Attached files
| file | filename |
|---|---|
| EX-32.1 - EXHIBIT 32.1 - EXERCISE FOR LIFE SYSTEMS, INC. | ex32_1.htm |
| EX-31.1 - EXHIBIT 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
September 30, 2009
[
] TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
For
the Transition Period From ____to _____
Commission
File Number
0001444279
EXERCISE
FOR LIFE SYSTEMS, INC.
|
North Carolina
|
22-3464709
|
|
(State
or other jurisdiction of
|
(IRS
Employer identification No.)
|
|
incorporation
or organization)
|
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 whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 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. Yes [x] No [ ]
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Date File required to be
submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). Yes [ ] No [ ]
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
|
þ
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes [ ] No [X]
Number of
shares of common stock outstanding as of November 5,
2009: 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.
1
PART
I
Page No.
Item
1. Financial
Statements
3
Item
2. Management's Discussion and Analysis of Financial Condition
and
Results of
Operations 13
Item
3. Quantitative
and Qualitative Disclosures About Market
Risk 13
Item 4.
Controls and
Procedures
13
Item 4T.
Controls and
Procedures
13
PART
II
Item
1. Legal
Proceedings
4
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
ITEM 1. FINANCIAL
STATEMENTS
INDEX
TO EXERCISE FOR
LIFE SYSTEMS, INC. FINANCIAL STATEMENTS
EXERCISE FOR LIFE SYSTEMS,
INC. PAGE
Balance
Sheets
4
Statements
of
Operations 5
Statement
of Stockholders’
Equity
6
Statements
of Cash
Flows
7
Notes to
Financial
Statements
8
EXERCISE
FOR LIFE SYSTEMS, INC.
FKA A.J.
GLASER, INC.
BALANCE
SHEETS
AS OF
SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
|
(Unaudited)
|
(Audited)
|
|||||||
|
ASSETS
|
9/30/2009
|
12/31/2008
|
||||||
|
|
|
|||||||
|
CURRENT ASSETS:
|
||||||||
|
Cash
|
$ | 13,063 | $ | 1,895 | ||||
|
TOTAL
CURRENT ASSETS
|
13,063 | 1,895 | ||||||
|
FIXED ASSETS:
|
||||||||
|
Machinery
and equipment
|
56,090 | 56,090 | ||||||
|
Accumulated
depreciation
|
(41,759 | ) | (33,347 | ) | ||||
|
TOTAL
FIXED ASSETS
|
14,331 | 22,743 | ||||||
|
TOTAL
ASSETS
|
$ | 27,394 | $ | 24,638 | ||||
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
||||||||
|
CURRENT LIABILITIES
|
||||||||
|
Accounts
payable
|
$ | 36,993 | $ | 10,998 | ||||
|
TOTAL
CURRENT LIABILITIES
|
36,993 | 10,998 | ||||||
|
STOCKHOLDERS' EQUITY
|
||||||||
|
Common
stock ($.0001 par value, 100,000,000 shares authorized; 11,527,050 shares
issued and outstanding at September 30, 2009 and December 31, 2008,
respectively)
|
1,153 | 1,152 | ||||||
|
Common
stock subscribed but not yet issued (10,000 and -0-shares at September 30,
2009 and December 31, 2008, respectively)
|
- | 1 | ||||||
|
Additional
paid in capital
|
133,999 | 133,999 | ||||||
|
Retained
deficit
|
(144,751 | ) | (121,512 | ) | ||||
|
TOTAL
STOCKHOLDERS' EQUITY
|
(9,599 | ) | 13,640 | |||||
|
|
||||||||
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 27,394 | $ | 24,638 | ||||
The
accompanying notes are an integral part of these financial
statements.
EXERCISE
FOR LIFE SYSTEMS, INC.
FKA A.J.
GLASER, INC.
STATEMENTS
OF OPERATIONS
FOR THE
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 and 2008 (UNAUDITED)
|
(Unaudited)
|
For
The Three Months
|
For
The Nine Months
|
||||||||||||||
|
Ended
September 30,
|
Ended
September 30,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
REVENUES:
|
||||||||||||||||
|
Sales
|
$ | 5,583 | $ | 5,189 | $ | 25,579 | $ | 38,375 | ||||||||
|
Cost
of sales
|
(1,172 | ) | (1,142 | ) | (5,190 | ) | (7,817 | ) | ||||||||
|
Gross
profit
|
4,411 | 4,047 | 20,389 | 30,558 | ||||||||||||
|
EXPENSES:
|
||||||||||||||||
|
Selling,
general and administrative expenses
|
12,359 | 56,865 | 43,628 | 115,423 | ||||||||||||
|
Total
expenses
|
12,359 | 56,865 | 43,628 | 115,423 | ||||||||||||
|
(Loss)
from operations
|
$ | (7,948 | ) | $ | (52,818 | ) | $ | (23,239 | ) | $ | (84,865 | ) | ||||
|
Provision
for income taxes
|
- | - | - | - | ||||||||||||
|
NET
(LOSS)
|
$ | (7,948 | ) | $ | (52,818 | ) | $ | (23,239 | ) | $ | (84,865 | ) | ||||
|
Basic
and fully diluted net (loss) per common share:
|
$ | * | $ | * | $ | * | $ | * | ||||||||
|
Weighted
average common shares outstanding
|
11,527,050 | 11,263,025 | 11,522,050 | 10,287,250 | ||||||||||||
|
*
less than $.01 per share.
|
||||||||||||||||
The
accompanying notes are an integral part of these financial
statements.
EXERCISE
FOR LIFE SYSTEMS, INC.
FKA A.J.
GLASER, INC
STATEMENT
OF STOCKHOLDERS’ EQUITY
FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2009 (UNAUDITED)
|
(Unaudited)
|
Common
|
Common
|
|
|||||||||||||||||||||
|
Stock
|
Stock
|
|
||||||||||||||||||||||
|
Subscribed
|
Subscribed
|
Additional
|
|
|||||||||||||||||||||
|
Common
Stock
|
Not
Issued
|
Not
Issued
|
Paid-in
|
Retained
|
||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
(Deficit)
|
|||||||||||||||||||
|
Balances,
January 1, 2009
|
11,517,050 | $ | 1,152 | 10,000 | $ | 1 | $ | 133,999 | $ | (121,512 | ) | |||||||||||||
|
Issuance
of common stock previously subscribed
|
10,000 | 1 | (10,000 | ) | (1 | ) | - | - | ||||||||||||||||
|
Net
loss for the nine months ended September 30, 2009
|
- | - | - | - | - | (23,239 | ) | |||||||||||||||||
|
Balances,
September 30, 2009
|
11,527,050 | $ | 1,153 | - | $ | - | $ | 133,999 | $ | (144,751 | ) | |||||||||||||
The
accompanying notes are an integral part of these financial
statements.
EXERCISE
FOR LIFE SYSTEMS, INC.
FKA A.J.
GLASER, INC.
STATEMENT
OF CASH FLOWS
FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2009 and 2008 (UNAUDITED)
|
|
(Unaudited)
|
(Unaudited)
|
||||||
|
2009
|
2008
|
|||||||
|
CASH FLOWS FROM OPERATING
ACTIVITIES:
|
||||||||
|
Net
(loss)
|
$ | (23,239 | ) | $ | (84,865 | ) | ||
|
Adjustments
to reconcile net (loss) to net cash provided by (used in)
operations:
|
||||||||
|
Depreciation
|
8,412 | 8,412 | ||||||
|
Common
stock issued for services rendered and expensed
|
- | 16,100 | ||||||
|
Decrease
in operating assets:
|
||||||||
|
Prepaid
expense
|
- | 41,400 | ||||||
|
Increase
in operating liabilities:
|
||||||||
|
Accounts
payable
|
25,995 | 2,813 | ||||||
|
NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
11,168 | (16,140 | ) | |||||
|
CASH FLOWS FROM FINANCING
ACTIVITIES:
|
||||||||
|
Proceeds
from sale of common stock to investors
|
- | 28,355 | ||||||
|
NET
CASH PROVIDED BY OPERATING ACTIVITIES
|
- | 28,355 | ||||||
|
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
11,168 | 12,215 | ||||||
|
CASH
AND CASH EQUIVALENTS,
|
||||||||
|
BEGINNING
OF THE PERIOD
|
1,895 | 316 | ||||||
|
END
OF THE PERIOD
|
$ | 13,063 | $ | 12,531 | ||||
The
accompanying notes are an integral part of these financial
statements.
EXERCISE
FOR LIFE SYSTEMS, INC.
FKA A.J.
GLASER, INC.
NOTES TO
FINANCIAL STATEMENTS
FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2009 (UNAUDITED)
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. We were
incorporated in the State of North Carolina on September 27, 2006 when it
redomiciled to North Carolina. We previously was incorporated on September 19,
1996 in the State of New Jersey.
On June
9, 2008, we 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. 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
Our
financial instruments are cash and accounts payable. The recorded values of
cash, prepaid expense 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 months.
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.
EXERCISE
FOR LIFE SYSTEMS, INC.
FKA A.J.
GLASER, INC.
NOTES TO
FINANCIAL STATEMENTS
FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2009 (UNAUDITED)
NOTE
1 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
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.
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 - In September 2006, the FASB issued SFAS No. 157,
Fair Value Measurements
(“SFAS 157”). SFAS 157 defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles, and expands
disclosures about fair value measurements. SFAS 157 is effective for
financial statements issued for fiscal years beginning after
November 15, 2007. However, in February 2008, the FASB Staff Position
No. 157-2 was issued, which delays the effective date of the requirements
of SFAS 157 as to nonfinancial assets and nonfinancial liabilities except for
items that are recognized or disclosed at fair value in the financial statements
on a recurring basis. The effective date has been deferred to fiscal years
beginning after November 15, 2008 for these nonfinancial assets and
liabilities. The Company’s adoption of SFAS 157 on January 1, 2008 did not
have a material impact on its financial position, results of operations or cash
flows during the year ended December 31, 2008. The Company does not expect
the deferred portion of the adoption of SFAS 157 to have a material impact on
its financial statements.
Recent Accounting
Pronouncements (cont.) - In December 2007, the FASB issued SFAS
No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”). SFAS
141R establishes principles and requirements for how the acquirer in a business
combination recognizes and measures in its financial statements the fair value
of identifiable assets acquired, the liabilities assumed and any noncontrolling
interest in the acquiree at the acquisition date. SFAS 141R determines what
information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination. SFAS 141R is
effective for fiscal years beginning after December 15, 2008. The Company
is currently evaluating the impact of adopting SFAS 141R on its results of
operations and financial condition and plans to adopt it as required in the
first quarter of fiscal 2009.
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests
in Consolidated Financial Statements” (“SFAS 160”), an amendment of Accounting
Research Bulletin No. 51, “Consolidated Financial Statements” (“ARB
51”). SFAS 160 establishes accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. Minority interests will be recharacterized as noncontrolling
interests and will be reported as a component of equity separate from the
parent’s equity, and purchases or sales of equity interests that do not result
in a change in control will be accounted for as equity transactions. In
addition, net income attributable to the noncontrolling interest will be
included in consolidated net income on the face of the income statement and upon
a loss of control, the interest sold, as well as any interest retained, will be
recorded at fair value with any gain or loss recognized in earnings. This
pronouncement is effective for fiscal years beginning after December 15,
2008. The Company is currently evaluating the impact of adopting SFAS 160 on its
results of operations and financial condition and plans to adopt it as required
in the first quarter of fiscal 2009.
In
March 2008, the FASB issued SFAS No. 161, “Disclosures about
Derivative Instruments and Hedging Activities — an amendment to FASB Statement
No. 133.” SFAS No. 161 is intended to improve financial standards for
derivative instruments and hedging activities by requiring enhanced disclosures
to enable investors to better understand their effects on an entity’s financial
position, financial performance, and cash flows. Entities are required to
provide enhanced disclosures about: (a) how and why an entity uses
derivative instruments; (b) how derivative instruments and related hedged
items are accounted for under Statement 133 and its related interpretations; and
(c) how derivative instruments and related hedged items affect an entity’s
financial position, financial performance, and cash flows. It is effective for
financial statements issued for fiscal years beginning after November 15,
2008, with early adoption encouraged. The adoption of this statement, which is
expected to occur in the first quarter of 2009, is not expected to have a
material effect on the Company’s financial statements.
Recent Accounting
Pronouncements (cont.) – In May 2008, the FASB issued SFAS No. 162, “The
Hierarchy of Generally Accepted Accounting Principles.” SFAS No. 162 identifies
the sources of accounting principles and the framework for selecting the
principles to be used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally
accepted accounting principles in the United States. It is effective 60 days
following the SEC’s approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With
Generally Accepted Accounting Principles.” The adoption of this statement is not
expected to have a material effect on the Company’s financial
statements.
In
May 2008, the FASB issued SFAS No. 163, “Accounting for Financial
Guarantee Insurance Contracts — an interpretation of FASB Statement
No. 60.” SFAS No. 163 requires that an insurance enterprise recognize
a claim liability prior to an event of default when there is evidence that
credit deterioration has occurred in an insured financial obligation. It also
clarifies how Statement No. 60 applies to financial guarantee insurance
contracts, including the recognition and measurement to be used to account for
premium revenue and claim liabilities, and requires expanded disclosures about
financial guarantee insurance contracts. It is effective for financial
statements issued for fiscal years beginning after December 15, 2008,
except for some disclosures about the insurance enterprise’s risk-management
activities. SFAS No. 163 requires that disclosures about the
risk-management activities of the insurance enterprise be effective for the
first period beginning after issuance. Except for those disclosures, earlier
application is not permitted. The adoption of this statement is not expected to
have a material effect on the Company’s financial statements.
On May 9,
2008, the FASB issued FASB Staff Position (“FSP”) APB 14-1, “Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement).” FSP APB 14-1 clarifies that convertible
debt instruments that may be settled in cash upon conversion (including partial
cash settlement) are not addressed by paragraph 12 of APB Opinion No. 14,
“Accounting for Convertible Debt and Debt Issued with Stock Purchase
Warrants.” Additionally, FSP APB 14-1 specifies that issuers of such
instruments should separately account for the liability and equity components in
a manner that will reflect the entity’s nonconvertible debt borrowing rate when
interest cost is recognized in subsequent periods. FSP APB14-1 is effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and interim periods within those fiscal years. FSP APB 14-1 will be effective
for the Company on January 1, 2009. The adoption of FSP APB 14-1 is not
expected to have a material impact on the Company’s results of operations or
financial position.
EXERCISE
FOR LIFE SYSTEMS, INC.
FKA A.J.
GLASER, INC.
NOTES TO
FINANCIAL STATEMENTS
FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2009 (UNAUDITED)
NOTE
1 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Recent Accounting
Pronouncements (cont.) – On June 16, 2008, the FASB issued FSP EITF
03-6-1, “Determining Whether Instruments Granted in Share-Based Payment
Transactions Are Participating Securities”, to address the question of whether
instruments granted in share-based payment transactions are participating
securities prior to vesting. FSP EITF 03-6-1 indicates that unvested share-based
payment awards that contain rights to dividend payments should be included in
earnings per share calculations. The guidance is effective for fiscal years
beginning after December 15, 2008. FSP EITF 03-6-1 will be effective for the
Company on January 1, 2009. The adoption of FSP EITF 03-6-1 is not expected
to have a material impact on the Company’s results of operations or financial
position.
In June
2008, the FASB issued EITF Issue 07-5 (EITF 07-5), “Determining whether an
Instrument (or Embedded Feature) is indexed to an Entity’s Own Stock.” EITF
07-5 is effective for financial statements issued for fiscal years beginning
after December 15, 2008, and interim periods within those fiscal years. Early
application is not permitted. Paragraph 11(a) of SFAS No. 133 “Accounting for
Derivatives and Hedging Activities”, specifies that a contract that would
otherwise meet the definition of a derivative but is both (a) indexed to the
Company’s own stock and (b) classified in stockholders’ equity in the statement
of financial position would not be considered a derivative financial instrument.
EITF 07-5 provides a new two-step model to be applied in determining whether a
financial instrument or an embedded feature is indexed to an issuer’s own stock
and thus able to qualify for the SFAS No. 133 paragraph 11(a) scope
exception. EITF 07-5 will be effective for the Company on January 1,
2009. The adoption of EITF 07-5 is not expected to have a material impact
on the Company’s financial statements.
In June
2008, the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments Granted
in Share-Based Payment Transactions are Participating Securities” (FSP 03-6-1).
FSP 03-6-1 clarifies that unvested share-based payment awards that contain
nonforfeitable rights to dividends or dividend equivalents (whether paid or
unpaid) are participating securities and are to be included in the computation
of earnings per share under the two-class method described in SFAS No. 128,
“Earnings Per Share”. This FSP will be effective for the Company on January
1, 2009 and requires that all prior-period earnings-per-share data that are
presented be adjusted retrospectively. The Company does not expect FSP 03-6-1 to
have a material impact on its earnings per share calculations.
In
October 2008, the FASB issued FSP No. 157-3, “Determining the Fair Value of
a Financial Asset When the Market for That Asset Is Not Active” (FSP 157-3). FSP
157-3 clarifies the application of SFAS 157 in a market that is not active and
provides an example to illustrate key considerations in determining the fair
value of a financial asset when the market for that financial asset is not
active. As it relates to the Company’s financial assets and liabilities
recognized or disclosed at fair value in the Company’s financial statements on a
recurring basis (at least annually), the adoption of FSP 157-3 did not have a
material impact on the Company’s financial statements.
In
November 2008, the EITF reached consensus on Issue No. 08-6, “Equity Method
Investment Accounting Considerations” (EITF 08-6), which clarifies the
accounting for certain transactions and impairment considerations involving
equity method investments. The intent of EITF 08-6 is to provide guidance
on (i) determining the initial carrying value of an equity method
investment, (ii) performing an impairment assessment of an underlying
indefinite-lived intangible asset of an equity method investment,
(iii) accounting for an equity method investee’s issuance of shares, and
(iv) accounting for a change in an investment from the equity method to the
cost method. EITF 08-6 is effective for the Company’s year beginning
January 1, 2009 and is to be applied prospectively. The adoption of Issue
No. 08-6 is not expected to have a material impact on the Company’s financial
position or results of operations.
In
December 2008, the FASB issued FSP FAS 140-4 and FIN 46(R)-8,
“Disclosures by Public Entities (Enterprises) About Transfers of Financial
Assets and Interest in Variable Interest Entities” (FSP 140-4).
FSP 140-4 requires additional disclosure about transfers of financial
assets and an enterprise’s involvement with variable interest entities.
FSP 140-4 was effective for the first reporting period ending after
December 15, 2008. The adoption of FSP 140-4 did not have any impact
on the Company’s financial statements.
EXERCISE
FOR LIFE SYSTEMS, INC.
FKA A.J.
GLASER, INC.
NOTES TO
FINANCIAL STATEMENTS
FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2009 (UNAUDITED)
NOTE
2 INCOME
TAXES
At
September 30, 2009 the Company had no federal and state net operating loss carry
forwards remaining.
Due to
operating losses, there is no provision for current federal or state income
taxes for the three and nine months ended September 30, 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
reconciliation of income taxes computed at the federal and state statutory
income tax rate to total income taxes for the three and nine months ended
September 30, 2009 and 2008 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.
During
the quarter ended June 30, 2008, the Company enacted a one hundred thousand for
one forward stock split. The effects of this split are retroactively reflected
in the financial statements as of the beginning of the period
presented.
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 and nine months ended September 30,
2009 and 2008.
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 these financial statements taken as a
whole.
NOTE
6 SUPPLEMENTAL CASH FLOW
INFORMATION
Supplemental
disclosures of cash flow information for the nine months ended September 30,
2009 and 2008 are summarized as follows:
Cash paid
during the period for interest and income taxes:
2009 2008
Income
Taxes $ --
$ --
Interest $ --
$ --
NOTE
7 GOING CONCERN AND
UNCERTAINTY
The
Company has suffered a loss from operations in 2009 and 2008. In addition, the
Company has generated a negative internal cash flow from its business operations
in 2009. 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.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Management’s
Discussion and Analysis contains various “forward looking statements” within
regarding future events or our future financial performance 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 our 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 our control. 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). Our 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 our 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:
|
·
|
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).
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.
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.
|
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 - NINE
MONTHS ENDED SEPTEMBER 30, 2009 AND 2008 (UNAUDITED)
Revenues
We had
revenues of $5,583 for the three months ended September 30, 2009 compared with
$5,189during the three months ended September 30, 2008. The increase in revenue
is attributable to the more marketing by word of mouth.
We had
revenues of $25,579 for the nine months ended September 30, 2009 compared with
$38,375 during the nine months ended September 30, 2008. The decrease in revenue
is attributable to the weak economy and fewer customers having disposable income
for our training services.
Operating
Expenses
We had
operating expenses of $12,359 for the three months ended September 30, 2009. Our
operating expenses for the three months ended September 30, 2008 were $56,865.
The decrease in operating expenses includes the decrease in selling, general and
administrative expenses.
We had
operating expenses of $43,628 for the nine months ended September 30, 2009. Our
operating expenses for the nine months ended September 30, 2008 were $115,423.
The decrease in operating expenses includes the decrease in selling, general and
administrative expenses.
Other
Expenses
We had no
other expenses for the three and nine months ended September 30, 2009 and
2008.
Liquidity and Capital
Resources
We had
$13,063 cash for the nine months ended September 30, 2009 compared to $12,531
for the nine months ended September 30, 2008. We will be required to raise
capital on an ongoing basis. In 2008, 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 operating activities were $11,168 for the nine months ended
September 30, 2009 and net cash flows used in operating activities were $16,140
for the nine months ended September 30, 2008. This is primarily attributable to
an increase in accounts payable of $25,995 for the nine months ended September
30, 2009 compared to an accounts payable balance of $2,813 for the nine months
ended September 30, 2008.
There
were no cash flows from investing activities for the nine months ended September
30, 2009 and 2008.
There
were no cash flows from financing activities for the nine months ended September
30, 2009 but there were cash flows provided by financing activities in the
amount of $28,355 for the nine months ended September 30, 2008. This cash flow
was provided by the proceeds from the sale of common stock to investors in
2008.
Overall,
we have funded all of our cash needs from inception through September 30, 2009
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 of our officers and directors have provided personal
guarantees to our various lenders as required for the extension of our
credit.
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.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The
information to be reported under this item is not required of smaller reporting
companies.
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 September 30, 2009, 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 our controls and other procedures that are designed to ensure
that information required to be disclosed by us in the reports that we file 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 us in the reports that it files under the Exchange Act is
accumulated and communicated to our 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 September 30,
2009, 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 our
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 September 30, 2009. 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.
PART II. OTHER
INFORMATION
ITEM
1. LEGAL PROCEEDINGS
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, 2008.
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE
OF PROCEEDS
We have
not had any unregistered sales of equity securities in the third quarter of
2009.
ITEM
3. DEFAULTS UPON SENIOR SECURITIES
We have
not had any default upon senior securities.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
We have
not had any submission of matters to a vote of security holders.
ITEM
5. OTHER INFORMATION
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)
Reports on Form
8-K
None
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.
|
EXERCISE
FOR LIFE SYSTEMS, INC.
(Registrant)
|
||
|
Date:
November 5, 2009
|
By:
|
/s/ Adam Slazer |
|
Adam
Slazer
President,
Chief Executive Officer, and
Chief
Financial Officer
|
||