UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For quarterly period ended September 30, 2002
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 0-26973
WHOLE LIVING, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 87-0621709
(State of incorporation) (I.R.S. Employer Identification No.)
433 East Bay Boulevard, Provo, Utah 84606
(Address of principal executive offices)
Registrant's telephone number: (801) 655-1000
629 East 730 South, Suite 201, American Fork, Utah 84003
(Former address)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes [X] No [ ]
As of October 22, 2002, the issuer had a total of 38,229,640 shares of common
stock outstanding.
TABLE OF CONTENTS
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements.............................................3
Item 2: Management's Discussion and Analysis.............................9
Item 3: Controls and Procedures..........................................12
PART II: OTHER INFORMATION
Item 2: Changes in Securities and Use of Proceeds .......................13
Item 5: Other Information ................................................13
Item 6: Exhibits and Reports filed on Form 8-K ..........................13
Signatures and Certifications ............................................14
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The financial information set forth below with respect to our statements
of operations for the three month periods ended September 30, 2002 and 2001,
is unaudited. This financial information, in the opinion of management,
includes all adjustments consisting of normal recurring entries necessary for
the fair presentation of such data. The results of operations for the nine
month period ended September 30, 2002, are not necessarily indicative of
results to be expected for any subsequent period.
2
Whole Living, Inc.
Consolidated Financial Statements
September 30, 2002
3
Whole Living, Inc.
Consolidated Balance Sheets
ASSETS
September 30, December 31,
2002 2001
-------------- -------------
(Unaudited)
Current Assets
Cash $ 74,881 $ 96,232
Accounts Receivable 284,042 50,000
Receivables - Other - 19,855
Inventory 607,016 511,846
Prepaid Expenses 135,884 20,167
-------------- -------------
Total Current Assets 1,101,823 698,100
-------------- -------------
Property & Equipment, Net 567,832 347,206
-------------- -------------
Other Assets
Goodwill, Net 5,474,173 17,318
Deposits 138,120 55,010
-------------- -------------
Total Other Assets 5,612,293 72,328
-------------- -------------
Total Assets $ 7,281,948 $ 1,117,634
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 973,490 $ 516,308
Accrued Expenses 518,770 332,287
Current Portion of Long-Term Liabilities 2,829,567 544,533
-------------- -------------
Total Current Liabilities 4,321,827 1,393,128
-------------- -------------
Long Term Liabilities
Notes Payable - Related Party 2,127,800 544,453
Notes Payable 701,767 -
Capital Lease Obligations - 80
Less Current Portion (2,829,567) (544,533)
-------------- -------------
Total Long Term Liabilities - -
-------------- -------------
Total Liabilities 4,321,827 1,393,128
-------------- -------------
Stockholders' Equity
Common Stock, $.001 Par Value; 50,000,000
Shares Authorized; 38,229,640 and 24,004,340
Shares Issued and Outstanding, Respectively 38,230 24,005
Additional Paid-In Capital 12,104,067 7,742,831
Retained Deficit (8,982,176) (7,842,330)
Subscription Receivable (200,000) (200,000)
-------------- -------------
Total Stockholders' Equity 2,960,121 (275,494)
-------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,281,948 $ 1,117,634
============== =============
4
Whole Living, Inc.
Consolidated Statements 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, September 30, September 30, September 30,
2002 2001 2002 2001
-------------- -------------- -------------- --------------
<s> <c> <c> <c> <c>
Sales $ 3,281,216 $ 1,727,102 $ 6,474,118 $ 4,561,742
Cost Of Goods Sold 2,040,226 1,073,693 4,191,433 3,304,520
-------------- -------------- -------------- --------------
Gross Profit 1,240,990 653,409 2,282,685 1,257,222
-------------- -------------- -------------- --------------
Operating Expenses
General & Administrative 1,368,456 807,707 2,998,013 2,445,929
Selling Expenses 72,932 122,854 306,028 683,637
-------------- -------------- -------------- --------------
Total Operating Expenses 1,441,388 930,561 3,304,041 3,129,566
-------------- -------------- -------------- --------------
OPERATING INCOME (LOSS) (200,398) (277,152) (1,021,356) (1,872,344)
-------------- -------------- -------------- --------------
OTHER INCOME(EXPENSE)
Interest Expense (68,479) (2,414) (122,742) (5,116)
Other Income (Expense) 4,252 5,317 4,252 7,332
-------------- -------------- -------------- --------------
Total Other Income(Expense) (64,227) 2,903 (118,490) 2,216
-------------- -------------- -------------- --------------
NET INCOME(LOSS) $ (264,625) $ (274,249) $ (1,139,846) $ (1,870,128)
============== ============== ============== ==============
WEIGHTED AVERAGE INCOME(LOSS) PER SHARE $ (0.01) $ (0.01) $ (0.04) $ (0.08)
============== ============== ============== ==============
WEIGHTED AVERAGE SHARES OUTSTANDING 37,717,751 28,603,952 29,497,177 23,067,747
============== ============== ============== ==============
5
Whole Living, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended
September 30,
2002 2001
-------------- --------------
<s> <c> <c>
Cash Flows From Operating Activities
Net Income(Loss) $ (1,139,846) $ (1,870,128)
Adjustments to Reconcile Net Income(Loss) to
Net Cash Provided(Used) in Operating Activities:
Depreciation & Amortization 138,926 133,036
Stock Issued for Services 165,200 190,000
Stock Issued for Interest 26,861 -
Warrants Issued for Services 40,000 -
Change in Assets and Liabilities (Net of Acquisition):
(Increase) Decrease in:
Accounts Receivable (213,272) (19,940)
Receivable - Other 19,855 -
Inventory (95,170) (31,228)
Prepaid Expenses (71,317) 47,140
Increase (Decrease) in:
Accounts Payable and Accrued Expenses (208,112) (57,634)
-------------- --------------
Net Cash Provided(Used) by Operating Activities (1,336,875) (1,608,754)
-------------- --------------
Cash Flows from Investing Activities
Cash (Bank Overdraft) Acquired in Acquisition (30,189) -
Payments for Notes Receivable (1,100,000) -
Payments for Property & Equipment (145,362) (81,039)
Payments for Deposits (70,240) (28,457)
-------------- --------------
Net Cash Provided(Used) by Investing Activities (1,345,791) (109,496)
-------------- --------------
Cash Flows from Financing Activities
Proceeds from Debt Financing 2,702,917 1,549,790
Proceeds from Issuance of Common Stock - 415,000
Principal Payments on Debt Financing (41,602) (246,540)
-------------- --------------
Net Cash Provided(Used) by Financing Activities 2,661,315 1,718,250
-------------- --------------
Increase in Cash (21,351) -
Cash and Cash Equivalents at Beginning of Period 96,232 -
-------------- --------------
Cash and Cash Equivalents at End of Period $ 74,881 $ -
============== ==============
Supplemental Disclosures of Cash Flow Information:
Cash Paid for:
Interest $ 16,668 $ 5,116
============== ==============
Income Taxes $ - $ -
============== ==============
Non-Cash Activities:
Common Stock Issued for Notes Payable & Accrued Interest $ 1,106,861 $ 2,517,469
============== ==============
Common Stock Issued & Warrants Granted for Services $ 205,200 $ 190,000
============== ==============
Common Stock Issued for Acquisition of Subsidiary $ 3,015,000 $ -
============== ==============
Common Stock Issued for Insurance $ 48,400 $ 28,000
============== ==============
6
Whole Living, Inc.
Notes to the Consolidated Financial Statements
September 30, 2002
GENERAL
- -------
Whole Living, Inc. (the Company) has elected to omit substantially all
footnotes to the financial statements for the nine months ended September 30,
2002 since there have been no material changes (other than indicated in other
footnotes) to the information previously reported by the Company in their
Annual Report filed on the Form 10-KSB for the year ended December 31, 2001.
UNAUDITED INFORMATION
- ---------------------
The information furnished herein was taken from the books and records of the
Company without audit. However, such information reflects all adjustments
which are, in the opinion of management, necessary to properly reflect the
results of the interim period presented. The information presented is not
necessarily indicative of the results from operations expected for the full
fiscal year.
ACQUISTION OF VESTRIO CORPORATION
- ---------------------------------
In June 2002, in anticipation of the merger, the Company issued 150,000 shares
of their common stock valued at $75,000 to two individuals to settle any
potential rights or claims against Vestrio Corporation (Vestrio).
In July 2002, the Company completed their acquisition of Vestrio. Pursuant to
the acquisition agreement, the Company exchanged 6,000,000 shares of their
common stock valued at $2,940,000 for all of the outstanding common stock of
Vestrio, thus making Vestrio a wholly owned subsidiary. This investment has
been recorded as a purchase and is valued at $3,015,000. Goodwill of
$5,473,103 has been recognized and will be tested annually for impairment. As
of September 30, 2002, no impairment has been recognized.
The September 30, 2002 financial statements include the accounts Vestrio. All
intercompany accounts have been eliminated.
STOCKHOLDERS' EQUITY TRANSACTIONS
- ---------------------------------
In January 2002, the Company issued 40,000 shares of their common stock for
services valued at $15,200.
In April 2002, the Company granted warrants to purchase 1,500,000 shares of
their common stock. The warrants were issued for services valued at $40,000.
In April 2002, the Company issued 6,000,000 shares of their common stock for
notes payable and accrued interest of $881,559.
In May 2002, the Company issued 600,000 shares of their common stock for
services valued at $150,000.
In May 2002, the Company issued 1,325,300 shares of their common stock for
notes payable and accrued interest of $225,302.
In June 2002, the Company issued 150,000 shares of their common stock for a
settlement valued at $75,000.
7
Whole Living, Inc.
Notes to the Consolidated Financial Statements
September 30, 2002
STOCKHOLDERS' EQUITY TRANSACTIONS (CONTINUED)
- ---------------------------------------------
In July 2002, the Company issued 6,000,000 shares of their common stock for
the acquisition of Vestrio Corporation valued at $2,940,000.
In August 2002, the Company issued 110,000 shares of their common stock for
insurance valued at $48,400.
NOTES PAYABLE
- -------------
The notes payable due to shareholders and an officer at September 30, 2002 is
$2,127,800. The notes range in interest from 8% to 15% and mature in 2002.
The notes payable due to various unrelated entities at September 30, 2002 is
$701,767. The notes range in interest from 9% to 13% and mature in 2002.
8
References in this quarterly report to "Whole Living" "we," "us," and
"our" refer to Whole Living, Inc.
FORWARD LOOKING STATEMENTS
This Form 10Q-SB contains certain forward-looking statements and any
statements contained in this Form 10Q-SB that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, words such as "may," "will," "expect," "believe," "anticipate,"
"estimate" or "continue" or comparable terminology are intended to identify
forward-looking statements. These statements by their nature involve
substantial risks and uncertain ties, and actual results may differ materially
depending on a variety of factors, many of which are not within Whole Living's
control. These factors include but are not limited to economic conditions
generally and in the industries in which Whole Living may participate;
competition within Whole Living's chosen industry, including competition from
much larger competitors; technological advances and failure by Whole Living to
successfully develop business relationships.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OVERVIEW
Whole Living is a holding company of three subsidiaries: Brain Garden,
Inc., Vestrio Corporation and Simple Online Solutions, LLC. Brain Garden is a
total lifestyle company focused on improving mental and physical performance
through whole foods and whole education. Brain Garden employs a network
marketing system to sell its products to customers and independent
distributors, and it relies on independent distributors to sponsor new
distributors. Simple Online Solutions owns certain proprietary products and
markets those products and services through licensing agreements. Vestrio
holds license agreements for the marketing of some of Simple Online Solution's
products and services. Vestrio offers a suite of proprietary investment and
stock analysis software products which are designed to help investors learn
how to analyze and manage their investments in the stock market. Vestrio
relies on a network marketing model for distribution of its products to the
public.
We have recorded operating losses for the most recent two fiscal years
and our independent auditors have expressed an opinion that we may be unable
to continue as a going concern without financing. However, our operating
subsidiaries have recorded significant revenues in the fourth quarter of 2002.
Vestrio was cash flow positive in the month of October and recorded $5 million
in revenues for the first four months of the year. In addition, Brain Garden
reached monthly revenues of $1 million in October. These developments are
indicators of our movement toward our projected revenues; however, we have
adjusted our projection to $14 million for our combined subsidiaries by year's
end from our preliminary projection of $30 million.
Brain Garden consolidated its operations into a single facility located
in Provo, Utah, which houses the corporate offices, manufacturing and
fulfillment. This two story 40,000 square foot facility is Brain Garden's new
international headquarters. Management anticipates that this facility will
increase our production capacity from $750,000 to $7.5 million. In addition,
Brain Garden is preparing to launch its network marketing program in the
United Kingdom.
Acquisition Treatment
In July 2002 Whole Living completed the acquisition of Vestrio
Corporation and Simple Online Solutions. We acquired these two companies in
an arms-length transaction by issuing an aggregate of 6,000,000 shares of
Whole Living common stock to the seven stockholders of Vestrio in exchange for
100,000 shares of Vestrio common stock. Simple Online Solutions was the
wholly-owned company of Vestrio. The stock-for-stock exchange was intended to
qualify as a tax-free exchange and the six million shares were valued at
approximately $2,940,000. The acquisition was accounted for under the purchase
method of accounting using generally accepted accounting principles. Goodwill
of $5,473,103 was recognized and will be tested annually for impairment.
Vestrio and Simple Online Solutions' results of operations are consolidated
with our operations for the three month period ended September 30, 2002.
9
RESULTS OF OPERATIONS
The following discussions should be read in conjunction with the
financial statements included with this report and comparisons are presented
for the three and nine month periods ended September 30, 2002 and 2001.
We recognize revenue upon the receipt of the sales order, which is
simultaneous with the payment and delivery of our goods. Revenue is net of
returns, which have historically been less than 1% of sales. For the 2002
nine month period, sales increased $1,912,376, or 41.9%, compared to the 2001
nine month period. Sales for the 2002 third quarter increased $1,554,114, or
90.0 %, compared to the 2001 third quarter. The increased revenues for the
2002 third quarter were primarily the result of our acquisition of Vestrio and
Brain Garden's continued development.
Cost of goods sold consists primarily of the cost of procuring and
packaging products, sales commissions paid to our independent distributors,
the cost of shipping product to distributors, plus credit card sales
processing fees. Distributor commissions are paid to several levels of
distributors on each product sold. The amount and recipient of the commission
varies depending on the purchaser's position within the Unigen Plan.
Distributor commissions are paid to distributors on a monthly basis based upon
their personal and group sales volume. Additional bonuses are paid weekly to
distributors. The overall payout average for sales commissions has
historically been approximately 39% of product sales.
Cost of goods sold increased $886,913, or 26.8%, for the 2002 nine
month period compared to the 2001 nine month period and increased $966,533, or
90.0 %, for the 2002 third quarter compared to the 2001 third quarter. Cost
of goods sold were 64.7% of sales for the 2002 nine month period compared to
72.4 % of sales for the 2001 comparable period. Costs of good sold for the
2002 third quarter were 62.2 % of sales compared to 62.2% of sales for the
2001 comparable period. The percentage of sales decrease in cost of goods
sold for the 2002 nine month period was primarily the result of bringing food
manufacturing in-house. Accordingly, our gross profit increased $1,025,463,
or 81.6%, for the 2002 nine month period compared to the 2001 nine month
period and increased $587,581, or 89.9%, for the 2002 third quarter compared
to the 2001 third quarter.
General and administrative expenses, which include general office
expense, management and employees' salaries, and the support systems for the
distributor network, increased $552,084, or 22.6%, for the 2002 nine month
period compared to the 2001 nine month period and increased $560,749, or
69.4%, for the 2002 third quarter compared to the 2001 comparable period.
This increase was primarily due to overall increased growth in sales.
Selling expenses, which include marketing expenses, the support of
sales meetings and events, and certain customer service expenses, decreased
$377,609, or 55.2%, for the 2002 nine month period compared to the 2001 nine
month period. These expenses also decreased $49,922, or 40.6%, for the 2002
third quarter compared to the same period in 2001. The decrease in these
expenses was primarily a result of recording higher selling expenses in the
2001 third quarter related to expanding distribution in Australia and New
Zealand, plus additional costs involved in laying the groundwork for expansion
into certain Asian markets.
Total operating expenses increased $174,475, or 5.6%, for the 2002 nine
month period compared to the 2001 nine month period. Total operating expenses
also increased $510,827, or 54.9%, for the 2002 third quarter compared to the
2001 third quarter. Our total operating expenses were 51.0% of sales for the
2002 nine month period compared to 68.6% of sales for the comparable 2001
period. Third quarter total operating expenses were 43.9% of sales compared
to 53.8% of sales for the 2001 third quarter. Consequently, our operating
loss was $1,021,356 for the 2002 nine month period compared to $1,872,344 for
the 2001 nine month period and our operating loss was $200,398 for the 2002
third quarter compared to $277,152 for the 2001 third quarter.
We recorded total other expense of $118,490 for the 2002 nine month
period and $64,227 for the 2002
10
third quarter, which was primarily related to interest expenses for notes
payable. Total other income for the 2001 nine month period was $2,216 and
$2,903 for the 2001 third quarter, which reflected interest expense offset by
other income.
Our net loss decreased $730,282, or 39.1%, for the 2002 nine month
period compared to the 2001 nine month period and decreased $9,624, or 3.5%,
for the 2002 third quarter compared to the 2001 third quarter. Our loss per
share was $0.04 for the 2002 nine month period compared to $0.08 for the 2001
nine month period and $0.01 for the 2002 and 2001 third quarters.
Factors Affecting Future Performance
Since our inception, internal cash flows, alone, have not been
sufficient to maintain our operations. Actual costs and revenues could vary
from the amounts we expect or budget, possibly materially, and those
variations are likely to affect how much additional financing we will need for
our operations. Our future internal cash flows will be dependent on a number
of factors, including:
. Our ability to encourage our distributors to sponsor new
distributors and increase their own personal sales;
. Our ability to promote our product lines with our distributors;
. Our ability to develop successful new product lines;
. Effects of future regulatory changes in the area of direct
marketing, if any; and
. Our ability to remain competitive in our markets.
In addition, we have entered into agreements with independent
distributors and suppliers located in Australia, Canada, New Zealand and Japan
and may establish similar arrangements in other countries in the future. As a
result, our future revenues may be affected by the economies of these
countries. Our international operations are subject to a number of risks, such
as, longer payment cycles, unexpected changes in regulatory environments,
import and export restrictions and tariffs, difficulties in staffing and
managing international operations, greater difficulty or delay in accounts
receivable collection, potentially adverse recessionary environments and
economies outside the United States, and possible political and economic
instability.
Seasonal Aspects
In the direct selling industry, the summer months of June, July and
August, and the holiday months of November and December are relatively soft.
However, in our short operating history we have experienced an increase in
sales during these time periods and are unsure how the industry-wide
fluctuations will affect our business in the future.
LIQUIDITY AND CAPITAL RESOURCES
We have funded our cash requirements primarily through sales, loans and
private placements of our common stock. At the nine month period ended
September 30, 2002, we had $74,881 cash on hand with $1,101,823 in total
current assets, compared to $96,232 cash on hand with $698,100 in total
current assets at the year ended December 31, 2001. Our total current
liabilities were $4,321,827 at September 30, 2002, compared to $1,393,128 at
the 2001 year end. The current portion of long-term liabilities represented
65.5% of the total current liabilities at the end of the 2002 nine month
period.
Net cash used for operating activities was $1,336,875 for the 2002 nine
month period compared to $1,608,754 for the 2001 nine month period. Net cash
used by investing activities was $1,345,791 for the 2002 nine month period
compared to $109,496 for the 2001 nine month period. The increase in net cash
used for investing activities was primarily related to payments of $1,100,000
for notes receivable. Net cash provided by financing activities was
$2,661,315 for the 2002 nine month period compared to $1,718,250 for the 2001
nine month period. The increase in net cash provided by financing activities
was primarily the result of more debt financing in the 2002 nine month period.
11
Commitments and Liabilities
At the period ended September 30, 2002 our principle commitments
consisted of $2,127,800 notes payable to related parties and $701,767 notes
payable to unrelated entities. As of December 31, 2001, future minimum
payments on notes payable were $544,453 through 2002. Future minimum payments
on operating leases for vehicles, office space and warehouse space were
$186,285 through 2003.
Historically, we have relied on loans from shareholders and management,
which we have converted into common stock. We also rely on equity
transactions to pay for services provided to us. During the third quarter
ended September 30, 2002 we issued 110,000 common shares to pay for director
and officers liability insurance valued at approximately $48,400. Previously,
in the second quarter ended June 30, 2002, we converted debt totaling
$1,106,861 by issuing 7,325,300 shares of common stock to the holders of notes
payable. In that same quarter, we issued common shares and warrants to pay
for services rendered, or to be rendered, to us which were valued at
approximately $190,000.
During the 2001 year we received cash from debt financing of
$1,990,373 and during the 2000 year we borrowed $1,934,049. These loans were
primarily from shareholders and management with interest rates varying from 9%
to 10.5%. We satisfied a portion of these notes payable in February 2001 when
we issued 6,677,230 shares to eight accredited investors to convert $2,004,678
of these notes payable. Then in May 2001 we sold 7,500,000 common shares to
six accredited investors in a private placement for $2,550,000 in cash. After
the private placement, on October 15, 2001, our Board authorized the buy back
of 4,052,890 common shares from five of the shareholders for $1,500,000. The
Board then retired the shares to the corporate treasury, reducing our issued
and outstanding by that number.
Financing
Management anticipates that additional capital for cash shortfalls will
be provided by future loans or private placements of our common stock. We
expect to issue private placements of stock pursuant to exemptions provided by
federal and state securities laws. The purchasers and manner of issuance will
be determined according to our financial needs and the available exemptions.
We also note that if we issue more shares of our common stock our shareholders
may experience dilution in the value per share of their common stock.
If we fail to raise the necessary funds through private placements, we
anticipate we will require debt financing from related or third parties. We
have not investigated the availability, source and terms for external
financing at this time and we can not assure that funds will be available from
any source, or, if available, that we will be able to obtain the funds on
terms agreeable to us. Also, the acquisition of funding through the issuance
of debt could result in a substantial portion of our cash flows from
operations being dedicated to the payment of principal and interest on the
indebtedness, and could render us more vulnerable to competitive and economic
downturns.
ITEM 3: CONTROLS AND PROCEDURES
As a result of new SEC regulations, our Board formalized the disclosure
controls and procedures we use to ensure that material information regarding
our company and its operations is provided to the public in a timely manner.
On November 1, 2002, our principal executive officer and CFO evaluated the
effectiveness of these disclosure controls and procedures and determined that
there were no significant deficiencies in these procedures.
They did not identify any deficiencies or material weaknesses in our
internal controls, nor did they identify fraud that involved management or
other employees who had a significant role in our internal controls. They did
not find any deficiencies or weaknesses which would require changes to be made
or corrective actions to be taken related to our internal controls, other than
providing our financial information to the auditor earlier in the process.
12
PART II. OTHER INFORMATION
ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS
RECENT SALES OF UNREGISTERED SECURITIES
The following discussion describes all securities sold by us without
registration during the three month period ended September 30, 2002, through a
recent date:
On August 14, 2002 we authorized the issuance of 110,000 common shares
to Universal Business Insurance in consideration for officer and directors'
liability insurance valued at $48,400. We relied on an exemption from
registration for a private transaction not involving a public distribution
provided by Section 4(2) under the Securities Act.
On July 8, 2002, we agreed to issue an aggregate of 6,000,000 shares to
seven shareholders of Vestrio Corporation in exchange for all of Vestrio's
issued and outstanding shares. We placed these shares into an escrow account
and then distributed them in July 2002. These shares were valued at
approximately $2,940,000. We relied on an exemption from registration for a
private transaction not involving a public distribution provided by Section
4(2) under the Securities Act.
ITEM 5. OTHER INFORMATION
On October 31, 2002 Ronald K. Williams resigned as our President and
Director. Mr. Williams will retire from the responsibilities of president,
but will remain as the founder and a consultant for the company. The board of
directors expects to appoint a new president within the next 90 days.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Part II Exhibits
Exhibit
No. Description
- ------- -----------
2.1 Agreement and Plan of Reorganization between Whole Living and
Vestrio, dated July 8, 2002
(Incorporated by reference to exhibit 2.1 to Form 8-K, filed July
11, 2002)
3.1 Articles of Incorporation of Whole Living
(Incorporated by reference to Form exhibit 2.1 10-SB, as amended,
filed August 9, 1999)
3.2 Bylaws of Whole Living
(Incorporated by reference to exhibit 2.4 to the Form 10-SB, as
amended, filed August 9, 1999)
10.1 Lease between Whole Living and KL Partners American Fork II, LLC,
dated November 26, 1999 (Incorporated by reference to exhibit 6.1 to
the Form 10-SB, as amended, filed August 9, 1999)
10.2 Consultant Agreement between Whole Living and Summit Resource Group,
Inc., dated April 30, 2002
21.1 Subsidiaries of Whole Living, Inc.
(b) Reports on Form 8-K
On July 11, 2002, we filed a current report on Form 8-K under Items
2 and 7 regarding the acquisition of Vestrio Corporation and Simple Online
Solutions, LLC. No financial statements were filed. Then on September 9,
2002 we filed an amendment to this Form 8-K which included the audited
financial statements for Vestrio Corporation and pro forma financial
statements for the combined corporations.
13
SIGNATURES
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.
WHOLE LIVING, INC.
Date Nov. 18, 2002 By: /s/ Douglas J. Burdick
------------------------------------
Douglas J. Burdick
Chief Operating Officer, Principal
Executive Officer and Director
Date: Nov. 18. 2002 By: /s/ Jeffrey R. Brudos
--------------------------------------
Jeffrey R. Brudos
Secretary/Treasurer, Chief Financial
Officer and Director
PRINCIPAL EXECUTIVE OFFICER CERTIFICATION
I, Douglas J. Burdick, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Whole Living,
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 statement made, in light of the circumstances under which 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 officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the
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registrant's auditors and the audit committee of 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;
and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Nov. 18, 2002 /s/ Douglas J. Burdick
Date: _________________________ ____________________________________
Douglas J. Burdick
Principal Executive Officer
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CHIEF FINANCIAL OFFICER CERTIFICATION
I, Jeffrey R. Brudos, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Whole Living,
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 statement made, in light of the circumstances under which 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 officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of 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;
and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Nov. 18, 2002 /s/ Jeffrey R. Brudos
Date: _________________________ ________________________________
Jeffrey R. Brudos
Chief Financial Officer
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