383)
----------- ----------- ----------- -----------
Net Income (Loss) $ 474 $ (7,747) $ (12,594) $ (16,715)
=========== =========== =========== ===========
Net Income (Loss) Per
Common Share $ 0.000 $ (0.000) $ (0.000) $ (0.001)
=========== =========== =========== ===========
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 13 pages
<TABLE>
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, 1998
<CAPTION>
Common Stock Deficit
----------------------- Accumulated Total
Issued Capital in During Shareholders'
----------------------- 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 13 pages
<TABLE>
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, 1998
<CAPTION>
Common Stock Deficit
----------------------- Accumulated Total
Issued Capital in During Shareholders'
----------------------- 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 Year (63,365) (63,365)
---------- -------- ---------- ----------- ---------
Balance, December 31, 1996 17,325,427 173,254 1,213,236 (2,003,309) (616,819)
Net Loss for the Year (36,497) (36,497)
---------- -------- ---------- ----------- ---------
Balance, December 31, 1997 17,325,427 173,254 1,213,236 (2,039,806) (653,316)
</TABLE>
See notes to consolidated financial statements.
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Page 8 of 13 pages
<TABLE>
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, 1998
<CAPTION>
Common Stock Deficit
----------------------- Accumulated Total
Issued Capital in During Shareholders'
----------------------- Excess of Development Equity
Shares Amount Par Stage (Deficit)
------ ------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 17,325,427 173,254 1,213,236 (2,039,806) (653,316)
Net Loss for the Period (12,594) (12,594)
---------- -------- ---------- ----------- ---------
Balance, June 30, 1998 17,325,427 $173,254 $1,213,236 $(2,052,400) $(665,910)
========== ======== ========== =========== =========
</TABLE>
See notes to consolidated financial statements.
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Page 9 of 13 pages
HEALTH & LEISURE, INC.
(a development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
--------------------------
1998 1997
---- ----
Cash Flows From Operating Activities:
Net loss $(12,594) $(16,715)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Increase in liabilities:
Accounts payable 2,146 5,860
Accrued expenses 20,350 20,350
-------- --------
Net cash provided by
operating activities 9,902 9,495
-------- --------
Cash Flows From Financing Activities:
Principal payments on bank debt (2,719) (4,966)
Proceeds of borrowings from officer 5,000
Repayment of borrowings from officer (650) (5,000)
-------- --------
Net cash used by
financing activities (3,369) (4,966)
-------- --------
Net Increase in Cash 6,533 4,529
Cash, beginning of period 281 (414)
-------- --------
Cash, end of period $ 6,814 $ 4,115
======== ========
Supplemental Disclosure of Cash Flows
Information:
Cash paid for interest $ 442 $ 1,033
======== ========
See notes to consolidated financial statements.
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Page 10 of 13 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, 1998, 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, 1997.
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Page 11 of 13 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
thought 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, 1998, 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 1998, the Company provided pharmaceutical
consulting which resulted in consulting revenue of $39,246 compared to
consulting revenues of $21,500 during the second quarter of 1997.
Administration and general expense increased from $24,577 for the six months
ended June 30, 1997 to $34,436 for the three months ended June 30, 1998, or
approximately 40%. The increase occurred because the Company had more activity
during 1998. The Company is continuing to search for businesses with which it
can combine. The expenses incurred during the quarter ended June 30, 1998, 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, 1998, the Company's operations were funded by
receipt of consulting fees, unpaid salaries to the Company's president in the
amount of $6,000 and accrued interest payable to the Company's president in the
amount of $4,175.
<PAGE> 12
Page 12 of 13 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> 13
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 5, 1998 by/S/ Robert M. Feldman
------------------ ---------------------------
Robert M. Feldman
President and Director
Date August 5, 1998 by/S/ Burton Schildhouse
------------------ ---------------------------
Burton Schildhouse
Secretary, Treasurer and
Director
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000774657
<NAME> HEALTH & LEISURE INC
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 6,814
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,814
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,814
<CURRENT-LIABILITIES> 450,620
<BONDS> 222,104
0
0
<COMMON> 173,254
<OTHER-SE> 1,213,236
<TOTAL-LIABILITY-AND-EQUITY> 6,814
<SALES> 0
<TOTAL-REVENUES> 54,049
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 57,851
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,792
<INCOME-PRETAX> (12,594)
<INCOME-TAX> 0
<INCOME-CONTINUING> (12,594)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,594)
<EPS-PRIMARY> (0.001)
<EPS-DILUTED> (0.001)
</TABLE>
