<PAGE> 1
1 of 18 pages
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, 2000
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 11, 2000)
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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, 2000
and December 31, 1999 3
Consolidated Statements of Operations for
the six months ended June 30, 2000
and 1999 and inception. 4
Consolidated Statements of Changes in
Shareholders' Equity for the period March 13,
1985 (date of inception) to June 30, 2000 5 - 7
Consolidated Statements of Cash Flows for the
six months ended June 30, 2000 and 1999 and from
inception. 8 - 9
Notes to the Consolidated Financial Statements 10 - 15
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 16
PART II - OTHER INFORMATION
-----------------
Item 6. Exhibits and Reports on Form 8-K 17
Signature Page 18
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HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheets
<TABLE>
<CAPTION>
ASSETS
------
June 30, December 31,
2000 1999
----------- -----------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 1,193 $ 1,050
----------- -----------
Total Current Assets 1,193 1,050
----------- -----------
TOTAL ASSETS $ 1,193 $ 1,050
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
CURRENT LIABILITIES
Accounts payable $ 74,658 $ 59,454
Accrued wages (Note 3) 378,000 366,000
Note payable - related party (Note 2) 296,772 267,272
Accrued interest payable - related party (Note 2) 107,554 98,974
----------- -----------
Total Current Liabilities 856,984 791,700
----------- -----------
Total Liabilities 856,984 791,700
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock; 10,000,000 shares authorized of
$0.01 par value, no shares outstanding - -
Common stock; 20,0000,000 shares authorized of
$0.01 par value, 17,325,427 shares issued and
outstanding 173,254 173,254
Additional paid-in capital 1,213,236 1,213,236
Deficit accumulated during the development stage (2,242,281) (2,177,140)
----------- -----------
Total Stockholders' Equity (Deficit) (855,791) (790,650)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 1,193 $ 1,050
=========== ===========
</TABLE>
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HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
From
For the For the Inception on
Three Months Ended Six Months Ended March 13,
June 30, June 30, 1985 Through
------------------------------ ------------------------------ June 30,
2000 1999 2000 1999 2000
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUE $ 7,500 $ 8,000 $ 15,000 $ 24,000 $ 862,728
EXPENSES
General and administrative 55,480 31,797 75,397 64,762 3,899,588
------------ ------------ ------------ ------------ ------------
Total Expenses 55,480 31,797 75,397 64,762 3,899,588
------------ ------------ ------------ ------------ ------------
LOSS FROM OPERATIONS (47,980) (23,797) (60,397) (40,762) (3,036,860)
------------ ------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE)
Interest income - - - - 18,111
Interest expense (4,745) (4,175) (4,745) (8,432) (185,373)
Miscellaneous income - - - - 18,363
------------ ------------ ------------ ------------ ------------
Total Other Income
(Expense) (4,745) (4,175) (4,745) (8,432) (148,899)
------------ ------------ ------------ ------------ ------------
LOSS BEFORE
EXTRAORDINARY ITEM (52,725) (27,972) (65,142) (49,194) (3,185,759)
EXTRAORDINARY ITEM -
GAIN ON EXTINGUISHMENT
OF DEBT - - - - 167,288
GAIN ON DISPOSAL OF
DISCONTINUED
OPERATIONS - - - - 776,190
------------ ------------ ------------ ------------ ------------
NET LOSS $ (52,725) $ (27,972) $ (65,142) $ (49,194) $ (2,242,281)
============ ============ ============ ============ ============
BASIC LOSS PER SHARE $ (0.00) $ (0.00) $ (0.00) $ (0.00)
============ ============ ============ ============
WEIGHTED AVERAGE
SHARES OUTSTANDING 17,325,427 17,325,427 17,325,427 17,325,427
============ ============ ============ ============
</TABLE>
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HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
----------------------- Paid-In Development
Shares Amount Capital Stage
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Balance at inception on
March 13, 1985 - $ - $ - $ -
Proceeds from initial issuance
of common stock on March 13,
1985 at $0.02 per share 300,000 3,000 3,000 -
Retroactive effect of
recapitalization 7,700,000 77,000 (3,000) (27,049)
Net loss for the period ended
December 31, 1985 - - - (96,722)
--------- --------- --------- ---------
Balance, December 31, 1985 8,000,000 80,000 - (123,771)
Common shares issued for
cash at $0.10 per share 1,000,000 10,000 90,000 -
Proceeds from exercise of
Series A Warrants at
$0.99 per share 625,427 6,254 614,661 -
Stock offering costs - - (25,610) -
Net loss for the year ended
December 31, 1986 - - - (230,969)
--------- --------- --------- ---------
Balance, December 31, 1986 9,625,427 96,254 679,051 (354,740)
Proceeds from exercise of
options at $0.01 per share 140,000 1,400 (550) -
Proceeds from exercise of
Series A Warrants at
$1.00 per share 10,000 100 9,900 -
Common shares issued
pursuant to finders fee
agreement at $0.01 per share 200,000 2,000 - -
Cost incurred in obtaining
working capital - - (25,580) -
Net loss for the year ended
December 31, 1987 - - - (374,614)
--------- --------- --------- ---------
Balance, December 31, 1987 9,975,427 $ 99,754 $ 662,821 $(729,354)
--------- --------- --------- ---------
</TABLE>
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HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
--------------------------- Paid-In Development
Shares Amount Capital Stage
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance, December 31, 1987 9,975,427 $ 99,754 $ 662,821 $ (729,354)
Dividend - 498,771 shares
of Entrepreneur, Inc. - - - (14,689)
Net loss for the year ended
December 31, 1988 - - - (242,711)
----------- ----------- ----------- -----------
Balance, December 31, 1988 9,975,427 99,754 662,821 (986,754)
Common stock issued in lieu
of debt at $0.06 per share 2,000,000 20,000 100,000 -
Common stock issued for cash
at $0.07 per share 1,500,000 15,000 95,000 -
Contribution of capital - - 106,415 -
Net loss for the year ended
December 31, 1989 - - - (156,153)
----------- ----------- ----------- -----------
Balance, December 31, 1989 13,475,427 134,754 964,236 (1,142,907)
Common stock issued for cash
at $0.07 per share 3,850,000 38,500 241,500 -
Net loss for the year ended
December 31, 1990 - - - (490,642)
----------- ----------- ----------- -----------
Balance, December 31, 1990 17,325,427 173,254 1,205,736 (1,633,549)
Net loss for the year ended
December 31, 1991 - - - (22,323)
----------- ----------- ----------- -----------
Balance, December 31, 1991 17,325,427 173,254 1,205,736 (1,655,872)
Net loss for the year ended
December 31, 1992 - - - (78,322)
----------- ----------- ----------- -----------
Balance, December 31, 1992 17,325,427 173,254 1,205,736 (1,734,194)
Contributed capital - - 7,500 -
Net loss for the year ended
December 31, 1993 - - - (85,881)
----------- ----------- ----------- -----------
Balance, December 31, 1993 17,325,427 $ 173,254 $ 1,213,236 $(1,820,075)
----------- ----------- ----------- -----------
</TABLE>
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HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
--------------------------- Paid-In Development
Shares Amount Capital Stage
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance, December 31, 1993 17,325,427 $ 173,254 $ 1,213,236 $(1,820,075)
Net loss for the year ended
December 31, 1994 - - - (61,810)
----------- ----------- ----------- -----------
Balance, December 31, 1994 17,325,427 173,254 1,213,236 (1,881,885)
Net loss for the year ended
December 31, 1995 - - - (58,056)
----------- ----------- ----------- -----------
Balance, December 31, 1995 17,325,427 173,254 1,213,236 (1,939,941)
Net loss for the year ended
December 31, 1996 - - - (63,365)
----------- ----------- ----------- -----------
Balance, December 31, 1996 17,325,427 173,254 1,213,236 (2,003,306)
Net loss for the year ended
December 31, 1997 - - - (36,499)
----------- ----------- ----------- -----------
Balance, December 31, 1997 17,325,427 173,254 1,213,236 (2,039,805)
Net loss for the year ended
December 31, 1998 - - - (35,559)
----------- ----------- ----------- -----------
Balance, December 31, 1998 17,325,427 173,254 1,213,236 (2,075,364)
Net loss for the year ended
December 31, 1999 - - - (101,775)
----------- ----------- ----------- -----------
Balance, December 31, 1999 17,325,427 173,254 1,213,236 (2,177,139)
Net loss for the six months
ended June 30, 2000
(unaudited) - - - (65,142)
----------- ----------- ----------- -----------
Balance, June 30, 2000
(unaudited) 17,325,427 $ 173,254 $ 1,213,236 $(2,242,281)
=========== =========== =========== ===========
</TABLE>
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HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
From
For the For the Inception on
Three Months Ended Six Months Ended March 13,
June 30, June 30, 1985 Through
---------------------------- ---------------------------- June 30,
2000 1999 2000 1999 2000
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net (loss) $ (52,725) $ (27,972) $ (65,142) $ (49,194) $(2,242,281)
Adjustments to reconcile net (loss to
net cash provided (used) by operating
activities:
Depreciation and amortization - - - - 48,216
Bad debt expense - - - - 38,500
Extraordinary item -
extinguishment of debt - - - - (167,288)
Gain on sale of marketable
securities - - - - (19,590)
Expenses recorded as note
payable to officer - - - - 163,275
Common stock issued for
services rendered - - - - 197,000
Other non-cash items - - - - (4,520)
Changes in operating assets and liabilities:
(Increase) decrease in
accounts receivable - - - - (171,505)
Increase (decrease) in notes
payable 16,500 - 29,500 - 296,772
Increase (decrease) in accounts
payable 26,448 8,100 15,205 15,669 74,658
Increase (decrease) in accrued
expenses 10,745 9,783 20,580 20,350 485,554
----------- ----------- ----------- ----------- -----------
Net Cash Provided (Used)
by Operating Activities 968 (10,089) 143 (13,175) (1,301,209)
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES
Offering costs for
Entrepreneur, Inc. - - - - (5,059)
Purchase of furniture and fixtures - - - - (1,893)
Proceeds of sales of marketable
securities - - - - 48,180
----------- ----------- ----------- ----------- -----------
Net Cash Provided (Used) by
Investing Activities $ - $ - $ - $ - $ 41,228
----------- ----------- ----------- ----------- -----------
</TABLE>
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HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
<TABLE>
<CAPTION>
For the For the
Three Months Ended Six Months Ended From
June 30, June 30, Inception on
--------------------------- --------------------------- March 13, 1985
through June 30,
2000 1999 2000 1999 2000
----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from exercise of warrants $ - $ - $ - $ - $ 630,915
Cash receipts from note payable - - - - 388,051
Cash receipts from note payable
- shareholder - 10,193 - 15,175 263,000
Payments on note payable
- shareholder - - - - (185,491)
Payments on note payable - - - (3,331) (144,651)
Proceeds from sale of common
stock - - - - 301,850
Proceeds from donated capital - - - - 7,500
----------- ----------- ----------- ----------- -----------
Net Cash Provided (Used) by
Financing Activities - 10,193 - 11,844 1,261,174
----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
CASH 968 104 143 (1,331) 1,193
CASH, BEGINNING OF PERIOD 225 - 1,050 1,435 -
----------- ----------- ----------- ----------- -----------
CASH, END OF PERIOD $ 1,193 $ 104 $ 1,193 $ 104 $ 1,193
=========== =========== =========== =========== ===========
SUPPLEMENT CASH FLOW
INFORMATION
Interest paid $ - $ - $ - $ 80 $ 56,911
Income tax $ - $ - $ - $ - $ -
</TABLE>
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HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 2000 and December 31, 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The consolidated financial statements presented are those of
Health & Leisure, Inc. (Health) and its wholly owned subsidiaries,
H & L Concepts, Inc. (H & L), Amtele, Inc. (Amtele), and Venture
Sum, Inc. (Venture). Collectively, they are referred to herein as
the "Company."
Health & Leisure, Inc. was incorporated on March 13, 1985, under
the laws of the State of Utah as Univenture Capital Corporation
(Univenture). On August 29, 1986, Univenture issued 7,700,000
shares of common stock to stockholders of Health and Leisure,
Inc., a Delaware Corporation, (which subsequently changed its name
to Entre Vest, Inc.) for all the outstanding stock of Health &
Leisure, Inc. This transaction was treated as a recapitalization
of Health & Leisure, Inc., and the financial statements of both
companies were combined to reflect this transaction retroactively
to March 13, 1985 (date of inception). Prior to this transaction,
results of operations from January 1, 1986 through August 29, 1986
included losses of $13,000 and $77,000 for Univenture and Health &
Leisure, Inc., respectively. Univenture had previously reported no
income or expense for the period ended December 31, 1985.
Univenture has since changed its name to Health & Leisure, Inc.
In June, 1985, the Company formed H & L Concepts, Inc., an Ohio
corporation, for the purpose of engaging in any lawful act or
activity for which corporations may be formed. H & L Concepts,
Inc. is a wholly owned subsidiary of the Company.
In 1990, the Company formed Amtele, Inc., a wholly owned Delaware
subsidiary, for the purpose of marketing telecommunication
services. Amtele, Inc. has had no operations since 1992.
In 1990, the Company formed Venture Sum, Inc., a wholly owned
Delaware subsidiary, for the purpose of searching for and
combining with an existing privately held company in a form which
would result in the combined entity being a public corporation.
Venture Sum, Inc. has had no operations since 1992.
Health & Leisure, Inc. was incorporated primarily for the purpose
of marketing a disposable pad that produces heat instantaneously
by exothermic reaction. The markets for this product include
medical, health, sports, and leisure fields. The market for the
heat pads has not developed on a scale anticipated by management
and the sale of heat pads has not resulted in profitable
operations. The Company is no longer actively marketing heat pads.
<PAGE> 11
11 of 18 pages
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 2000 and December 31, 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
a. Organization (Continued)
From March, 1990 through December, 1991, the Company marketed a
long distance telephone service of American Telephone & Telegraph,
Inc. (AT&T) known as its Software Defined Network (SDN) service to
primarily small and mid-sized companies located throughout the
United States. On December 28, 1990, the Company began conducting
its telecommunications business through a 50% interest in
Telephony Worldwide Enterprises (TWE), a partnership. In 1991, the
Company recorded a loss from TWE of $19,861. In 1992, TWE ceased
all business activity. The Company divested itself of the
partnership in 1991 including all interest in the partnership and
all liabilities therefrom. As a result of the TWE partnership, the
Company recorded consulting revenue in the amount of $12,667 and
$38,000 in 1991 and 1992, respectively.
During 1991 and 1992, the Company discontinued all business
activities with respect to the heat pads and the SDN service, and
since that time has been seeking a company with which to effect a
business combination.
In 1993, the Company began providing consulting services for
pharmaceutical companies. The Company's president, who is a
registered pharmacist, arranged for these services to help meet
on-going expenses. The Company does not consider consulting to be
its primary on-going business operation and expects such services
to cease in 2000.
The Company has limited operations, assets and liabilities.
Accordingly, the Company is dependent upon management and/or
significant shareholders to provide sufficient working capital to
preserve the integrity of the corporate entity during this phase.
It is the intent of management and significant shareholders to
provide sufficient working capital necessary to support and
preserve the integrity of the corporate entity.
b. Accounting Method
The Company's consolidated financial statements are prepared using
the accrual method of accounting. The Company has elected a
December 31 year-end.
c. Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments
with maturities of three months or less at the time of
acquisition.
<PAGE> 12
12 of 18 pages
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 2000 and December 31, 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
d. Basic Loss Per Share
The computation of basic loss per share of common stock is based
on the weighted average number of shares outstanding during the
period of financial statements.
<TABLE>
<CAPTION>
For the For the
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------ ------------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Numerator - loss $ (52,725) $ (27,972) $ (65,142) $ (49,194)
Denominator - weighted
average number of
shares outstanding 17,325,427 17,325,427 17,325,427 17,325,427
------------ ------------ ------------ ------------
Basic loss per share $ (0.00) $ (0.00) $ (0.00) $ (0.00)
============ ============ ============ ============
</TABLE>
e. Provision for Taxes
At June 30, 2000, the Company had net operating loss carryforwards
of approximately $2,200,000 that may be offset against future
taxable income through 2020. No tax benefit has been reported in
the consolidated financial statements, because the Company
believes there is a 50% or greater chance the carryforwards will
expire unused. Accordingly, the potential tax benefits of the loss
carryforwards are offset by a valuation amount of the same amount.
f. Additional Accounting Policies
Additional accounting policies will be established once planned
principal operations commence.
g. 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 and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
<PAGE> 13
13 of 18 pages
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 2000 and December 31, 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
h. Revenue Recognition
The Company has no significant source of ongoing revenues. Revenue
recognition policies will be determined when principal operations
commence.
i. Principles of Consolidation
The consolidated financial statements include the accounts of
Health & Leisure, Inc. and its subsidiaries, all of which are
wholly owned. Significant intercompany accounts have been
eliminated.
NOTE 2 - NOTE PAYABLE - RELATED PARTY
In order to meet its cash flow needs, the Company has repeatedly
borrowed from one of its principal directors. This note functions
similar to a revolving line of credit in that it has no specific
pay back terms. Interest accrues on this note at a rate of 6% per
annum. The total principal amount due on the note at June 30, 2000
and December 31, 1999 was $296,772 and $267,272, respectively.
Unpaid interest at June 30, 2000 and December 31, 1999 totaled
$107,554 and $98,974, respectively. Because the note has no
specific terms, the entire balance including unpaid interest has
been classified as a current liability.
NOTE 3 - ACCRUED WAGES
During the six months ended June 30, 2000, the Company accrued an
additional $12,000 in wages payable to its president. As of June
30, 2000, the Company has recorded total accrued wages payable to
its president of $378,000.
NOTE 4 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of
liabilities in the normal course of business. However, the Company
does not have significant cash or other material assets, nor does
it have an established source of revenues sufficient to cover its
operating costs and to allow it to continue as a going concern. It
is the intent of the Company to seek after a merger with an
existing operating company. Until this occurs, shareholders of the
Company have committed to meeting the Company's operating
expenses.
<PAGE> 14
14 of 18 pages
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 2000 and December 31, 1999
NOTE 5 - PREFERRED AND COMMON STOCK
During 1986, a total of 2,000,000 Series A and Series B warrants
were issued in registered form. They were tradable separately in
the over-the-counter market. Each warrant evidenced the right to
purchase one share of common stock.
During 1987 and 1986, 625,427 Series A warrants were exercised at
$1.00 per share. No warrants were exercised during 1988, and all
remaining warrants expired in 1988.
The Company issued 200,000 shares of common stock as a finder's
fee during 1987. The finder's fee was valued at $2,000 based upon
the par value of the stock.
On May 2, 1988, the Company effected a one-for-ten reverse stock
split. The common stock outstanding at that date was reduced from
99,754,275 to 9,975,427 and the authorized common stock changed
from 200,000,000 shares, $0.001 par value to 20,000,000 shares,
$0.01 par value.
The Company authorized 10,000,000 shares of preferred stock, $0.01
par value, pursuant to an amendment to the Company's certificate
of incorporation filed May 2, 1988. The amended certificate
permits the Board of Directors to issue one or more series of the
preferred stock on terms and conditions approved by the Board of
Directors without further action by the stockholders. No shares of
preferred stock were issued as of December 31, 1999.
In 1989, the Company entered into an agreement with its president
to discharge indebtedness aggregating $120,000 in exchange for
2,000,000 shares of the Company's common stock. This transaction
was recorded as a capital contribution by the Company's president
which increased common stock and additional paid-in capital by
$120,000 in 1989.
In 1989, the Company sold 1,000,000 shares of common stock for
$60,000 to a director of the Company and signed subscription
agreements to issue 500,000 shares of common stock for $50,000,
which was received in January, 1990. During 1989, the president
individually entered into agreements with two creditors whereby he
transferred certain personal assets in full settlement of the
amounts due the creditors in the aggregate of $91,415. These
settlement agreements have been treated as a capital contribution
by the Company's president. During 1989, the president contributed
$15,000 of marketable securities to the Company.
On May 25, 1990, the Company issued 1,000,000 shares of common
stock to a vice president of the Company as a signing bonus in
consideration for his acceptance of the position. The shares were
recorded at $0.10 per share based on the fair market value of the
shares, established by previous sales to unrelated parties.
<PAGE> 15
15 of 18 pages
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 2000 and December 31, 1999
NOTE 5 - PREFERRED AND COMMON STOCK (Continued)
During 1990, the Company issued 2,000,000 shares of common stock to
consultants of the Company (recorded as compensation at the
contractually stated fair value of the services performed) and
850,000 shares pursuant to stock subscription agreements.
<PAGE> 16
16 of 18 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
six months ended June 30, 2000, 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 has been
searching for a business with which the Company can combine, acquire or
otherwise affiliate.
During the second quarter of 2000, the Company provided pharmaceutical
consulting which resulted in consulting revenue of $7,500 compared to consulting
revenues of $8,000 during the second quarter of 1999.
Administration and general expense increased from $31,797 for the three months
ended June 30, 1999 to $55,480 for the three months ended June 30, 2000, or
approximately 74%. Administration and general expense increased from $64,762 for
the six months ended June 30, 1999 to $75,397 for the six months ended June 30,
2000, or approximately 16%. The increase occurred because in 2000 the Company
had more activity than during 1999. The Company has been searching for a
business with which it can combine. On July 17, 2000 the Company signed a letter
of intent with BigPros, Inc. pursuant to which the Company would acquire BigPros
and the shareholders of BigPros would acquire a substantial controlling interest
in the Company. The increased expenses for the six months ended June 30, 2000
were incurred in negotiating the letter of intent and investigating the BigPros
business opportunity, while expenses of investigating other business
opportunities decreased. The letter of intent is subject to a number of
conditions so there can be no assurance that the transaction will close. The
Company is currently working on a definitive agreement and its board of
directors has conditionally approved the transaction. The expenses incurred
during the quarter ended June 30, 2000, 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, 2000, 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 $4,745.
<PAGE> 17
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PART II - OTHER INFORMATION
-----------------
Item 6. Exhibits and Reports on form 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) On July 18, 2000 the Company filed a Form 8-K Report to report
the execution of a letter of intent with BigPros, Inc.
<PAGE> 18
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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 21, 2000 by /S/ Robert M. Feldman
--------------------------- ------------------------------------
Robert M. Feldman
President and Director
Date August 21, 2000 by /S/ Burton Schildhouse
--------------------------- ------------------------------------
Burton Schildhouse
Secretary, Treasurer and
Director
