Attached files
| file | filename |
|---|---|
| EX-32.1 - EXERCISE FOR LIFE SYSTEMS, INC. | ex32_1.htm |
| EX-31.1 - EXERCISE FOR LIFE SYSTEMS, INC. | ex31_1.htm |
U.S.
Securities and Exchange Commission
Washington,
D.C. 20549
FORM
10-Q
[X] QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
For the Quarterly Period Ended March
31, 2010
[
] TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
For
the Transition Period From ____to _____
Commission
File Number
333-153589
EXERCISE
FOR LIFE SYSTEMS, INC.
|
North Carolina
|
22-3464709
|
|
(State
or other jurisdiction of
|
(IRS
Employer identification No.)
|
|
incorporation
or organization)
|
http://www.e4lifeonline.com/
Adam
Slazer
Chief
Executive Officer
East
Field Road, Suite 200-311
Huntersville,
NC 28078
Telephone
No.: 704-778-1700
(Name,
Address and Telephone Number
of
Principal Executive Offices and Agent for Service)
Indicate
by check mark if the registrant is a well-know seasoned issuer, as defined in
Rule 405 of the Securities Act.
Yes
[ ] No
[x]
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act
Yes
[ ] No
[x]
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
[ ]
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this
chapter) during the preceding 12 months (or such shorter period that the
registrant was required to submit and post such files).
[ ]
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 if
Regulation S-K (229.405 of this Chapter) is not contained herein, and will not
be contained, to the best of the registrant’s knowledge, in definitive proxy of
information statements incorporated by reference in Part III of this Form 10-K
or any amendments to this Form 10-K.
[ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
|
Large
accelerated filer
|
¨
|
|
Non-accelerated
filer
|
¨ (Do not
check if a smaller reporting company)
|
|
Accelerated
filer
|
¨
|
|
Smaller
reporting company
|
X
|
Indicate
by check mark whether the registrant is a shell company (as defined in rule
12b-2 of the exchange act).
Yes
[ ] No
[X]
The
Registrant’s revenues for its three months ended March 31, 2010 were
$9,463.
Number of
shares of common stock, par value $.0001, outstanding as of May 6, 2010:
11,527,050
CAUTIONARY
STATEMENT REGARDING FORWARD LOOKING INFORMATION
The
discussion contained in this 10-Q under the Securities Exchange Act of 1934, as
amended, contains forward-looking statements that involve risks and
uncertainties. The issuer's actual results could differ significantly from those
discussed herein. These include statements about our expectations, beliefs,
intentions or strategies for the future, which we indicate by words or phrases
such as "anticipate," "expect," "intend," "plan," "will," "we believe," "the
Company believes," "management believes" and similar language, including those
set forth in the discussions under "Notes to Financial Statements" and
"Management's Discussion and Analysis or Plan of Operation" as well as those
discussed elsewhere in this Form 10-Q. We base our forward-looking statements on
information currently available to us, and we assume no obligation to update
them. Statements contained in this Form 10-Q that are not historical facts are
forward-looking statements that are subject to the "safe harbor" created by the
Private Securities Litigation Reform Act of 1995.
INDEX TO
FORM 10-Q
|
PART
I
|
Page No. |
| Item 1. Financial Statements | 3 |
| Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | 11 |
|
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
|
12 |
|
Item
4. Controls and Procedures
|
13 |
|
Item
4T. Controls and Procedures
|
13 |
|
PART
II
|
|
|
Item
1. Legal Proceedings
|
14 |
|
Item
1A. Risk Factors
|
14 |
|
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
14 |
|
Item
3. Defaults Upon Senior Securities
|
14 |
|
Item
4. Submission of Matters to a Vote of Security
Holders
|
14 |
|
Item
5. Other Information
|
14 |
|
Item
6. Exhibits
|
14 |
2
ITEM 1. FINANCIAL
STATEMENTS
INDEX
TO EXERCISE FOR
LIFE SYSTEMS, INC. FINANCIAL STATEMENTS
| EXERCISE FOR LIFE SYSTEMS, INC. | Page No. |
|
Balance
Sheets
|
4 |
|
Statements
of Operations
|
5 |
|
Statement
of Stockholders’ Equity
|
6 |
|
Statements
of Cash Flows
|
7 |
|
Notes
to Financial Statements
|
8 |
3
|
EXERCISE
FOR LIFE SYSTEMS, INC.
|
||||||||
|
AS
OF MARCH 31, 2010 AND DECEMBER 31, 2009
|
||||||||
|
Unaudited
|
Audited
|
|||||||
|
ASSETS
|
3/31/2010
|
12/31/2009
|
||||||
|
|
|
|||||||
|
CURRENT ASSETS:
|
||||||||
|
Cash
|
$ | 265 | $ | 4,918 | ||||
|
TOTAL
CURRENT ASSETS
|
265 | 4,918 | ||||||
|
FIXED ASSETS:
|
||||||||
|
Machinery
and equipment
|
56,090 | 56,090 | ||||||
|
Accumulated
depreciation
|
(47,367 | ) | (44,563 | ) | ||||
|
TOTAL
FIXED ASSETS
|
8,723 | 11,527 | ||||||
|
TOTAL
ASSETS
|
$ | 8,988 | $ | 16,445 | ||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
|
||||||||
|
CURRENT LIABILITIES
|
||||||||
|
Accounts
payable
|
$ | 22,699 | $ | 41,407 | ||||
|
Promissory
note payable
|
21,000 | - | ||||||
|
TOTAL
CURRENT LIABILITIES
|
43,699 | 41,407 | ||||||
|
STOCKHOLDERS' EQUITY
(DEFICIT)
|
||||||||
|
Common
stock ($.0001 par value, 100,000,000 shares authorized; 11,527,050 and
11.517,050 shares issued and outstanding at March 31, 2010 and December
31, 2009, respectively)
|
1,153 | 1,153 | ||||||
|
Common
stock subscribed but not yet issued (-0- and 10,000 shares at March 31,
2010 and December 31, 2009, respectively)
|
- | - | ||||||
|
Additional
paid in capital
|
133,999 | 133,999 | ||||||
|
Retained
deficit
|
(169,863 | ) | (160,114 | ) | ||||
|
TOTAL
STOCKHOLDERS' EQUITY (DEFICIT)
|
(34,711 | ) | (24,962 | ) | ||||
|
|
||||||||
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
$ | 8,988 | $ | 16,445 | ||||
|
The
accompanying notes are an integral part of these financial
statements
|
||||||||
4
|
EXERCISE
FOR LIFE SYSTEMS, INC.
|
||||||||
|
FOR
THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
|
||||||||
|
|
||||||||
|
(Unaudited)
|
For
The Three Months
|
|||||||
|
Ended
March 31,
|
||||||||
|
2010
|
2009
|
|||||||
|
REVENUES:
|
||||||||
|
Sales
|
$ | 12,232 | $ | 8,949 | ||||
|
Cost
of sales
|
(2,769 | ) | (2,021 | ) | ||||
|
Gross
profit
|
9,463 | 6,928 | ||||||
|
EXPENSES:
|
||||||||
|
Selling,
general and administrative expenses
|
19,212 | 17,311 | ||||||
|
Total
expenses
|
19,212 | 17,311 | ||||||
|
(Loss)
from operations
|
$ | (9,749 | ) | $ | (10,383 | ) | ||
|
Provision
for income taxes
|
- | - | ||||||
|
NET
(LOSS)
|
$ | (9,749 | ) | $ | (10,383 | ) | ||
|
Basic
and fully diluted net loss per common share:
|
$ | * | $ | * | ||||
|
Weighted
average common shares outstanding
|
11,527,050 | 11,522,050 | ||||||
|
*
less than $.01 per share.
|
||||||||
The
accompanying notes are an integral part of these financial
statements.
5
|
EXERCISE
FOR LIFE SYSTEMS, INC.
|
||||||||||||||||||||||||
|
FOR
THE THREE MONTHS ENDED MARCH 31, 2010
|
||||||||||||||||||||||||
|
(Unaudited)
|
Common
|
Common
|
|
|||||||||||||||||||||
|
Stock
|
Stock
|
|
||||||||||||||||||||||
|
Subscribed
|
Subscribed
|
Additional
|
|
|||||||||||||||||||||
|
Common
Stock
|
Not
Issued
|
Not
Issued
|
Paid-in
|
Retained
|
||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
(Deficit)
|
|||||||||||||||||||
|
Balances,
December 31, 2009
|
11,527,050 | $ | 1,153 | - | $ | - | $ | 133,999 | $ | (160,114 | ) | |||||||||||||
|
Net
loss for the three months ended March 31, 2010
|
- | - | - | - | - | (9,749 | ) | |||||||||||||||||
|
Balances,
March 31, 2010
|
11,527,050 | $ | 1,153 | - | $ | - | $ | 133,999 | $ | (169,863 | ) | |||||||||||||
The
accompanying notes are an integral part of these financial
statements.
6
|
EXERCISE
FOR LIFE SYSTEMS, INC.
|
||||||||
|
(FKA
A.J. GLASER, INC.)
|
||||||||
|
STATEMENTS
OF CASH FLOWS
|
||||||||
|
FOR
THE THREE MONTHS ENDED MARCH 31, 2010 and 2009
|
||||||||
|
|
||||||||
|
|
(Unaudited)
|
(Unaudited)
|
||||||
|
2010
|
2009
|
|||||||
|
CASH FLOWS FROM OPERATING
ACTIVITIES:
|
||||||||
|
Net
(loss)
|
$ | (9,749 | ) | $ | (10,383 | ) | ||
|
Adjustments
to reconcile net (loss) to net cash provided by (used in)
operations:
|
||||||||
|
Depreciation
|
2,804 | 2,804 | ||||||
|
Increase
(decrease) in operating liabilities:
|
||||||||
|
Accounts
payable
|
2,292 | 8,875 | ||||||
|
NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
(4,653 | ) | 1,296 | |||||
|
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(4,653 | ) | 1,296 | |||||
|
CASH
AND CASH EQUIVALENTS,
|
||||||||
|
BEGINNING
OF THE PERIOD
|
4,918 | 1,895 | ||||||
|
END
OF THE PERIOD
|
$ | 265 | $ | 3,191 | ||||
|
SUPPLEMENTAL
NON-CASH FINANCING ACTIVITIES:
|
||||||||
|
Conversion
of accounts payable to notes payable for consulting
services
|
$ | 21,000 | $ | - | ||||
The
accompanying notes are an integral part of these financial
statements.
7
EXERCISE
FOR LIFE SYSTEMS, INC.
NOTES TO
FINANCIAL STATEMENTS
NOTE
1 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Business
Activity
Exercise
For Life Systems, Inc., (the “Company”) offers personal fitness training
services and products and is located in the Charlotte, North Carolina area. The
Company was incorporated in the State of North Carolina on September 27,
2006.
On June
9, 2008, the Company filed an amendment to the Articles of Incorporation with
the Secretary of State of North Carolina to change its corporate name to
Exercise For Life Systems, Inc. (FKA A.J. Glaser, Inc.). This amendment also
changed the par value of the common stock from $1 per share to $.0001 per share
and increased the authorized common shares from 100 shares to 100,000,000
shares.
Basis of
Presentation
The
financial statements include the accounts of Exercise For Life Systems, Inc.
under the accrual basis of accounting.
Management’s Use of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates.
Income
Taxes
Income
taxes are provided in accordance with Statement of Financial Accounting
Standards No. 109 (SFAS No. 109), “Accounting for Income
Taxes.” A deferred tax asset or liability is recorded for all temporary
differences between financial and tax reporting and net operating loss-carry
forwards.
Deferred
tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that, some portion or all of the deferred
tax asset will not be realized. Deferred tax assets and liabilities are adjusted
for the effect of changes in tax laws and rates on the date of
enactment.
Fair Value of Financial
Instruments
The
Company’s financial instruments are cash and accounts payable. The recorded
values of cash and payables approximate their fair values based on their
short-term nature.
Comprehensive Income
(Loss) - The Company adopted Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 130, “Reporting Comprehensive
Income”, which establishes standards for the reporting and display of
comprehensive income and its components in the financial statements. There were
no items of comprehensive income (loss) applicable to the Company during the
period covered in the financial statements.
Loss Per Share - The
Company reports loss per share in accordance with Statement of Financial
Accounting Standard (SFAS) No.128. This statement requires dual presentation of
basic and diluted earnings (loss) with a reconciliation of the numerator and
denominator of the loss per share computations. Basic earnings per share amounts
are based on the weighted average shares of common outstanding. If applicable,
diluted earnings per share would assume the conversion, exercise or issuance of
all potential common stock instruments such as options, warrants and convertible
securities, unless the effect is to reduce a loss or increase earnings per
share. There were no adjustments required to net loss for the period presented
in the computation of diluted earnings per share. There were no common stock
equivalents necessary for the computation of diluted loss per
share.
Long-Lived Assets -
In accordance with SFAS No. 144, the Company reviews and evaluates its
long-lived assets for impairment whenever events or changes in circumstances
indicate that their net book value may not be recoverable. When such factors and
circumstances exist, including those noted above, the Company compares the
assets’ carrying amounts against the estimated undiscounted cash flows to be
generated by those assets over their estimated useful lives. If the carrying
amounts are greater than the undiscounted cash flows, the fair values of those
assets are estimated by discounting the projected cash flows. Any excess of the
carrying amounts over the fair values are recorded as impairments in that fiscal
period.
Property and Equipment -
Property and equipment is stated at cost. Depreciation is provided by the
straight-line method over the estimated economic life of the property and
equipment remaining from five to seven years.
When
assets are sold or retired, their costs and accumulated deprecation are
eliminated from the accounts and any gain or loss resulting from their disposal
is included in the statement of operations.
The
Company recognizes an impairment loss on property and equipment when evidence,
such as the sum of expected future cash flows (undiscounted and without interest
charges), indicates that future operations will not produce sufficient revenue
to cover the related future costs, including depreciation, and when the carrying
amount of the asset cannot be realized through sale. Measurement of the
impairment loss is based on the fair value of the assets.
Revenue Recognition –
Revenue is recognized when fitness training services are completed provided
collection from the client of the resulting receivable is probable. Revenue from
product sales is recognized when the products are shipped.
Risk and Uncertainties
- The Company is subject to risks common to companies in the service
industry, including, but not limited to, litigation, development of new
technological innovations and dependence on key personnel.
Cash and Cash
Equivalents - For purposes of the Statements of Cash Flows, the Company
considers highly liquid investments with an original maturity of three months or
less to be cash equivalents.
8
EXERCISE
FOR LIFE SYSTEMS, INC.
NOTES TO
FINANCIAL STATEMENTS
FOR THE
THREE MONTHS ENDED MARCH 31, 2010 (UNAUDITED)
NOTE
1 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Share-Based Payments -
The Company accounts for share-based compensation using the fair value
method of Financial Accounting Standard No. 123R. Common shares issued for
services rendered by a third party (both employees and non-employees) are
recorded at the fair value of the shares issued or services rendered, whichever
is more readily determinable. The Company accounts for options and warrants
under the same authoritative guidance using the Black-Scholes Option Pricing
Model.
Advertising Costs -
Advertising costs are expensed as incurred. The Company does not incur any
direct-response advertising costs.
Recent Accounting
Pronouncements - The Company has reviewed all recently issued, but not
yet effective, accounting pronouncements and do not believe the future adoption
of any such pronouncements may be expected to cause a material impact on its
financial condition or the results of its operations.
FASB Accounting
Standards Codification
(Accounting Standards Update (“ASU”)
2009-01)
In
June 2009, FASB approved the FASB Accounting Standards Codification (“the
Codification”) as the single source of authoritative nongovernmental GAAP. All
existing accounting standard documents, such as FASB, American Institute of
Certified Public Accountants, Emerging Issues Task Force and other related
literature, excluding guidance from the Securities and Exchange Commission
(“SEC”), have been superseded by the Codification. All other non-grandfathered,
non-SEC accounting literature not included in the Codification has become
nonauthoritative. The Codification did not change GAAP, but instead introduced a
new structure that combines all authoritative standards into a comprehensive,
topically organized online database. The Codification is effective for interim
or annual periods ending after September 15, 2009, and impacts the
Company’s consolidated financial statements as all future references to
authoritative accounting literature will be referenced in accordance with the
Codification. There have been no changes to the content of the Company’s
financial statements or disclosures as a result of implementing the Codification
during the quarter ended March 31, 2010.
As a
result of the Company’s implementation of the Codification during the fiscal
year ended December 31, 2009, previous references to new accounting standards
and literature are no longer applicable. In the current annual consolidated
financial statements, the Company will provide reference to both new and old
guidance to assist in understanding the impacts of recently adopted accounting
literature, particularly for guidance adopted since the beginning of the current
fiscal year but prior to the Codification.
Subsequent
Events
(Included in Accounting Standards
Codification (“ASC”) 855 “Subsequent Events”, previously SFAS No. 165
“Subsequent Events”)
SFAS
No. 165 established general standards of accounting for and disclosure of
events that occur after the balance sheet date, but before the consolidated
financial statements are issued or available to be issued (“subsequent events”).
An entity is required to disclose the date through which subsequent events have
been evaluated and the basis for that date. For public entities, this is the
date the consolidated financial
Recent Accounting
Pronouncements (cont.) -- statements are issued. SFAS No. 165 does
not apply to subsequent events or transactions that are within the scope of
other GAAP and did not result in significant changes in the subsequent events
reported by the Company. SFAS No. 165 became effective for interim or
annual periods ending after June 15, 2009 and did not impact the Company’s
consolidated financial statements. The Company evaluated for subsequent events
through the issuance date of the Company’s consolidated financial statements. No
recognized or non-recognized subsequent events were noted.
Determination of
the Useful Life of Intangible Assets
(Included in ASC 350 “Intangibles —
Goodwill and Other”, previously FSP SFAS No. 142-3 “Determination of the
Useful Lives of Intangible Assets”)
FSP SFAS
No. 142-3 amended the factors that should be considered in developing
renewal or extension assumptions used to determine the useful life of a
recognized intangible asset under previously issued goodwill and intangible
assets topics. This change was intended to improve the consistency between the
useful life of a recognized intangible asset and the period of expected cash
flows used to measure the fair value of the asset under topics related to
business combinations and other GAAP. The requirement for determining useful
lives must be applied prospectively to intangible assets acquired after the
effective date and the disclosure requirements must be applied prospectively to
all intangible assets recognized as of, and subsequent to, the effective date.
FSP SFAS No. 142-3 became effective for consolidated financial statements
issued for fiscal years beginning after December 15, 2008, and interim
periods within those fiscal years. The adoption of FSP SFAS No. 142-3 did not
impact the Company’s consolidated financial statements.
Noncontrolling
Interests
(Included in ASC 810
“Consolidation”, previously SFAS No. 160 “Noncontrolling Interests in
Consolidated Financial Statements an amendment of ARB
No. 51”)
SFAS
No. 160 changed the accounting and reporting for minority interests such
that they will be recharacterized as noncontrolling interests and classified as
a component of equity. SFAS No. 160 became effective for fiscal years
beginning after December 15, 2008 with early application prohibited. The
Company implemented SFAS No. 160 at the start of fiscal 2009 and no longer
records an intangible asset when the purchase price of a noncontrolling interest
exceeds the book value at the time of buyout. The adoption of SFAS No. 160
did not have any other material impact on the Company’s financial
statements.
Consolidation of
Variable Interest Entities — Amended
(To be included in ASC 810
“Consolidation”, SFAS No. 167 “Amendments to FASB Interpretation No.
46(R)”)
SFAS
No. 167 amends FASB Interpretation No. 46(R) “Consolidation of
Variable Interest Entities regarding certain guidance for determining whether an
entity is a variable interest entity and modifies the methods allowed for
determining the primary beneficiary of a variable interest entity. The
amendments include: (1) the elimination of the exemption for qualifying
special purpose entities, (2) a new approach for determining who should
consolidate a variable-interest entity, and (3) changes to when it is
necessary to
9
EXERCISE
FOR LIFE SYSTEMS, INC.
NOTES TO
FINANCIAL STATEMENTS
FOR THE
THREE MONTHS ENDED MARCH 31, 2010 (UNAUDITED)
NOTE
1 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Recent Accounting
Pronouncements (cont.) – been evaluated and the basis for that date. For
public entities, this is the date the consolidated financial reassess that
should consolidate a variable-interest entity. SFAS No. 167 is effective
for the first annual reporting period beginning after November 15, 2009,
with earlier adoption prohibited. The Company will adopt SFAS No. 167 in
fiscal 2010 and does not anticipate any material impact on the Company’s
financial statements.
NOTE
2 INCOME
TAXES
At March
31, 2010 the Company had federal and state net operating loss carry forwards of
approximately $58,000 that expire in various years through the year
2023.
Due to
operating losses, there is no provision for current federal or state income
taxes for the three months ended March 31, 2010 and 2009.
Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amount used for federal and state income tax purposes.
The
Company’s deferred tax asset at March 31, 2010 consists of net operating loss
carry forwards calculated using federal and state effective tax rates equating
to approximately $23,000 less a valuation allowance in the amount of
approximately $23,000. Because of the Company’s lack of earnings history, the
deferred tax asset has been fully offset by a valuation allowance. The valuation
allowance increased by approximately $3,000 for the quarter ended March 31,
2010.
The
Company’s total deferred tax asset as of March 31, 2010 is as
follows:
Net operating loss carry
forwards $ 23,000
Valuation
allowance (23,000)
Net
deferred tax
asset $
--
=======
The
reconciliation of income taxes computed at the federal and state statutory
income tax rate to total income taxes for the three months ended March 31, 2010
and 2009 is as follows:
Income
tax computed at the federal statutory
rate
34%
Income
tax computed at the state statutory
rate 6%
Valuation
allowance
(40%)
Total
deferred tax
asset 0%
NOTE
3 CAPITAL
STOCK
The
Company is authorized to issue 100,000,000 common shares at $.0001 par value per
share.
NOTE
4 INCOME (LOSS) PER
SHARE
Income
(loss) per share is computed by dividing the net income (loss) by the weighted
average number of common shares outstanding during the period. Basic and diluted
loss per share was the same for the three months ended March 31, 2010 and
2009.
NOTE
5 LEASE COMMITMENTS AND
RELATED PARTY TRANSACTIONS
The
Company has an oral, month-to-month lease with its President. The lease is
gratuitous and consists of approximately 100 square feet of office space. The
effects of the fair value of rent of its headquarters that is provided by a
related party are immaterial to the financial statements taken as a
whole.
NOTE
6 SUPPLEMENTAL CASH FLOW
INFORMATION
Supplemental
disclosures of cash flow information for the three months ended March 31, 2010
and 2009 are summarized as follows:
Cash paid
during the period for interest and income taxes:
2010 2009
Income
Taxes
$ -- $ --
Interest
$ -- $ --
NOTE
7 GOING CONCERN AND
UNCERTAINTY
The
Company has suffered a loss from operations in the three months ended March 31,
2010. In addition, the Company has generated a negative internal cash flow from
its business operations in three months ended March 31, 2010 and has negative
working capital at March 31, 2010. These factors raise substantial doubt as to
the ability of the Company to continue as a going concern.
Management’s
plans with regard to these matters encompass the following actions: 1) obtain
funding from new investors to alleviate the Company’s working deficiency, and 2)
implement a plan to increase sales. The Company’s continued existence is
dependent upon its ability to resolve it liquidity problems and increase
profitability in its current business operations. However, the outcome of
management’s plans cannot be ascertained with any degree of certainty. The
accompanying financial statements do not include any adjustments that might
result from the outcome of these risks and uncertainties.
Due to
business souring and cash at low levels, management has elected
to search for acquisition candidates to enhance value to its
shareholders.
NOTE
8 PROMISSORY NOTE
PAYABLE
The
Company has an unsecured promissory note payable to an unrelated consulting
services provider bearing annual interest of 10.00% as of March 31, 2010 The
note consists of one balloon payment of principal of $21,000 and interest of
$1,050 with principal maturity in August, 2010.
Principal
maturities of the note payable as of March 31, 2010 for the next five years and
thereafter are as follows:
2010 $ 21,000
Thereafter $ -0-
Total $ 21,000
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10
Management’s
Discussion and Analysis contains various “forward looking statements” within
regarding future events or the future financial performance of the Company that
involve risks and uncertainties. Certain statements included in this 10-Q,
including, without limitation, statements related to anticipated cash flow
sources and uses, and words including but not limited to “anticipates”,
“believes”, “plans”, “expects”, “future” and similar statements or expressions,
identify forward looking statements. Any forward-looking statements herein are
subject to certain risks and uncertainties in the Company’s business, including
but not limited to, reliance on key customers and competition in its markets,
market demand, product performance, technological developments, maintenance of
relationships with key suppliers, difficulties of hiring or retaining key
personnel and any changes in current accounting rules, all of which may be
beyond the control of the Company. Management will elect additional changes to
revenue recognition to comply with the most conservative SEC recognition on a
forward going accrual basis as the model is replicated with other similar
markets (i.e. SBDC). The Company’s actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including those set forth therein.
Management’s
Discussion and Analysis of Results of Financial Condition and Results of
Operations (“MD&A”) should be read in conjunction with the financial
statements included herein.
BUSINESS
MODEL
Exercise
for Life Systems, Inc.’s primary focus is to improve operating margins and cash
flows from the Company’s existing profit center of personal fitness training, as
well as provide value added health and fitness services and to continue helping
clients achieve their health and wellness goals. The Exercise for
Life Systems, Inc. product line seeks to provide a unique platform for the
delivery of value-added services to its fitness, wellness and weight
loss-conscious clients.
We plan
to integrate personal training, nutrition advice, and our weight management
program into our core fitness training operations to position ourselves as the
total source for most of our clients’ wellness and fitness needs. Our
target market includes, but is not limited to 18- to 64-year
olds. This expansion over our prior target market of 18- to 34-year
olds is due to the increased awareness of health and physical fitness among 35-
to 64-year olds. Currently, our clients range in age from
approximately 12 to 91, reflecting our many years in business and our diverse
client base. Our industry experience has allowed us to identify
target markets that will be receptive to our proprietary products and
services.
Our
products and services include personal training services with professionally
certified personal trainers, supplements which are scientifically advanced
formulas designed to give the body the maximum benefit from vitamins and
minerals, a nutrition and weight management program, and fitness
assessments. We are headquartered in Cornelius, North Carolina, and
we seek to enhance stockholder value by building brand awareness and recognition
of our products and services as well as by opening new facilities.
PLAN OF
OPERATION
We plan
to raise additional funds through project debt financings or through future
sales of our common stock, until such time as our revenues are sufficient to
meet our cost structure, and ultimately achieve profitable operations. There is
no assurance that we will be successful in raising additional capital or
achieving profitable operations. Our financial statements do not include any
adjustments that might result from the outcome of these uncertainties. We will
need financing within 12 months to execute our business plan.
For the
next 12 months, our Plan of Operations is as follows:
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Increase
revenue through continued addition of new clients and through improved
retention of new and existing clients. We offer prospective clients the
ability to choose the billing type, amenities and pricing structure they
prefer. Prospective clients may choose between our services paid in
contract which is discounted or pay as you go, the later of which is more
popular. These options are presented in a simplified sales process, giving
prospective clients important choices around the term, enrollment fee
level and individual training payment amount. We believe our training type
offerings align with the “consumer choice” mandate prevalent in the retail
marketplace. We also believe the choices we offer are an important
competitive differentiator in our market space. Our focus is on improving
retention rates through new and more focused initiatives to fully engage
new clients in the full range of our wellness offerings (for example,
nutrition programs and nutrition products, weight loss and weight
management programs, personal training and group
exercise).
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Leverage
our strong background in successfully helping clients attain their
goals. Our services continue to receive high awareness ratings
and marketing recognition from consumers. We believe that
strong marketing support at the local level, with messages focused on our
target (and in some cases, underserved) market segments are a key to
attracting new and retaining present clients. Continuing
high-focused market research is the key, we believe, to understanding our
present clients and to identifying geographic markets and consumer
segments that present our best opportunities to add new
clients. This market research and the resulting creative
concepts, selectively tested in appropriate markets, helps maximize the
effectiveness of our advertising. We plan on sending a mass
mailing to The Peninsula residents in order to drive new
business. We identified the aging population in the community
and a potential source of new
business.
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Grow
our ancillary revenues. Our valuable client base affords
us an opportunity to provide clients other value-added products and
services to help them achieve their health and wellness goals and increase
our revenue per client. We offer a comprehensive and extensive list of
services to clients and, depending on the retail distribution channel at
our fitness facility, these products and services include a potential for
nutritional products; potential licensed personal exercise equipment;
personal training; group specialty exercise classes; nutrition and weight
management programs. We are pursuing other ways to leverage our client
base with other services with the goal of mutually benefiting our clients
while further increasing our
revenue.
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We are
currently developing our product and service offerings and strengthening our
client relationships.
Major
ongoing Tasks:
— seeking
investors,
— seeking
growth opportunities,
—
continue with product and service development and promotion.
RESULTS OF OPERATIONS -
THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (UNAUDITED)
11
Revenues
The
Company had revenues of $9,463 for the three months ended March 31, 2010
compared with $6,928 during the three months ended March 31, 2009. The increase
in revenue is attributable to the strengthening of the economy and customers
having more disposable income, in our opinion, for our training services than
last year.
Operating
Expenses
The
Company had operating expenses of $19,212 for the three months ended March 31,
2010. Our operating expenses for the three months ended March 31, 2009 were
$17,311. The increase in operating expenses includes the increase in selling,
general and administrative expenses.
Other
Expenses
The
Company had no other expenses for the three months ended March 31, 2010 and
2009.
Liquidity and Capital
Resources
We had
$265 cash on hand for the three months ended March 31, 2010 compared to $3,191
for the three months ended March 31, 2009. We will be required to raise capital
on an ongoing basis. Most recently we raised funds from unrelated accredited
investors through private placements of common stock. In the future we will
potentially need to raise capital to sustain operations through this
channel.
Net cash
flows provided by (used in) operating activities were $(4,653) for the three
months ended March 31, 2010 and net cash flows provided by operating activities
were $1,296 for the three months ended March 31, 2009. This is primarily
attributable to an increase in accounts payable of $8,875 three months ended
March 31, 2009 compared to an accounts payable balance of $2,292 for the three
months ended March 31, 2010.
There
were no cash flows from investing activities for the three months ended March
31, 2010 and 2009.
There
were no cash flows from financing activities for the three months ended March
31, 2010 and 2009.
Overall,
we have funded all of our cash needs from inception through March 31, 2010 with
proceeds from issuance of our common stock.
Critical Accounting Policies
and Estimates
The
preparation of our financial statements requires us to make estimates and
assumptions that affect the reported amount 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 reported
period. A critical accounting policy is one that is both very important to the
portrayal of our financial condition and results, and requires management’s
most difficult, subjective or complex judgments. Typically, the circumstances
that make these judgments difficult, subjective and/or complex have to do with
the need to make estimates about the effect of matters that are inherently
uncertain.
Off-Balance Sheet
Arrangements
We have
not entered into any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources and would be considered material to
investors. Certain officers and directors of the Company have provided personal
guarantees to our various lenders as required for the extension of credit to the
Company.
Accounting Policies Subject
to Estimation and Judgment
Management’s
Discussion and Analysis of Financial Condition and Results of Operations are
based upon our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. When preparing
our financial statements, we make estimates and judgments that affect the
reported amounts on our balance sheets and income statements, and our related
disclosure about contingent assets and liabilities. We continually evaluate our
estimates, including those related to revenue, allowance for doubtful accounts,
reserves for income taxes, and litigation. We base our estimates on historical
experience and on various other assumptions, which we believe to be reasonable
in order to form the basis for making judgments about the carrying values of
assets and liabilities that are not readily ascertained from other sources.
Actual results may deviate from these estimates if alternative assumptions or
condition are used.
The
information to be reported under this item is not required of smaller reporting
companies.
12
ITEM 4. CONTROLS AND
PROCEDURES
We
maintain disclosure controls and procedures designed to ensure that information
required to be disclosed in reports filed under the Securities Exchange Act of
1934 (“Exchange Act”) is recorded, processed, summarized and reported within the
specified time periods. Our Chief Executive Officer and its Chief Financial
Officer (collectively, the “Certifying Officers”) are responsible for
maintaining our disclosure controls and procedures. The controls and procedures
established by us are designed to provide reasonable assurance that information
required to be disclosed by the issuer in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the Commission’s rules and forms.
As of the
end of the period covered by this report, the Certifying Officers evaluated the
effectiveness of our disclosure controls and procedures. Based on the
evaluation, the Certifying Officers concluded that our disclosure controls and
procedures were effective to provide reasonable assurance that information
required to be disclosed by us in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the applicable rules and forms, and that it is accumulated
and communicated to our management, including the Certifying Officers, as
appropriate to allow timely decisions regarding required
disclosure.
The
Certifying Officers have also concluded, based on their evaluation of our
controls and procedures that as of March 31, 2010, our internal controls over
financial reporting are effective and provide a reasonable assurance of
achieving their objective.
The
Certifying Officers have also concluded that there was no change in our internal
controls over financial reporting identified in connection with the evaluation
that occurred during our fourth fiscal quarter that has materially affected, or
is reasonably likely to materially affect, our internal control over financial
reporting.
ITEM 4T. CONTROLS AND
PROCEDURES
(a) Conclusions
regarding disclosure controls and procedures. Disclosure controls and
procedures are the Company’s controls and other procedures that are designed to
ensure that information required to be disclosed by the Company in the reports
that the Company files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission’s rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company in the reports that it files
under the Exchange Act is accumulated and communicated to the Company’s
management, including its Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding required disclosure.
Management is responsible for establishing and maintaining adequate internal
control over financial reporting.
Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-14(c) promulgated under the Exchange Act as of March 31, 2010,
and, based on their evaluation, as of the end of such period, the our disclosure
controls and procedures were effective as of the end of the period covered by
the Quarterly Report,
(b) Management’s
Report On Internal Control Over Financial Reporting. It is management’s
responsibilities to establish and maintain adequate internal controls over the
Company’s financial reporting. Internal control over financial reporting is
defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a
process designed by, or under the supervision of, the issuer’s principal
executive and principal financial officers and effected by the issuer’s
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles and includes those policies and procedures that:
• Pertain
to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the issuer;
and
• Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles and that receipts and expenditures of the issuer are being
made only in accordance with authorizations of management of the issuer;
and
• Provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the issuer’s assets that could have a
material effect on the financial statements.
As of the
end of the period covered by the Quarterly Report, an evaluation was carried out
under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, of the effectiveness of
our internal control over financial reporting.
Management
assessed the effectiveness of our internal control over financial reporting as
of March 31, 2010. In making this assessment, management used the criteria set
forth by the Committee of Sponsoring Organizations of the Treadway Commission in
Internal Control-Integrated Framework.
Based on
that evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that, as of the end of such period, internal controls over financial
reporting were effective as of the end of the period covered by the
Report.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate. All internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation. Because of the inherent
limitations of internal control, there is a risk that material misstatements may
not be prevented or detected on a timely basis by internal control over
financial reporting. However, these inherent limitations are known features of
the financial reporting process. Therefore, it is possible to design into the
process safeguards to reduce, though not eliminate, this risk.
This
Quarterly Report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit us to provide only management’s report in this Quarterly
Report.
(c) Changes in
internal control over financial reporting. There were no changes in our
internal control over financial reporting identified in connection with the
evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that
occurred during our last fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
13
PART II. OTHER
INFORMATION
As of the
date of this report, we are not a party to any pending legal proceeding and are
not aware of any threatened legal proceeding.
ITEM
1A. RISK FACTORS
The information to be reported
under this item has not changed since the previously filed 10K, for the year
ended December 31, 2009.
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE
OF PROCEEDS
We have
not had any unregistered sales of equity securities in the first quarter of
2010.
We have
not had any default upon senior securities.
We have
not had any submission of matters to a vote of security holders.
We do not
have any other information to report.
ITEM
6. EXHIBITS
31.2 CFO
Certification Pursuant to Section 302 (included in Exhibit
31.1)
32.2 CFO
Certification Pursuant to Section 906 (included in Exhibit
32.1)
On
February 9, 2010, we filed a current report in Form 8-K to announce a creation
of a direct financial obligation under an off-balance sheet arrangement in
regards to the Promissory Note with Greentree Financial Group, Inc. for the sum
of $21,000 with an interest rate of 10%, payable six months from the date of
execution.
14
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
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EXERCISE
FOR LIFE SYSTEMS, INC.
(Registrant)
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Date:
May 6, 2010
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By:
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/s/
Adam Slazer
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Adam
Slazer
President,
Chief Executive Officer, and
Chief
Financial Officer
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