UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2016
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File No. 333-202959
BALANCE LABS, INC.
(Exact name of registrant as specified in its charter)
Delaware | 47-1146785 | |
(State or other jurisdiction of incorporation) |
(IRS Employer Identification No.) |
1111 Lincoln Road, 4th Floor
Miami Beach, Florida
(Address of principal executive offices)
(305) 907-7600
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months, 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 Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec.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 [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer | [ ] | Accelerated filer | [ ] | |
Non-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]
As of November 17, 2016, there were 21,620,000 shares outstanding of the registrant’s common stock.
BALANCE LABS, INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
2 |
PART I – FINANCIAL INFORMATION
Balance Labs Inc and Subsidiaries
Condensed Consolidated Balance Sheets
September 30, 2016 | December 31, 2015 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current Assets | ||||||||
Cash | $ | 131,813 | $ | 19,071 | ||||
Other Receivable-related party | 30,000 | |||||||
Prepaid expenses | 42,923 | 3,151 | ||||||
Total Current Assets | 204,736 | 22,222 | ||||||
Fixed Assets | 4,754 | - | ||||||
Investments | ||||||||
Investment | 2,000 | - | ||||||
Investment at Fair Value-related party | 715,000 | 500 | ||||||
Total Assets | $ | 926,490 | $ | 22,722 | ||||
Liabilities and Stockholder’s Equity(Deficit) | ||||||||
Current Liabilities | ||||||||
Accounts Payable-related parties | $ | 221,659 | $ | 199,679 | ||||
Accounts Payable and accrued expenses | 54,306 | 36,955 | ||||||
Note payable-net of discount-of $250,000 and $18,190 | 275,000 | 6,810 | ||||||
Short term advance related party | 659 | 21,620 | ||||||
Total Current Liabilities | 551,624 | 265,064 | ||||||
Long-term Liabilities | ||||||||
Notes payable-related party net of discount of $111,428 and $0 | 8,572 | - | ||||||
Total Liabilities | 560,196 | 265,064 | ||||||
Commitments and contingencies(see note6) | ||||||||
Stockholder’s Equity | ||||||||
Preferred stock, $.0001 par value: Authorized 50,000,000 shares, non-issued and outstanding as of September 30, 2016 and December 31, 2016 | ||||||||
Common stock, $.0001 par value: Authorized 500,000,000 shares. 21,620,000 and 20,620,000 respectively issued and outstanding as of September 30, 2016 and December 31, 2015 | 2,162 | 2,062 | ||||||
Additional Paid in Capital | 741,271 | 129,943 | ||||||
Accumulated Deficit | (1,091,639 | ) | (374,347 | ) | ||||
Accumulated other comprehensive income | 714,500 | - | ||||||
Total Stockholder’s Equity(Deficit) | 366,294 | (242,342 | ) | |||||
Total Liabilities and Stockholder’s Equity(Deficit) | $ | 926,490 | $ | 22,722 |
See the accompanying notes to these unaudited condensed consolidated financial statements
3 |
Balance Labs Inc and Subsidiaries
Statement of Operations
(unaudited)
For the three | For the three | For the nine | For the nine | |||||||||||||
Months Ended | Months Ended | Months Ended | Months Ended | |||||||||||||
September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||||||||
(Consolidated) | (Consolidated) | |||||||||||||||
Revenue- related party | - | - | - | $ | 39,000 | |||||||||||
General and Administrative expenses | 46,764 | 8,866 | 98,346 | 100,453 | ||||||||||||
Professional Fees | 38,034 | 21,479 | 76,792 | 27,291 | ||||||||||||
Salaries and Wages | 38,414 | 16,686 | 106,746 | 60,786 | ||||||||||||
General and Administrative expenses-related party | 50,000 | 45,000 | 140,000 | 90,000 | ||||||||||||
Total Operating Expenses | 173,212 | 92,031 | 421,884 | 278,530 | ||||||||||||
Loss from Operations | (173,212 | ) | (92,031 | ) | (421,884 | ) | (239,530 | ) | ||||||||
Other Expenses | ||||||||||||||||
Interest expense (includes amortization of warrants on note) | (138,001 | ) | (496 | ) | (295,408 | ) | (536 | ) | ||||||||
Net Loss | $ | (311,263 | ) | $ | (92,527 | ) | $ | (717,292 | ) | $ | (240,066 | ) | ||||
Other Comprehensive (Loss) Income | (35,000 | ) | - | 714,500 | - | |||||||||||
Comprehensive (Loss) Income | (346,263 | ) | (92,527 | ) | (2,792 | ) | (240,066 | ) | ||||||||
Net (Loss) per share Basic and Diluted | $ | (0.01 | ) | (0.00 | ) | $ | (0.03 | ) | (0.01 | ) | ||||||
Weighted average Number of Common Shares Outstanding- Basic and Diluted | 21,620,000 | 20,388,497 | 21,287,000 | 20,431,086 |
See the accompanying notes to these unaudited condensed consolidated financial statements
4 |
Balance Labs Inc
Condensed Statement of Cash Flows
(Unaudited)
For the Nine Months | For the Nine Months | |||||||
Ended | Ended | |||||||
September 30, 2016 | September 30, 2015 | |||||||
(Consolidated) | ||||||||
Cash Flows from Operating Activities | ||||||||
Net Loss | (717,292 | ) | (240,066 | ) | ||||
Adjustments to reconcile Net Loss to net cash used in operations | ||||||||
Stock-Based Compensation | 40 | |||||||
Depreciation expense | 720 | |||||||
Amortization of Debt Discount | 268,190 | - | ||||||
Changes in Operating Assets and Liabilities | ||||||||
Other Receivable | (30,000 | ) | - | |||||
Prepaid Expenses | (39,772 | ) | (3,151 | ) | ||||
Accounts Payable and Accrued Expenses | 17,351 | 4,053 | ||||||
Accounts Payable and Accrued Expenses - Related Party | 21,980 | 107,036 | ||||||
Net cash used in Operating Activities | (478,823 | ) | (132,088 | ) | ||||
Cash Flows from Investing Activities | ||||||||
- | ||||||||
Purchase of Equipment | (5,474 | ) | - | |||||
Purchase of Investments | (2,000 | ) | - | |||||
Net cash used in Investing Activities | (7,474 | ) | - | |||||
Cash Flows from Financing Activities | ||||||||
Note Payable, related party | 120,000 | - | ||||||
Note Payable | 500,000 | - | ||||||
Proceeds from short term advances -related parties | - | 37,340 | ||||||
Repayments of loans -related party | (20,961 | ) | (38,325 | ) | ||||
Sales of Common Stock and Warrants | - | 110,000 | ||||||
Net cash provided by Financing Activities | 599,039 | 109,015 | ||||||
Net cash increase (decrease) for period | 112,742 | (23,073 | ) | |||||
Cash at beginning of period | 19,071 | 66,158 | ||||||
Cash at end of period | 131,813 | 43,085 |
See the accompanying notes to these unaudited condensed consolidated financial statements
5 |
BALANCE LABS, INC.
Notes to Condensed Consolidated Financial Statements
As of September 30, 2016
(Unaudited)
Note 1 – Business Organization and Nature of Operations
Balance Labs, Inc. (“Balance Labs” or the “Company”) was incorporated on June 5, 2014 under the laws of the State of Delaware. Balance Labs is a consulting firm that provides business development and consulting services to start up and development stage businesses. The Company offers services to help businesses in various industries improve and fine tune their business models, sales and marketing plans and internal operations as well as make introductions to professional services such as business plan writing, accounting firms and legal service providers.
The Company leverages its knowledge in developing businesses with entrepreneurs and start up companies’ management whereby it creates a customized plan for them to overcome obstacles so that they can focus on marketing their product(s) and/or service(s) to their potential customers.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed consolidated financial position of Balance Labs as of September 30, 2016 and the unaudited condensed consolidated results of its operations and cash flows for the nine months ended September 30, 2016. The unaudited condensed consolidated results of operations for the nine months ended September 30, 2016 are not necessarily indicative of the operating results for the full year. It is recommended that these unaudited condensed consolidated financial statements be read in conjunction with the audited financial statements and related disclosures of the Company for the year ended December 31, 2015 was filed with the Securities and Exchange Commission on April 14, 2016.
Note 2 – Going Concern
The attached financial statements have been prepared assuming the Company will continue as a going concern. The Company has suffered losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. The Company used $478,823 of cash in operating activities and currently has $131,813 in cash. This will sustain the Company for only 3.9 months without additional funds. Management plans to raise additional capital within the next two months that will sustain its operations for the next year. In addition, the company will begin an active marketing campaign to market its services.
Note 3 – Summary of Significant Accounting Policies
Cash and Cash Equivalents
The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At September 30, 2016 and December 31, 2015, the Company had no cash equivalents.
Use of Estimates
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Estimates may include those pertaining to stock-based compensation and deferred tax assets. Actual results could materially differ from those estimates.
Concentrations and Credit Risk
One customer provided 100% of revenues during the three and nine month periods ended September 30, 2015.
6 |
Revenue Recognition
The Company recognizes revenue related to its professional services to its customers when (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the sales price is fixed or determinable; and (iv) collectability is reasonably assured.
The Company adopted the provisions of Accounting Standards Codification (“ASC”) Topic 740-10, which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
Management has evaluated and concluded that there is material tax positions requiring recognition in the Company’s financial statements as of September 30, 2016. The Company does not expect any significant changes in its unrecognized tax benefits within twelve months of the reporting date.
The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as general and administrative expenses in the statement of operations.
Investment – Related Party
Investment – related party is recorded at fair value on September 30, 2016. The Company holds its investments as available for sale securities.
Principles of Consolidation
The consolidated financial statements include the company’s majority owned entities, all two wholly owned corporate subsidiaries (Balance Labs LLC., from April 15, 2016, Balance AgroTech Co., from January 11, 2016). All significant intercompany transactions are eliminated.
Net Loss Per Common Share
Basic and diluted loss per common share is computed by dividing net loss by the weighted average number of common shares and warrants from convertible debentures outstanding during the periods. The effect of 2,920,000 and 320,000 warrants and 2,120,000 and 0 shares from convertible notes payable for the nine months ended September 30, 2016 and 2015, respectively were anti dilutive and not included in dilutive loss per share.
Stock-Based Compensation
The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Awards granted to directors are treated on the same basis as awards granted to employees.
The Company has computed the fair value of warrants granted using the Black-Scholes option pricing model. The expected term used for warrants is the contractual life. Since the Company’s stock has not been publicly traded for a sufficiently long period of time, the Company is utilizing an expected volatility figure based on a review of the historical volatilities, over a period of time, equivalent to the expected life of the instrument being valued, of similarly positioned public companies within its industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.
7 |
Fair Value of Financial Instruments
The Company measures its financial assets and liabilities in accordance with GAAP. For certain of our financial instruments, including cash, accounts payable, and the short-term portion of long-term debt, the carrying amounts approximate fair value due to their short maturities.
We adopted accounting guidance for financial and non-financial assets and liabilities (ASC 820). The adoption did not have a material impact on our results of operations, financial position or liquidity. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
● | Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. | |
● | Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. | |
● | Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. |
The following table presents certain assets of the Company’s measured and recorded at fair value on the Company’s balance sheet on a recurring basis and their level within the fair value hierarchy as of September 30, 2016.
Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Fair-value – equity securities | $ | 717,000 | $ | 2,000 | $ | - | $ | 715,000 | ||||||||
Total Assets measured at fair value | $ | 717,000 | $ | 2,000 | $ | - | $ | 715,000 |
The following table presents certain assets of the Company’s measured and recorded at fair value on the Company’s balance sheet on a recurring basis and their level within the fair value hierarchy as of December 31, 2015.
Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Fair-value – equity securities | $ | 500 | $ | - | $ | - | $ | 500 | ||||||||
Total Assets measured at fair value | $ | 500 | $ | - | $ | - | $ | 500 |
The following is a reconciliation of the level 3 Assets:
Beginning Balance as of January 1, 2016 | $ | 500 | ||
Unrealized gain on (level 3) September 30, 2016 | 714,500 | |||
Ending Balance as of September 30, 2016 | $ | 715,000 |
8 |
Business Segments
The Company operates in one segment and therefore segment information is not presented.
Advertising, Marketing and Promotional Costs
Advertising, marketing and promotional expenses are expensed as incurred and are included in selling, general and administrative expenses on the accompanying statement of operations. For the nine month period ended September 30, 2016 and the nine months ended September 30, 2015, advertising, marketing and promotion expense was $6,595 in 2016 and $0 in 2015, respectively.
Reclassifications
Certain prior period amounts have been reclassified for comparative purposes to conform to the fiscal 2016 presentation. These reclassifications have no impact on the previously reported net loss.
Recently Issued Accounting Pronouncements
The Company has evaluated all new accounting standards that are in effect and may impact its condensed consolidated financial statements and does not believe that there are any other new accounting standards that have been issued that might have a material impact on its financial position or results of operations.
In February 2016, the FASB issued ASU 2016-02, Leases, which will amend current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.
In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which relates to the accounting for employee share-based payments. This standard addresses several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. This standard will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.
In April 2016, the FASB issued ASU 2016–10 Revenue from Contract with Customers (Topic 606): identifying Performance Obligations and Licensing ” .The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. Topic 606 includes implementation guidance on (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). The amendments in this Update are intended render more detailed implementation guidance with the expectation to reduce the degree of judgement necessary to comply with Topic 606. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.
9 |
Note 4 – Stockholders’ Equity
Authorized Capital
The Company is authorized to issue 500,000,000 shares of common stock, $0.0001 par value, and 50,000,000 shares of preferred stock, $0.0001 par value.
Warrants
The following table summarizes warrants outstanding as of September 30, 2016, and the related changes during the periods are presented below.
Weighted | ||||||||
Number of | Average | |||||||
Warrants | Exercise Price | |||||||
Balance at December 31, 2015 | 320,000 | 0.50 | ||||||
Granted | 2,600,000 | 3.50 | ||||||
Exercised | - | - | ||||||
Forfeited | - | - | ||||||
Balance at September 30, 2016 | 2,920,000 | $ | 4.00 |
Note 5 – Related Party Transactions
The Company’s CEO earned $10,000 per month. The following compensation was recorded within general and administrative expenses – related parties on the statements of operations: $35,000 and $90,000 for the nine months ended September 30, 2016 and 2015, respectively. As of September 30, 2016, $217,318 of compensation was unpaid and was included in accounts payable – related parties on the balance sheet.
For the nine months ended September 30, 2016 and 2015, the Company expensed $5,000 and $5,000, respectively, for rent and office services which are included in general and administrative expenses related party to Balance Holdings LLC, an entity controlled by the Company’s CEO. As of September 30, 2016, $5,000 was owed.
The Company billed $30,000 to a related company, 100% owned by the Company’s CEO. For administrative and accounting services. As of September 30, 2016, the $30,000 has not been paid.
During the nine months ended September 30, 2016, the Company’s CEO or related party provided the Company unsecured short-term advances aggregating $31,842. The advances earn interest at a rate of 8% per annum and are payable on demand. During the nine months ended September 30, 2016, the Company repaid an aggregate of $52,803 of short-term advances to the Company’s CEO and entities controlled by the Company’s CEO. For the nine months ended September 30, 2016, the company recorded $1,232 of interest expense. The outstanding balance as of September, 2016 was $659.
On September 30, 2016, the CEO loaned $120,000 to the Company at an interest rate of 10%, due on October 1, 2017. In addition, the Company issued 600,000 warrants at an execution price of $1.00 which expire on October 1, 2019. See Note 7
On May 4, 2016 the company began compensating its board member Aviv Hillo, $2,500 per month for his consulting and advisory services. The expense for the nine month period ended September 30, 2016 was $7,500 compared to $0 for the same period last year.
The Company has discontinued paying a related company $5,000 a month as rent on a month to month basis as of July 31, 2016. It has been recorded in general and administrative expenses-related parties on the statement of operations. The company on July 27, 2016 signed a sublease with entity partially owned by a related party to sub-lease approximately 2200 square feet 1691 Michigan Ave, Miami Beach, Fl. 33139, beginning August 1, 2016 and ending September 30, 2018 at a monthly base rental of $7,741 per month until July 31, 2017, $7,973 per month from August 1, 2017 to July 31, 2018, and $8,212 from August 1, 2018 to the sublease termination date. In addition to base rent, the company will have to pay 50% of the CAM charges as additional rent.
Note 6 – Commitments and Contingencies
Litigation, Claims and Assessments
In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position or results of operations.
10 |
Consulting Fees
The Company will continue to pay its CEO $10,000 per month as compensation on a month to month basis. They will be recorded in general and administrative expenses-related parties on the statement of operations.
Rent
The Company has discontinued paying a related company $5,000 a month as rent on a month to month basis as of July 31, 2016. It has been recorded in general and administrative expenses-related parties on the statement of operations. The company on July 27, 2016 signed a sublease with entity partially owned by a related party to sub-lease approximately 2200 square feet 1691 Michigan Ave, Miami Beach, Fl. 33139, beginning August 1, 2016 and ending September 30, 2018 at a monthly base rental of $7,741 per month until July 31, 2017, $7,973 per month from August 1, 2017 to July 31, 2018, and $8,212 from August 1, 2018 to the sublease termination date. In addition to base rent, the company will have to pay 50% of the CAM charges as additional rent.
Acquisition
The company’s subsidiary Balance AgroTech Co., on April 4, 2016 entered into an agreement with Pimi Agro Cleantech Ltd. (Pimi) where the Shareholders of Pimi would exchange 100% of their shares for 15,400,000 Series A Preferred Shares in Balance Agrotech Co. The preferred shares will pay a cash dividend of 2.5% or 5% PIK dividend at the election of the company. The company will use its best efforts for the filing of a Registration Statement. The stated value of the preferred shares is $1.00. The original agreement called for a closing within 45 days from April 4, 2016. The agreement has been extended. A closing is planned for January, 2017. The Company has spent $15,000 on due diligence as of September 30, 2016.
Note 7 – Convertible Note Payable
On December 23, 2015, the Company issued a secured convertible promissory note in the amount of $25,000. The note carries a rate of 8% and is due on March 23, 2016. It is secured by all the assets of the Company. The note further contains a provision that the lender may convert any part of the note, including accrued interest, that is unpaid into the Company’s common stock at an exercise price of $0.50 per share. As of March 23, 2016, the note is in default. As of September 30, 2016, the accrued interest on the note is $2,730.
The note also contains a five year warrant to purchase 100,000 shares of common stock at an exercise price of $0.50 per share until December 23, 2020.
On April 1, 2016, the Company received $500,000 in exchange for a convertible debenture due April 2, 2017 bearing interest at 10% and convertible into common stock at $.25 per share unless the note is paid by the Company prior to the election of the holder to convert. The Company recognized a beneficial conversion feature expense of $500,000 that will be amortized over the life of the note. As of September 30, 2016 accrued interest of the note is $25,000 and amortized $250,000 of debt discount to interest expense.
On April 1, 2016, the Company entered into an investment agreement (the “Investment Agreement”) with Newel Trading Group LLC, a Delaware limited liability company (“Newel”) whereby Newel is obligated, providing the Company has met certain conditions including the filing of a Registration Statement for the shares to be acquired, to purchase up to Twenty-Five Million Dollars ($25,000,000) of the Company’s common stock at the rates set forth in the Investment Agreement. Under the Investment Agreement, the shares are purchased at the discretion of the Company by issuing a Put Notice when funds are needed. In consideration for the execution and delivery of the Investment Agreement, Company issued 1,000,000 non-registrable shares of Company’s common stock with a fair value of $125,000 and three year warrants to purchase 2,000,000 shares of the Company’s common stock at an exercise price of $3.50 per share, expiring March 23, 2019. The black scholes option pricing model with the following assumptions were used to value the warrants. Expected volatility of 559%, expected life of 3 years, risk free rate of return of 0.9% and expected dividend yield of 0%. The warrants had a fair value of $250,000. On September 30, 2016 the Company’s CEO loaned the Company $120,000 with an interest rate of 10%. In addition, the Company issued the CEO 600,000 warrants with a value of $111,428. The assumptions used to value the warrants are expected volatility of 559%, expected life of 3 years, risk free rate of return of 0.9% and expected dividend yield of 0%.
On September 30, 2016, the Chief Executive Officer of the Company loaned $120,000 to the Company at an interest rate of 10% due on October 1, 2017 (the “Loan”). In connection with the Loan, the Company issue 600,000 warrants at an exercise price of $1.00 which expire on October 1, 2019. The Company valued the warrants using the Black-Scholes option pricing model with the following assumptions: Expected volatility of 514%, expected life of three years, risk free rate of return of 1.14% and an expected divided yield of 0%. The warrants had a fair value of $85,714. The Company also has a beneficial conversion discount of $25,714 related to the note issuance.
Note 8 – Subsequent Event
Acquisition
The company’s subsidiary Balance AgroTech Co., on April 4, 2016 entered into an agreement with Pimi Agro Cleantech Ltd. (Pimi) where the Shareholders of Pimi would exchange 100% of their shares for 15,400,000 Series A Preferred Shares in Balance Agrotech Co. The preferred shares will pay a cash dividend of 2.5% or 5% PIK dividend at the election of the company. The company will use its best efforts for the filing of a Registration Statement. The stated value of the preferred shares is $1.00. The original agreement called for a closing within 45 days from April 4, 2016. The agreement has been extended. A closing is planned for January, 2017. The Company has spent $15,000 on due diligence as of September 30, 2016.
11 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of the condensed results of operations and financial condition of Balance Labs, Inc. (“Balance Labs” or the “Company”) for the nine months ended September 30, 2016 should be read in conjunction with our condensed financial statements and the notes thereto that are included elsewhere in this Quarterly Report on Form 10-Q. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “us,” “we,” “our,” and similar terms refer to Balance Labs. This Quarterly Report includes forward-looking statements, as that term is defined in the federal securities laws, based upon current expectations that involve risks and uncertainties, such as plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. Words such as “anticipate,” “estimate,” “plan,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions are used to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of certain risk factors discussed in our registration statement on Amendment No. 3 to Form S-1 (the “Risk Factors”) filed with the Securities and Exchange Commission (the “SEC”) on June 5, 2015 and declared effective by the SEC on June 15, 2015. Any one or more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward-looking statements made by us ultimately prove to be accurate. Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise.
Overview
We were incorporated on June 5, 2014 under the laws of the State of Delaware. We are a consulting firm that provides business development and consulting services to startup and development-stage companies. We provide businesses in various industries with customized consulting services to meet their business needs and help them improve their business models, sales and marketing plans and internal operations, as well as introduce these businesses to experienced professional contacts that would be vital to the success of these companies. The Company is not a registered investment company under the Investment Company Act of 1940, as amended (the “1940 Act”) and does not engage primarily, in the business of investing, reinvesting, or trading in securities. The Company is not managed like an active investment vehicle, is not an investment company registered under the 1940 Act, and is not required to register under the 1940 Act.
Our business focuses on providing advice to entrepreneurs and assisting business owners so that their ideas can be fully developed and implemented. Due to limited resources, lack of experienced management and competing priorities, startup and developmental stage companies are not operating as efficiently as they can be, and therefore would benefit from an outside party that could assist in developing and executing certain strategies. We utilize our knowledge in developing businesses, share practical experiences with our clients and introduce the business owners to experienced professionals who could help these inexperienced entrepreneurs further implement their ideas. Startups and development stage businesses across all industries commonly experience these certain “growing pains”.
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Plan of Operations
Our plan is to prepare our clients for the many inevitable challenges they will encounter and to develop a customized plan for them to help overcome these obstacles, so that they can focus on marketing their product(s) and/or service(s) to their potential customers.
Although we’ve only worked with one client since inception, our goal is to add and service a minimum of two to three new clients between now and the end of 2016. We’re marketing our services through both personal contact and online by (a) mining our existing network of professional contacts via personal outreach programs, which will also target international prospects that may wish to enter the US market; (b) expanding our network by attending targeted conferences and professional gatherings; and (c) utilizing our website at www.balancelabs.co, plus engaging potential clients on social media, including LinkedIn, Facebook and Twitter. However, because we have a limited budget allocated for an on-line marketing campaign, we anticipate that professionals within our professional network and personal referrals from companies that are satisfied with our professional services are likely to be our most significant and efficient near-term form of marketing.
During the quarter ended September 30, 2016, the Company activated two subsidiaries, Balance Labs, LLC, Balance AgroTech Co. BalanceLabs LLC, is strictly a management company that provides necessary administrative services to small companies.
We believe that we can support our year one clients with our existing full-time staff, supplemented with part-time sub-contracted professionals and service providers, as necessary. Between now and the end of 2016, we intend to formalize our relationships with these sub-contractors so that we can offer our clients turn-key business development products and services.
Our primary requirement for funding is for working capital in order to accommodate temporary imbalances between cash receipts and cash expenditures (see “Liquidity and Capital Resources”).
Acquisition
On April 4, 2016, the Company’s subsidiary Balance AgroTech Co., entered into an agreement with Pimi Agro Cleantech Ltd. (Pimi) where the shareholders of Pimi would exchange 100% of their shares for 15,400,000 Series A Preferred Shares in Balance Agrotech Co. The preferred shares will pay a cash dividend of 2.5% or 5% PIK dividend at the election of the company. The Company will use its best efforts for the filing of documents to allow the public trading of the Company’s common shares. The stated value of the preferred shares is $1.00. The original agreement called for a closing within 45 days from April 4, 2016. The agreement has been extended. A closing is planned for January, 2017.
Results of Operations
Nine Months Ended September 30, 2016 Compared with Nine Months Ended September 30, 2015 and the Three Months Ended September 30, 2016 Compared with the Three Months Ended September 30, 2015
Overview
We reported a net loss of $717,292 and $240,066 for the nine months ended September 30, 2016 and 2015, respectively, an increase of $477,226 or 199%, primarily due to a $39,000 reduction in revenues and increased interest expense of $294,872. For the three months ended September 30, 2016 we reported a loss of $311,263 and a loss of $92,527 for the three months ended September 30, 2015, an increase of $218,736 or 236%. This was mainly due to an increase in interest expense and professional fees.
Revenues
For the nine months ended September 30, 2016, we generated no revenue, for the nine months ended September 30, 2015 we generated $39,000 from an entity which our CEO has an indirect 19% interest. For the three months ended September 30, 2016, we generated no revenue as compared to no revenue for the same period, the previous year.
General and administrative expenses
General and administrative expenses were $98,346 and $100,453 for the nine months ended September 30, 2016 and 2015, respectively, a decrease of $2,107 or 2%. For the three months ended September 30, 2016 and 2015, general and administrative expenses were $46,764 and $8,866, an increase of $37,898 or 428%. The increase cost was a result of higher accounting, consulting and transfer agent fees.
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Interest expense
Interest expense for the nine months ended September 30, 2016 and 2015 was $295,408 and $536, respectively, which was attributable to the short term advances provided by our CEO, and the amortization of debt discount on the $25,000 and $500,000 notes. For the three months ended September 30, 2016 and 2015 interest was $138,001 and $496 respectively, an increase of $137,505. This increase is the result of the amortization of debt discount and short term advances as stated above.
Liquidity and Capital Resources
Liquidity
We measure our liquidity in a number of ways, including the following:
September 30, 2016 | December 31, 2015 | |||||||
(Unaudited) | ||||||||
Cash | $ | 131,813 | $ | 19,071 | ||||
Working capital (deficiency) | (346,888 | ) | $ | (242,842 | ) |
Investment Agreement
On April 1, 2016, the Company entered into an investment agreement (the “Investment Agreement”) with Newel Trading Group LLC, a Delaware limited liability company (“Newel”) whereby Newel is obligated, providing the Company has met certain conditions including the filing of a Form S-1 Registration Statement for the shares to be acquired, to purchase up to Twenty-Five Million Dollars ($25,000,000) of the Company’s common stock at the rates set forth in the Investment Agreement. Under the Investment Agreement, the shares are purchased at the discretion of the Company by issuing a Put Notice when funds are needed. In consideration for the execution and delivery of the Investment Agreement, Company issued 1,000,000 non-registrable shares of Company’s common stock. The Company also issued Newel 2,000,000 warrants at an exercise price of $3.50.
Availability of Additional Funds
Except for the monthly consulting fee to our CEO and Chairman of the Board and the lease of our office space, as described elsewhere in this Quarterly Report, we currently do not have any material commitments for capital expenditures. In addition, as of September 30, 2016, with regards to our professional service agreement that provided 100% of our revenues since inception, we and our client have fully satisfied our professional service and payment obligations under the agreement, respectively. We are actively pursuing new client relationships. Even if we were to add a new client(s), due to our current lack of a diversified client base, there could be temporary imbalances between cash receipts and cash operating expenditures, which means that we may need additional capital. The engagement revenues associated with most client engagements will self-fund the in-house and sub-contractor services we need in order to supply products and services to our clients.
As of September 30, 2016, the Company had a working capital deficiency of $346,888. The Company’s cash flow used in operating cash flows was ($478,823) for the nine months ended September 30, 2016. As discussed in Note 7 of the financial statements, the Company has raised $500,000 in the debt financing. In addition, the Company is working to manage its current liabilities while it continues to make changes in operations to further improve its cash flow and liquidity position. Based upon subsequent debt financing and the Company’s current cash flow projections, management believes the Company will need additional capital resources to meet projected cash flow requirements for the next twelve months.
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During the nine months ended September 30, 2016, our sources and uses of cash were as follows:
Net Cash Used in Operating Activities
We experienced negative cash flow from operating activities for the nine months ended September 30, 2016 in the amount of $478,823. The net cash used in operating activities was primarily due to cash used to fund a net loss of $717,292 adjusted for non-cash expenses of $720 and $268,190 increase accounts payable and accrued related party and by a $39,772 net increase in prepared expenses.
Net Cash used in Investing Activities
During the nine month period ended September 30, 2016 the Company purchased $5,474 of office equipment and opened an investment account with a deposit of $2,000.
Net Cash Provided by Financing Activities
Net cash provided by financing activities during the nine months ended September 30, 2016 was $599,039 related to $120,000 of proceeds from convertible note payable from related parties offset by the repayment of $20,961 of short term advances from related parties. In addition, we received $500,000 for a convertible debenture (See Note 7 in the Financial Statements)
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Critical Accounting Policies and Estimates
There are no material changes from the critical accounting policies set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 10-K which was filed with the SEC on April 14, 2016. Please refer to that document for disclosures regarding the critical accounting policies related to our business.
Recent Accounting Standards
We have implemented all new accounting standards that are in effect and may impact our financial statements and do not believe that there are any other new accounting standards that have been issued that might have a material impact on our financial position or results of operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 4. Controls and Procedures.
(a) Evaluation of Disclosure and Control Procedures
Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(c) and 15d-15(e) under the Exchange Act) are not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms and to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
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(b) Management’s Report on Internal Control over Financial Reporting
This Company’s management is responsible for establishing and maintaining internal controls over financial reporting and disclosure controls. Internal Control Over Financial Reporting is a process designed by, or under the supervision of, the Company’s Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, and effected by the board of directors, 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:
(1) | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer; |
(2) | 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 and directors of the registrant; and |
(3) | 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. |
Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is appropriately recorded, processed, summarized and reported within the specified time periods.
Management has conducted an evaluation of the effectiveness of our internal control over financial reporting as of the end of the period covered by this Quarterly Report on Form 10-Q, based on the framework established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
Based on this assessment, management concluded that as of the period covered by this Quarterly Report on Form 10-Q, it had material weaknesses in its internal control procedures.
As of period covered by this Quarterly Report on Form 10-Q, we have concluded that our internal control over financial reporting was ineffective. The Company’s assessment identified certain material weaknesses which are set forth below:
Functional Controls, Lack of Audit Committee and Segregation of Duties
Because of the Company’s limited resources, there are limited controls over information processing.
The Company does not have an audit committee and therefore there is no independent review and independent oversight over the Company’s financial reporting.
There is an inadequate segregation of duties consistent with control objectives. Our Company’s management is composed of a small number of individuals resulting in a situation where limitations on segregation of duties exist. In order to remedy this situation, we would need to hire additional staff to provide greater segregation of duties. Currently, it is not feasible to hire additional staff to obtain optimal segregation of duties. Management will reassess this matter at end of the fiscal year to determine whether improvement in segregation of duty is feasible.
Accordingly, as the result of identifying the above material weakness we have concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the Company’s internal controls.
Management believes that the material weaknesses set forth above were the result of the scale of our operations and are intrinsic to our small size. Management believes these weaknesses did not have a material effect on our financial results and intends to take remedial actions upon receiving funding for the Company’s business operations.
This Quarterly Report on Form 10-Q 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 SEC that permit the Company to provide only management’s report herein.
(c) Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results. From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters that may harm our business could arise from time to time.
Smaller reporting companies are not required to provide the information required by this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On September 30, 2016, the Chief Executive Officer of the Company loaned $120,000 to the Company at an interest rate of 10% due on October 1, 2017 (the “Loan”). In connection with the Loan, the Company issue 600,000 warrants at an exercise price of $1.00 which expire on October 1, 2019.
The preceding securities were not registered under the Securities Act of 1933, as amended (the “Securities Act”), but qualified for exemption under Section 4(a)(2) of the Securities Act. The securities were exempt from registration under Section 4(a)(2) of the Securities Act because the issuance of such securities by the Company did not involve a “public offering,” as defined in Section 4(a)(2) of the Securities Act, due to the insubstantial number of persons involved in the transaction, size of the offering, and manner of the offering and number of securities offered. The Company did not undertake an offering in which it sold a high number of securities to a high number of investors. In addition, the Investor had the necessary investment intent as required by Section 4(a)(2) of the Securities Act since they agreed to, and received, the securities bearing a legend stating that such securities are restricted pursuant to Rule 144 of the Securities Act. This restriction ensures that these securities would not be immediately redistributed into the market and therefore not be part of a “public offering.” Based on an analysis of the above factors, the Company has met the requirements to qualify for exemption under Section 4(a)(2) of the Securities Act.
Item 3. Defaults Upon Senior Securities.
On December 23, 2015 the Company issued a secured convertible promissory note in the amount of $25,000 (the “Note”). The Note became due on March 23, 2016 and is now in default. The Note carries a default interest rate of $18%. The Note further contains a provision that the lender may convert any part of the Note, including accrued interest that is unpaid into the Company’s common stock at an exercise price of $0.50 per share. As of September 30, 2016, the accrued interest on the Note is $2,730.
Item 4. Mine Safety Disclosures.
Not applicable.
None.
Exhibit No. | Description | |
31.1 | Certification of Principal Executive Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 302 of 2002* | |
31.2 | Certification of Principal Financial Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 302 of 2002* | |
32.1 | Certification of Principal Executive Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* | |
32.2 | Certification of Principal Financial Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* | |
101.INS | XBRL Instance Document* | |
101.SCH | XBRL Taxonomy Extension Schema Document* | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document* | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document* | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document* | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document* |
* | Filed herewith |
17 |
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BALANCE LABS, INC. | ||
Date: November 17, 2016 | By: | /s/ Michael D. Farkas |
Michael D. Farkas | ||
President,
Chief Executive Officer and Chief Financial Officer | ||
(Principal Executive and Financial Officer) |
18 |
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Michael D. Farkas, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Balance Labs, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly for the period in which this quarterly report is being prepared; | |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; | |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; | |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
a) | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and | |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
Date: November 17, 2016 | By: | /s/ Michael D. Farkas |
Michael D. Farkas | ||
Principal Executive Officer |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL ACCOUNTING OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Michael D. Farkas, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Balance Labs, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly for the period in which this quarterly report is being prepared; | |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; | |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; | |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
a) | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and | |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
Date: November 17, 2016 | By: | /s/ Michael D. Farkas |
Michael D. Farkas | ||
Principal Accounting Officer |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with this Quarterly Report of Balance Labs, Inc. (the “Company”), on Form 10-Q for the period ended September 30, 2016, as filed with the U.S. Securities and Exchange Commission on the date hereof, I, Michael D. Farkas, Principal Executive Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:
(1) | Such Quarterly Report on Form 10-Q for the period ended September 30, 2016, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
(2) | The information contained in such Quarterly Report on Form 10-Q for the period ended September 30, 2016, fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: November 17, 2016 | By: | /s/ Michael D. Farkas |
Michael D. Farkas | ||
Principal Executive Officer |
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with this Quarterly Report of Balance Labs, Inc. (the “Company”), on Form 10-Q for the period ended September 30, 2016, as filed with the U.S. Securities and Exchange Commission on the date hereof, I, Michael D. Farkas, Principal Financial Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:
(1) | Such Quarterly Report on Form 10-Q for the period ended September 30, 2016, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
(2) | The information contained in such Quarterly Report on Form 10-Q for the period ended September 30, 2016, fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: November 17, 2016 | By: | /s/ Michael D. Farkas |
Michael D. Farkas | ||
Principal Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Nov. 17, 2016 |
|
Document And Entity Information | ||
Entity Registrant Name | Balance Labs, Inc. | |
Entity Central Index Key | 0001632121 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 21,620,000 | |
Trading Symbol | BLNC | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2016 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Note payable, discount | $ 250,000 | $ 18,190 |
Note payable related party, discount | $ 111,428 | $ 0 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 21,620,000 | 20,620,000 |
Common stock, shares outstanding | 21,620,000 | 20,620,000 |
Statement of Operations (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Income Statement [Abstract] | ||||
Revenue related party | $ 39,000 | |||
General and Administrative expenses | 46,764 | 8,866 | 98,346 | 100,453 |
Professional Fees | 38,034 | 21,479 | 76,792 | 27,291 |
Salaries and Wages | 38,414 | 16,686 | 106,746 | 60,786 |
General and Administrative expenses - related party | 50,000 | 45,000 | 140,000 | 90,000 |
Total Operating Expenses | 173,212 | 92,031 | 421,884 | 278,530 |
Loss from Operations | (173,212) | (92,031) | (421,884) | (239,530) |
Other Expenses | ||||
Interest expenses (includes amortization of warrants on note) | (138,001) | (496) | (295,408) | (536) |
Net Loss | (311,263) | (92,527) | (717,292) | (240,066) |
Other Comprehensive (Loss) Income | (35,000) | 714,500 | ||
Comprehensive (loss) Income | $ (346,263) | $ (92,527) | $ (2,792) | $ (240,066) |
Net (Loss) per share-Basic and Diluted | $ (0.01) | $ (0.00) | $ (0.03) | $ (0.01) |
Weighted average Number of Common Shares Outstanding - Basic and Diluted | 21,620,000 | 20,388,497 | 21,287,000 | 20,431,086 |
Business Organization and Nature of Operations |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Business Organization and Nature of Operations |
Note 1 Business Organization and Nature of Operations
Balance Labs, Inc. (Balance Labs or the Company) was incorporated on June 5, 2014 under the laws of the State of Delaware. Balance Labs is a consulting firm that provides business development and consulting services to start up and development stage businesses. The Company offers services to help businesses in various industries improve and fine tune their business models, sales and marketing plans and internal operations as well as make introductions to professional services such as business plan writing, accounting firms and legal service providers.
The Company leverages its knowledge in developing businesses with entrepreneurs and start up companies management whereby it creates a customized plan for them to overcome obstacles so that they can focus on marketing their product(s) and/or service(s) to their potential customers.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed consolidated financial position of Balance Labs as of September 30, 2016 and the unaudited condensed consolidated results of its operations and cash flows for the nine months ended September 30, 2016. The unaudited condensed consolidated results of operations for the nine months ended September 30, 2016 are not necessarily indicative of the operating results for the full year. It is recommended that these unaudited condensed consolidated financial statements be read in conjunction with the audited financial statements and related disclosures of the Company for the year ended December 31, 2015 was filed with the Securities and Exchange Commission on April 14, 2016. |
Going Concern |
9 Months Ended |
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Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern |
Note 2 Going Concern
The attached financial statements have been prepared assuming the Company will continue as a going concern. The Company has suffered losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. The Company used $478,823 of cash in operating activities and currently has $131,813 in cash. This will sustain the Company for only 3.9 months without additional funds. Management plans to raise additional capital within the next two months that will sustain its operations for the next year. In addition, the company will begin an active marketing campaign to market its services. |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies |
Note 3 Summary of Significant Accounting Policies
Cash and Cash Equivalents
The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At September 30, 2016 and December 31, 2015, the Company had no cash equivalents.
Use of Estimates
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Estimates may include those pertaining to stock-based compensation and deferred tax assets. Actual results could materially differ from those estimates.
Concentrations and Credit Risk
One customer provided 100% of revenues during the three and nine month periods ended September 30, 2015.
Revenue Recognition
The Company recognizes revenue related to its professional services to its customers when (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the sales price is fixed or determinable; and (iv) collectability is reasonably assured.
The Company adopted the provisions of Accounting Standards Codification (ASC) Topic 740-10, which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
Management has evaluated and concluded that there is material tax positions requiring recognition in the Companys financial statements as of September 30, 2016. The Company does not expect any significant changes in its unrecognized tax benefits within twelve months of the reporting date.
The Companys policy is to classify assessments, if any, for tax related interest as interest expense and penalties as general and administrative expenses in the statement of operations.
Investment Related Party
Investment related party is recorded at fair value on September 30, 2016. The Company holds its investments as available for sale securities.
Principles of Consolidation
The consolidated financial statements include the companys majority owned entities, all two wholly owned corporate subsidiaries (Balance Labs LLC., from April 15, 2016, Balance AgroTech Co., from January 11, 2016. All significant intercompany transactions are eliminated.
Net Loss Per Common Share
Basic and diluted loss per common share is computed by dividing net loss by the weighted average number of common shares and warrants from convertible debentures outstanding during the periods. The effect of 2,920,000 and 320,000 warrants and 2,120,000 and 0 shares from convertible notes payable for the nine months ended September 30, 2016 and 2015, respectively were anti dilutive and not included in dilutive loss per share.
Stock-Based Compensation
The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Awards granted to directors are treated on the same basis as awards granted to employees.
The Company has computed the fair value of warrants granted using the Black-Scholes option pricing model. The expected term used for warrants is the contractual life. Since the Companys stock has not been publicly traded for a sufficiently long period of time, the Company is utilizing an expected volatility figure based on a review of the historical volatilities, over a period of time, equivalent to the expected life of the instrument being valued, of similarly positioned public companies within its industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.
Fair Value of Financial Instruments
The Company measures its financial assets and liabilities in accordance with GAAP. For certain of our financial instruments, including cash, accounts payable, and the short-term portion of long-term debt, the carrying amounts approximate fair value due to their short maturities.
We adopted accounting guidance for financial and non-financial assets and liabilities (ASC 820). The adoption did not have a material impact on our results of operations, financial position or liquidity. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
The following table presents certain assets of the Companys measured and recorded at fair value on the Companys balance sheet on a recurring basis and their level within the fair value hierarchy as of September 30, 2016.
The following table presents certain assets of the Companys measured and recorded at fair value on the Companys balance sheet on a recurring basis and their level within the fair value hierarchy as of December 31, 2015.
The following is a reconciliation of the level 3 Assets:
Business Segments
The Company operates in one segment and therefore segment information is not presented.
Advertising, Marketing and Promotional Costs
Advertising, marketing and promotional expenses are expensed as incurred and are included in selling, general and administrative expenses on the accompanying statement of operations. For the nine month period ended September 30, 2016 and the nine months ended September 30, 2015, advertising, marketing and promotion expense was $6,595 in 2016 and $0 in 2015, respectively.
Reclassifications
Certain prior period amounts have been reclassified for comparative purposes to conform to the fiscal 2016 presentation. These reclassifications have no impact on the previously reported net loss.
Recently Issued Accounting Pronouncements
The Company has evaluated all new accounting standards that are in effect and may impact its condensed consolidated financial statements and does not believe that there are any other new accounting standards that have been issued that might have a material impact on its financial position or results of operations.
In February 2016, the FASB issued ASU 2016-02, Leases, which will amend current lease accounting to require lessees to recognize (i) a lease liability, which is a lessees obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessees right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.
In March 2016, the FASB issued ASU 2016-09, Compensation Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which relates to the accounting for employee share-based payments. This standard addresses several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. This standard will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.
In April 2016, the FASB issued ASU 201610 Revenue from Contract with Customers (Topic 606): identifying Performance Obligations and Licensing .The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. Topic 606 includes implementation guidance on (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether an entitys promise to grant a license provides a customer with either a right to use the entitys intellectual property (which is satisfied at a point in time) or a right to access the entitys intellectual property (which is satisfied over time). The amendments in this Update are intended render more detailed implementation guidance with the expectation to reduce the degree of judgement necessary to comply with Topic 606. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition. |
Stockholders' Equity |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity |
Note 4 Stockholders Equity
Authorized Capital
The Company is authorized to issue 500,000,000 shares of common stock, $0.0001 par value, and 50,000,000 shares of preferred stock, $0.0001 par value.
Warrants
The following table summarizes warrants outstanding as of September 30, 2016, and the related changes during the periods are presented below.
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Related Party Transactions |
9 Months Ended |
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Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions |
Note 5 Related Party Transactions
The Companys CEO earned $10,000 per month. The following compensation was recorded within general and administrative expenses related parties on the statements of operations: $35,000 and $90,000 for the nine months ended September 30, 2016 and 2015, respectively. As of September 30, 2016, $217,318 of compensation was unpaid and was included in accounts payable related parties on the balance sheet.
For the nine months ended September 30, 2016 and 2015, the Company expensed $5,000 and $5,000, respectively, for rent and office services which are included in general and administrative expenses related party to Balance Holdings LLC, an entity controlled by the Companys CEO. As of September 30, 2016, $5,000 was owed.
The Company billed $30,000 to a related company, 100% owned by the Companys CEO. For administrative and accounting services. As of September 30, 2016, the $30,000 has not been paid.
During the nine months ended September 30, 2016, the Companys CEO or related party provided the Company unsecured short-term advances aggregating $31,842. The advances earn interest at a rate of 8% per annum and are payable on demand. During the nine months ended September 30, 2016, the Company repaid an aggregate of $52,803 of short-term advances to the Companys CEO and entities controlled by the Companys CEO. For the nine months ended September 30, 2016, the company recorded $1,232 of interest expense. The outstanding balance as of September, 2016 was $659.
On September 30, 2016, the CEO loaned $120,000 to the Company at an interest rate of 10%, due on October 1, 2017. In addition, the Company issued 600,000 warrants at an execution price of $1.00 which expire on October 1, 2019. See Note 7
On May 4, 2016 the company began compensating its board member Aviv Hillo, $2,500 per month for his consulting and advisory services. The expense for the nine month period ended September 30, 2016 was $7,500 compared to $0 for the same period last year.
The Company has discontinued paying a related company $5,000 a month as rent on a month to month basis as of July 31, 2016. It has been recorded in general and administrative expenses-related parties on the statement of operations. The company on July 27, 2016 signed a sublease with entity partially owned by a related party to sub-lease approximately 2200 square feet 1691 Michigan Ave, Miami Beach, Fl. 33139, beginning August 1, 2016 and ending September 30, 2018 at a monthly base rental of $7,741 per month until July 31, 2017, $7,973 per month from August 1, 2017 to July 31, 2018, and $8,212 from August 1, 2018 to the sublease termination date. In addition to base rent, the company will have to pay 50% of the CAM charges as additional rent. |
Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies |
Note 6 Commitments and Contingencies
Litigation, Claims and Assessments
In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Companys consolidated financial position or results of operations.
Consulting Fees
The Company will continue to pay its CEO $10,000 per month as compensation on a month to month basis. They will be recorded in general and administrative expenses-related parties on the statement of operations.
Rent
The Company has discontinued paying a related company $5,000 a month as rent on a month to month basis as of July 31, 2016. It has been recorded in general and administrative expenses-related parties on the statement of operations. The company on July 27, 2016 signed a sublease with entity partially owned by a related party to sub-lease approximately 2200 square feet 1691 Michigan Ave, Miami Beach, Fl. 33139, beginning August 1, 2016 and ending September 30, 2018 at a monthly base rental of $7,741 per month until July 31, 2017, $7,973 per month from August 1, 2017 to July 31, 2018, and $8,212 from August 1, 2018 to the sublease termination date. In addition to base rent, the company will have to pay 50% of the CAM charges as additional rent.
Acquisition
The companys subsidiary Balance AgroTech Co., on April 4, 2016 entered into an agreement with Pimi Agro Cleantech Ltd. (Pimi) where the Shareholders of Pimi would exchange 100% of their shares for 15,400,000 Series A Preferred Shares in Balance Agrotech Co. The preferred shares will pay a cash dividend of 2.5% or 5% PIK dividend at the election of the company. The company will use its best efforts for the filing of a Registration Statement. The stated value of the preferred shares is $1.00. The original agreement called for a closing within 45 days from April 4, 2016. The agreement has been extended. A closing is planned for January, 2017. The Company has spent $15,000 on due diligence as of September 30, 2016. |
Convertible Note Payable |
9 Months Ended |
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Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Convertible Note Payable |
Note 7 Convertible Note Payable
On December 23, 2015, the Company issued a secured convertible promissory note in the amount of $25,000. The note carries a rate of 8% and is due on March 23, 2016. It is secured by all the assets of the Company. The note further contains a provision that the lender may convert any part of the note, including accrued interest, that is unpaid into the Companys common stock at an exercise price of $0.50 per share. As of March 23, 2016, the note is in default. As of September 30, 2016, the accrued interest on the note is $2,730.
The note also contains a five year warrant to purchase 100,000 shares of common stock at an exercise price of $0.50 per share until December 23, 2020.
On April 1, 2016, the Company received $500,000 in exchange for a convertible debenture due April 2, 2017 bearing interest at 10% and convertible into common stock at $.25 per share unless the note is paid by the Company prior to the election of the holder to convert. The Company recognized a beneficial conversion feature expense of $500,000 that will be amortized over the life of the note. As of September 30, 2016 accrued interest of the note is $25,000 and amortized $250,000 of debt discount to interest expense.
On April 1, 2016, the Company entered into an investment agreement (the Investment Agreement) with Newel Trading Group LLC, a Delaware limited liability company (Newel) whereby Newel is obligated, providing the Company has met certain conditions including the filing of a Registration Statement for the shares to be acquired, to purchase up to Twenty-Five Million Dollars ($25,000,000) of the Companys common stock at the rates set forth in the Investment Agreement. Under the Investment Agreement, the shares are purchased at the discretion of the Company by issuing a Put Notice when funds are needed. In consideration for the execution and delivery of the Investment Agreement, Company issued 1,000,000 non-registrable shares of Companys common stock with a fair value of $125,000 and three year warrants to purchase 2,000,000 shares of the Companys common stock at an exercise price of $3.50 per share, expiring March 23, 2019. The black scholes option pricing model with the following assumptions were used to value the warrants. Expected volatility of 559%, expected life of 3 years, risk free rate of return of 0.9% and expected dividend yield of 0%. The warrants had a fair value of $250,000. On September 30, 2016 the Companys CEO loaned the Company $120,000 with an interest rate of 10%. In addition, the Company issued the CEO 600,000 warrants with a value of $111,428. The assumptions used to value the warrants are expected volatility of 559%, expected life of 3 years, risk free rate of return of 0.9% and expected dividend yield of 0%.
On September 30, 2016, the Chief Executive Officer of the Company loaned $120,000 to the Company at an interest rate of 10% due on October 1, 2017 (the Loan). In connection with the Loan, the Company issue 600,000 warrants at an exercise price of $1.00 which expire on October 1, 2019. The Company valued the warrants using the Black-Scholes option pricing model with the following assumptions: Expected volatility of 514%, expected life of three years, risk free rate of return of 1.14% and an expected divided yield of 0%. The warrants had a fair value of $85,714. The Company also has a beneficial conversion discount of $25,714 related to the note issuance. |
Subsequent Event |
9 Months Ended |
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Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Event |
Note 8 Subsequent Event
Acquisition
The companys subsidiary Balance AgroTech Co., on April 4, 2016 entered into an agreement with Pimi Agro Cleantech Ltd. (Pimi) where the Shareholders of Pimi would exchange 100% of their shares for 15,400,000 Series A Preferred Shares in Balance Agrotech Co. The preferred shares will pay a cash dividend of 2.5% or 5% PIK dividend at the election of the company. The company will use its best efforts for the filing of a Registration Statement. The stated value of the preferred shares is $1.00. The original agreement called for a closing within 45 days from April 4, 2016. The agreement has been extended. A closing is planned for January, 2017. The Company has spent $15,000 on due diligence as of September 30, 2016. |
Summary of Significant Accounting Policies (Policies) |
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Cash and Cash Equivalents |
Cash and Cash Equivalents
The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At September 30, 2016 and December 31, 2015, the Company had no cash equivalents. |
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Use of Estimates |
Use of Estimates
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Estimates may include those pertaining to stock-based compensation and deferred tax assets. Actual results could materially differ from those estimates. |
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Concentrations and Credit Risk |
Concentrations and Credit Risk
One customer provided 100% of revenues during the three and nine month periods ended September 30, 2015. |
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Revenue Recognition |
Revenue Recognition
The Company recognizes revenue related to its professional services to its customers when (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the sales price is fixed or determinable; and (iv) collectability is reasonably assured.
The Company adopted the provisions of Accounting Standards Codification (ASC) Topic 740-10, which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
Management has evaluated and concluded that there is material tax positions requiring recognition in the Companys financial statements as of September 30, 2016. The Company does not expect any significant changes in its unrecognized tax benefits within twelve months of the reporting date.
The Companys policy is to classify assessments, if any, for tax related interest as interest expense and penalties as general and administrative expenses in the statement of operations. |
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Investment - Related Party |
Investment Related Party
Investment related party is recorded at fair value on September 30, 2016. The Company holds its investments as available for sale securities. |
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Principles of Consolidation |
Principles of Consolidation
The consolidated financial statements include the companys majority owned entities, all two wholly owned corporate subsidiaries (Balance Labs LLC., from April 15, 2016, Balance AgroTech Co., from January 11, 2016. All significant intercompany transactions are eliminated. |
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Net Loss Per Common Share |
Net Loss Per Common Share
Basic and diluted loss per common share is computed by dividing net loss by the weighted average number of common shares and warrants from convertible debentures outstanding during the periods. The effect of 2,920,000 and 320,000 warrants and 2,120,000 and 0 shares from convertible notes payable for the nine months ended September 30, 2016 and 2015, respectively were anti dilutive and not included in dilutive loss per share. |
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Stock-Based Compensation |
Stock-Based Compensation
The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is generally re-measured on vesting dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Awards granted to directors are treated on the same basis as awards granted to employees.
The Company has computed the fair value of warrants granted using the Black-Scholes option pricing model. The expected term used for warrants is the contractual life. Since the Companys stock has not been publicly traded for a sufficiently long period of time, the Company is utilizing an expected volatility figure based on a review of the historical volatilities, over a period of time, equivalent to the expected life of the instrument being valued, of similarly positioned public companies within its industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued. |
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Fair Value of Financial Instruments |
Fair Value of Financial Instruments
The Company measures its financial assets and liabilities in accordance with GAAP. For certain of our financial instruments, including cash, accounts payable, and the short-term portion of long-term debt, the carrying amounts approximate fair value due to their short maturities.
We adopted accounting guidance for financial and non-financial assets and liabilities (ASC 820). The adoption did not have a material impact on our results of operations, financial position or liquidity. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
The following table presents certain assets of the Companys measured and recorded at fair value on the Companys balance sheet on a recurring basis and their level within the fair value hierarchy as of September 30, 2016.
The following table presents certain assets of the Companys measured and recorded at fair value on the Companys balance sheet on a recurring basis and their level within the fair value hierarchy as of December 31, 2015.
The following is a reconciliation of the level 3 Assets:
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Business Segments |
Business Segments
The Company operates in one segment and therefore segment information is not presented. |
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Advertising, Marketing and Promotional Costs |
Advertising, Marketing and Promotional Costs
Advertising, marketing and promotional expenses are expensed as incurred and are included in selling, general and administrative expenses on the accompanying statement of operations. For the nine month period ended September 30, 2016 and the nine months ended September 30, 2015, advertising, marketing and promotion expense was $6,595 in 2016 and $0 in 2015, respectively. |
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Reclassifications |
Reclassifications
Certain prior period amounts have been reclassified for comparative purposes to conform to the fiscal 2016 presentation. These reclassifications have no impact on the previously reported net loss. |
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Recently Issued Accounting Pronouncements |
Recently Issued Accounting Pronouncements
The Company has evaluated all new accounting standards that are in effect and may impact its condensed consolidated financial statements and does not believe that there are any other new accounting standards that have been issued that might have a material impact on its financial position or results of operations.
In February 2016, the FASB issued ASU 2016-02, Leases, which will amend current lease accounting to require lessees to recognize (i) a lease liability, which is a lessees obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessees right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.
In March 2016, the FASB issued ASU 2016-09, Compensation Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which relates to the accounting for employee share-based payments. This standard addresses several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. This standard will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.
In April 2016, the FASB issued ASU 201610 Revenue from Contract with Customers (Topic 606): identifying Performance Obligations and Licensing .The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. Topic 606 includes implementation guidance on (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether an entitys promise to grant a license provides a customer with either a right to use the entitys intellectual property (which is satisfied at a point in time) or a right to access the entitys intellectual property (which is satisfied over time). The amendments in this Update are intended render more detailed implementation guidance with the expectation to reduce the degree of judgement necessary to comply with Topic 606. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition. |
Summary of Significant Accounting Policies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value on Recurring Basis of Assets |
The following table presents certain assets of the Companys measured and recorded at fair value on the Companys balance sheet on a recurring basis and their level within the fair value hierarchy as of September 30, 2016.
The following table presents certain assets of the Companys measured and recorded at fair value on the Companys balance sheet on a recurring basis and their level within the fair value hierarchy as of December 31, 2015.
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Schedule of Reconciliation of Level 3 Assets |
The following is a reconciliation of the level 3 Assets:
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Stockholders' Equity (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Warrants Grants |
The following table summarizes warrants outstanding as of September 30, 2016, and the related changes during the periods are presented below.
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Going Concern (Details Narrative) - USD ($) |
9 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Net cash used in operating activities | $ 478,823 | $ 132,088 | ||
Cash | $ 131,813 | $ 43,085 | $ 19,071 | $ 66,158 |
Summary of Significant Accounting Policies (Details Narrative) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2016
USD ($)
Segment
shares
|
Sep. 30, 2015
USD ($)
shares
|
Dec. 31, 2015
USD ($)
|
|
Cash equivalents | $ | ||||
Number of operating segment | Segment | 1 | |||
Advertising, marketing and promotion expense | $ | $ 6,595 | $ 0 | ||
Warrant [Member] | ||||
Anti dilutive securities | shares | 2,920,000 | 320,000 | ||
Number of convertible note payable shares, issued | shares | 2,120,000 | 0 | ||
One Customer [Member] | Revenue [Member] | ||||
Revenue percentage | 100.00% | 100.00% |
Summary of Significant Accounting Policies - Schedule of Fair Value on Recurring Basis of Assets (Details) - USD ($) |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Fair value - equity securities | $ 717,000 | $ 500 |
Total Assets measured at fair value | 717,000 | 500 |
Level 1 [Member] | ||
Fair value - equity securities | 2,000 | |
Total Assets measured at fair value | 2,000 | |
Level 2 [Member] | ||
Fair value - equity securities | ||
Total Assets measured at fair value | ||
Level 3 [Member] | ||
Fair value - equity securities | 715,000 | 500 |
Total Assets measured at fair value | $ 715,000 | $ 500 |
Summary of Significant Accounting Policies - Schedule of Reconciliation of Level 3 Assets (Details) |
9 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
| |
Accounting Policies [Abstract] | |
Beginning Balance as of January 1, 2016 | $ 500 |
Unrealized gain on (level 3) on September 30, 2016 | 714,500 |
Ending Balance as of September 30, 2016 | $ 715,000 |
Stockholders' Deficit (Details Narrative) - $ / shares |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Equity [Abstract] | ||
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Stockholders' Deficit - Summary of Warrants Grants (Details) - Warrant [Member] |
9 Months Ended |
---|---|
Sep. 30, 2016
$ / shares
shares
| |
Number of Warrants Beginning Balance | shares | 320,000 |
Number of Warrants Granted | shares | 2,600,000 |
Number of Warrants Exercised | shares | |
Number of Warrants Forfeited | shares | |
Number of Warrants Ending Balance | shares | 2,920,000 |
Weighted Average Exercise Price Beginning Balance | $ / shares | $ 0.50 |
Weighted Average Exercise Price Granted | $ / shares | 3.50 |
Weighted Average Exercise Price Exercised | $ / shares | |
Weighted Average Exercise Price Forfeited | $ / shares | |
Weighted Average Exercise Price Ending Balance | $ / shares | $ 4.00 |
Commitments and Contingencies (Details Narrative) - USD ($) |
9 Months Ended | ||
---|---|---|---|
Apr. 04, 2016 |
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Consulting fees payable to CEO per month | $ 10,000 | ||
Preferred stock, dividend rate, percentage | 2.50% | ||
Stated value of the preferred shares | $ 0.0001 | $ 0.0001 | |
Acquisition expenses | $ 15,000 | ||
PIK [Member] | |||
Preferred stock, dividend rate, percentage | 5.00% | ||
AgroTech Co [Member] | |||
Stated value of the preferred shares | $ 1.00 | ||
AgroTech Co [Member] | Series A Preferred Stock [Member] | |||
Preferred stock, dividend rate, percentage | 100.00% | ||
Preferred stock dividend | 15,400,000 | ||
July 31, 2016 [Member] | |||
Monthly rent | $ 5,000 | ||
July 27, 2016 [Member] | |||
Sublease description | The company on July 27, 2016 signed a sublease with entity partially owned by a related party to sub-lease approximately 2200 square feet 1691 Michigan Ave, Miami Beach, Fl. 33139, beginning August 1, 2016 and ending September 30, 2018 at a monthly base rental of $7,741 per month until July 31, 2017, $7,973 per month from August 1, 2017 to July 31, 2018, and $8,212 from August 1, 2018 to the sublease termination date. In addition to base rent, the company will have to pay 50% of the CAM charges as additional rent. | ||
August 1, 2016 To September 30, 2018 [Member] | |||
Monthly rent | $ 7,741 | ||
Lease expiration date | Jul. 31, 2017 | ||
August 1, 2017 to July 31, 2018 [member] | |||
Monthly rent | $ 7,973 | ||
August 1, 2018 To sublease Termination Date [Member] | |||
Monthly rent | $ 8,212 |
Subsequent Event (Details Narrative) - USD ($) |
9 Months Ended | ||
---|---|---|---|
Apr. 04, 2016 |
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Preferred stock, dividend rate, percentage | 2.50% | ||
Stated value of the preferred shares | $ 0.0001 | $ 0.0001 | |
Acquisition expenses | $ 15,000 | ||
PIK [Member] | |||
Preferred stock, dividend rate, percentage | 5.00% | ||
Subsequent Event [Member] | |||
Preferred stock, dividend rate, percentage | 2.50% | ||
Acquisition expenses | $ 15,000 | ||
Subsequent Event [Member] | PIK [Member] | |||
Preferred stock, dividend rate, percentage | 5.00% | ||
AgroTech Co [Member] | |||
Stated value of the preferred shares | $ 1.00 | ||
AgroTech Co [Member] | Subsequent Event [Member] | |||
Stated value of the preferred shares | $ 1.00 | ||
AgroTech Co [Member] | Series A Preferred Stock [Member] | |||
Preferred stock, dividend rate, percentage | 100.00% | ||
Preferred stock dividend | 15,400,000 | ||
AgroTech Co [Member] | Series A Preferred Stock [Member] | Subsequent Event [Member] | |||
Preferred stock, dividend rate, percentage | 100.00% | ||
Preferred stock dividend | 15,400,000 |
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