<PAGE> 1
1 of 19 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: September 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 November 13, 2000)
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HEALTH & LEISURE, INC.
Table of Contents
-------------------
Page #
------
PART I - FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
Consolidated Balance Sheets at September 30, 2000
and December 31, 1999 3
Consolidated Statements of Operations for
the nine months ended September 30, 2000
and 1999 and inception. 4
Consolidated Statements of Changes in
Shareholders' Equity for the period March 13,
1985 (date of inception) to September 30, 2000 5 - 7
Consolidated Statements of Cash Flows for the
nine months ended September 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 - 17
PART II - OTHER INFORMATION
-----------------
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 18
Signature Page 19
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3 of 19 pages
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheets
<TABLE>
<CAPTION>
ASSETS
------
September 30, December 31,
2000 1999
----------- -----------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 643 $ 1,050
----------- -----------
Total Current Assets 643 1,050
----------- -----------
TOTAL ASSETS $ 643 $ 1,050
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
CURRENT LIABILITIES
Accounts payable $ 106,469 $ 59,453
Accrued wages (Note 3) 384,000 366,000
Note payable - related party (Note 2) 305,272 267,272
Accrued interest payable - related party (Note 2) 112,005 98,974
----------- -----------
Total Current Liabilities 907,746 791,699
----------- -----------
Total Liabilities 907,746 791,699
----------- -----------
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 (2,293,593) (2,177,139)
----------- -----------
Total Stockholders' Equity (Deficit) (907,103) (790,649)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 643 $ 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 Nine Months Ended March 13,
September 30, September 30, 1985 Through
----------------------------- ----------------------------- September 30,
2000 1999 2000 1999 2000
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUE $ - $ 7,500 $ 15,000 $ 31,500 $ 862,728
EXPENSES
General and administrative 44,860 28,734 122,257 93,496 3,946,448
------------ ------------ ------------ ------------ ------------
Total Expenses 44,860 28,734 122,257 93,496 3,946,448
------------ ------------ ------------ ------------ ------------
LOSS FROM OPERATIONS (46,860) (21,234) (107,257) (61,996) (3,083,720)
------------ ------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE)
Interest income - - - - 18,111
Interest expense (4,452) (4,194) (9,197) (12,626) (189,825)
Miscellaneous income - - - - 18,363
------------ ------------ ------------ ------------ ------------
Total Other Income
(Expense) (4,452) (4,194) (9,197) (12,626) (153,351)
------------ ------------ ------------ ------------ ------------
LOSS BEFORE
EXTRAORDINARY ITEM (51,312) (25,428) (116,454) (74,622) (3,237,071)
EXTRAORDINARY ITEM -
GAIN ON EXTINGUISHMENT
OF DEBT - - - - 167,288
GAIN ON DISPOSAL OF
DISCONTINUED
OPERATIONS - - - - 776,190
------------ ------------ ------------ ------------ ------------
NET LOSS $ (51,312) $ (25,428) $ (116,454) $ (74,622) $ (2,293,593)
============ ============ ============ ============ ============
BASIC LOSS PER SHARE $ (0.00) $ (0.00) $ (0.01) $ (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 nine months
ended September 30, 2000
(unaudited) - - - (116,454)
----------- ----------- ----------- -----------
Balance, September 30, 2000
(unaudited) 17,325,427 $ 173,254 $ 1,213,236 $(2,293,593)
=========== =========== =========== ===========
</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 Nine Months Ended March 13,
September 30, September 30, 1985 Through
----------------------------- ----------------------------- September 30,
2000 1999 2000 1999 2000
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net (loss) $ (51,312) $ (25,428) $ (116,454) $ (74,622) $(2,293,593)
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 8,500 - 38,000 - 305,272
Increase (decrease) in accounts
payable 31,811 7,622 47,016 22,607 106,469
Increase (decrease) in accrued
expenses 10,451 8,837 31,031 30,525 496,005
----------- ----------- ----------- ----------- -----------
Net Cash Provided (Used)
by Operating Activities (550) (8,969) (407) (21,490) (1,301,759)
----------- ----------- ----------- ----------- -----------
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>
From
For the For the Inception on
Three Months Ended Nine Months Ended March 13,
September 30, September 30, 1985 Through
----------------------------- ----------------------------- September 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 - 8,415 - 24,175 263,000
Payments on note payable
- shareholder - - - - (185,491)
Payments on note payable - - - (4,120) (144,651)
Proceeds from sale of common
stock - - - - 301,850
Proceeds from donated capital - - - - 7,500
----------- ----------- ----------- ----------- -----------
Net Cash Provided (Used) by
Financing Activities - 8,415 - 20,055 1,261,174
----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
CASH (550) (544) (407) (1,435) 643
CASH, BEGINNING OF PERIOD 1,193 - 1,050 1,435 -
----------- ----------- ----------- ----------- -----------
CASH, END OF PERIOD $ 643 $ 104 $ 643 $ 104 $ 643
=========== =========== =========== =========== ===========
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
September 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. Univernture 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. 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 19 pages
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 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
Worldwide Enterprise (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 19 pages
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 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 Nine Months Ended
September 30, September 30,
------------------------------- -------------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Numerator - loss $ (51,312) $ (25,428) $ (116,454) $ (74,622)
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) $ (0.01) $ (0.00) $ (0.00)
============ ============ ============ ============
</TABLE>
e. Provision for Taxes
At September 30, 2000, the Company had net operating loss
carryforwards of approximately $2,290,000 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 19 pages
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 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 September 30,
2000 and December 31, 1999 was $305,272 and $267,272,
respectively. Unpaid interest at September 30, 2000 and December
31, 1999 totaled $112,005 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 nine months ended September 30, 2000, the Company
accrued an additional $18,000 in wages payable to its president.
As of September 30, 2000, the Company has recorded total accrued
wages payable to its president of $384,000.
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 19 pages
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 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 tradeable 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 19 pages
HEALTH & LEISURE, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 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 19 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. Since 1992
the Company has been searching for a business with which the Company can
combine, acquire or otherwise affiliate. In order to help meet operating
expenses during this time period the Company has been providing consulting
service to pharmacy chains. During the nine months ended September 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. 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. (See Item 5)
During the third quarter of 2000, the Company did not provide pharmaceutical
consulting which had resulted in consulting revenue of $7,500 during the third
quarter of 1999, however, Big Pros paid $30,000 toward expenses, during the
third quarter of 2000. These funds have not been recorded as revenue but as
decreases to expenses in connection with the costs related to the letter of
intent and the definitive agreement discussed in Item 5.
Administration and general expense increased from $28,734 for the three months
ended September 30, 1999 to $46,860 for the three months ended September 30,
2000, or approximately 63%. Administration and general expense increased from
$93,496 for the nine months ended September 30, 1999 to $122,257 for the nine
months ended September 30, 2000, or approximately 31%. The increase in these
expenses occurred because the Company was involved in negotiating the letter of
intent and investigating the BigPros business opportunity and negotiating a
definitive agreement with Big Pros. Expenses of investigating other business
opportunities decreased. The Big Pros transaction is subject to a
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number of conditions so there can be no assurance that the transaction will
close (see Item 5). The expenses incurred during the quarter ended September 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 September 30, 2000, the Company's operations were
funded by 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 $4,452,
loans to the company in the amount of $8,500 by the Company's president, and by
an increase in trade payables.
PART II - OTHER INFORMATION
-----------------
Item 5. Other Information.
On July 17, 2000, Health & Leisure, Inc. (the "Company") issued a press release
announcing that it had executed a non-binding letter of intent with BigPros,
Inc. ("BigPros"). BigPros is engaged in the business of representing
professional athletes on the World Wide Web. BigPros provides website
development, hosting and all "back office" processes related to the distribution
and fulfillment of merchandise and memorabilia via sites dedicated to its
individual professional athlete clients. Following the execution of the letter
of intent the Company proceeded to negotiate a definitive agreement. An
Agreement and Plan of Merger, as modified by a Modification Agreement
(collectively, the "Agreement"), both dated as of October 6, 2000, were entered
into among the Company, Venture Sum, Inc., a Delaware corporation and a
wholly-owned subsidiary of the Company ("Mergerco"), Bigpros, Inc., a Florida
corporation ("BigPros"), Constellation Holdings, Inc., a Delaware corporation
("Constellation"), and Professional Acquisition Management Marketing
Corporation, a Florida corporation ("Pro-Amm"). The Agreement provides generally
for the merger of Mergerco with and into BigPros (the "Merger"). Upon completion
of the Merger, the current holders of BigPros Common Stock and Constellation
will own up to approximately 92% of the equity securities of the Company and
will be in control of the Company. The Agreement is subject to a number of
conditions , including an important condition on a minimum level of
capitalization BigPros is required to have prior to closing. Unless BigPros is
adequately financed, the Company does not believe that consummation of the
closing with BigPros is probable. BigPros' original proposed financing did not
materialize, however BigPros is currently attempting to obtain financing from
other sources and has proposed amendments to the Agreement based upon alternate
financing that it is attempting to obtain and based upon other proposed changes
by the parties. Due to the uncertainty of BigPros financing, the uncertainty
regarding the satisfaction of a number of other conditions in the Agreement and
the uncertainty regarding whether the parties will agree to the proposed
amendments to the Agreement, there can be
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no assurance that the Merger will be consummated.
Item 6. Exhibits and Reports on form 8-K
(a) Exhibits - none
(b) On July 18, 2000 The Company filed a report on Form 8-K reporting
under Item 5 it enters into a letter of intent with Big Pros, Inc.
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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 November 13, 2000 by /S/ Robert M. Feldman
Robert M. Feldman
President and Director
Date November 13, 2000 by /S/ Burton Schildhouse
Burton Schildhouse
Secretary, Treasurer
and Director
