The following discussion and analysis of the condensed consolidated results of
operations and financial condition of Balance Labs, Inc., and subsidiaries
("Balance Labs" or the "Company") for the three months ended March 31, 2022
should be read in conjunction with our condensed consolidated 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 Annual Report on Form 10-K filed with the Securities
and Exchange Commission (the "SEC") on March 31, 2022. 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.
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 start-up and development-stage companies. Our business model is to 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
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
Additionally, in accordance with the 1940 Act, Section 3(c)(1), the Company is
not an Investment Company as defined by the 1940 Act because the Company does
not have outstanding securities beneficially owned by more than one hundred
persons and, at this time, the Company is not making and does not presently
propose to make a public offering of its securities. Additionally, the Company
has not and has no plans to purchase or acquire any securities issued by any
registered investment company.
Our business focuses on providing advisement services 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, start-up 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.
Start-ups and development stage businesses across all industries commonly
experience these certain "growing pains".
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 overcome these obstacles,
so that they can focus on marketing their product(s) and/or service(s) to their
Although we've only worked with three clients since inception, our goal is to
add and service a minimum of two to three new clients between now and the end of
2022. 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.
We believe that we can support our 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 2022, we intend to formalize our
relationships with these subcontractors so that we can offer our clients
turn-key business development products and services.
The Company incorporated or formed nine subsidiaries since 2016, Balance Labs,
LLC, Balance AgroTech Co., Advanced AutoTech Co., Balance Cannabis Co., Balance
Medical Marijuana Co. Krypto Ventures Inc, formerly known as KryptoBank Co. , a
former subsidiary. Except for Krypto Ventures Inc, formerly known as KryptoBank
Co. all of the subsidiaries are wholly owned by the company. On July 29, 2021,
the Company exchanged 52,500,000 shares of common stock in Krypto Ventures, Inc.
for 119,584,736 shares of common stock in Descrypto Holdings, Inc. ("Descrypto")
(formerly W Technologies Inc.), an unrelated party in a Share Exchange
Agreement. As a result, Krypto Ventures, Inc. has been deconsolidated and is no
longer our subsidiary.
In November 2018, the Company acquired a non-controlling minority interest in a
new start-up company, iGrow Systems, Inc. As of March 31, 2022, this investment
has no value based on the equity method of accounting. iGrow Systems, Inc., is
developing a plant growing device for home use.
Our primary requirement for funding is for working capital in order to
accommodate temporary negative cash flows from operations (see "Liquidity and
Results of Operations
Three Months Ended March 31, 2022 Compared with Three Months Ended March 31,
We reported a net loss of $221,962 and of $183,173 for the three months ended
March 31, 2022 and 2021, respectively. This represents a difference of $38,789,
or 21.18%, primarily due to an increase in the unrealized loss of available for
Revenues - Related Party
For the three months ended March 31, 2022 and March 31, 2021, we generated
$67,500 and $0, respectively in revenue. The primary reason or the increase in
revenue was due to consulting agreement with EZFill Holdings, Inc. Our
president, CEO, CFO and Chairman of the Board is also the former president of
EZFill Holdings, Inc. and owns approximately 28% of EZ Fill's outstanding common
stock as of March 31, 2022.
General and Administrative Expenses
General and administrative expenses were $4,039 and $5,900 for the three months
ended March 31, 2022 and 2021, respectively, a decrease of $1,861 or 31.54%
primarily due to a decrease in rent expense offset by an increase in office
Professional fees were $44,212 and $25,030 for the three months ended March 31,
2022 and 2021, respectively, an increase of $19,182 or 76.64% due to increase in
accounting fees for the quarter.
Other Income and Expense
Other expenses for the three months ended March 31, 2022 was $187,919. Other
expense for the three months ended March 31, 2021 was $87,852. This represents a
difference of 113.90% which was attributable to an unrealized loss from
available for sale securities and interest expense, offset by proceeds from sale
of investment, accreted interest income and interest income on note receivable.
Unrealized gain or loss on available for sale securities
Unrealized loss on available for sale securities for the three months ended
March 31, 2022 was $131,535. Unrealized loss on available for sale securities
for the three months ended March 31, 2021 was $5,500. This represents an
increase of $126,035 or 2,291.55% attributable to a reduction in the stock price
of the securities.
Net Loss allocated from Equity Method Investee
Net Loss allocated from Equity Method Investee for the three months ended March
31, 2022 and March 31, 2021 was $6,154 and $21,006, respectively. This
represents a decrease of $14,852 or 70.70% primarily due to decrease in
operating expenses by the investee.
Liquidity and Capital Resources
We measure our liquidity in a number of ways, including the following:
March 31, December 31,
Cash $ 213,897 $ 227,558
Working capital (deficiency) $ (3,595,066 ) $ (3,513,015 )
Availability of Additional Funds
Except for the monthly consulting fee to our CEO and Chairman of the Board and
the monthly lease of our virtual office, as described elsewhere in this annual
report, we currently do not have any material commitments for capital
expenditures. 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
As of March 31, 2022, the Company had a working capital deficiency of
$3,595,066. The Company used cash in operations of $13,661. 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.
Net Cash Used in Operating Activities
We experienced negative cash flows from operating activities for the three
months ended March 31, 2022 and March 31, 2021, in the amount of $13,661 and
$127,486, respectively. This was primarily due to a net loss of $221,962
primarily offset by an unrealized loss on the value of an investment by
$131,535, change in accounts receivable of $22,500, change in interest
receivable of $4,216, change in accounts payable and accrued expenses by
$66,078, change in accounts payable and accrued expenses -related party of
$30,000, net loss from equity method investee of $5,541, and accumulated losses
on unconsolidated interest in excess of investment of $613.
Net Cash Used in Investing Activities
Net cash used in investing activities during the three months ended March 31,
2022 and March 31, 2021 was $0 and $119,000, respectively. During the three
months ended March 31, 2021, cash used in investing activities was $119,000 as a
note receivable to an unrelated party.
Net Cash Provided by Financing Activities
Net cash provided by financing activities during the three months ended March
31, 2022 and March 31, 2021 was $0 and $248,500, respectively. Cash provided by
financing activities during the three months ended March 31, 2021 was $248,500
from short-term advances from related parties.
Our Auditors Have Issued a Going Concern Opinion
The Company's independent registered public accounting firm has expressed
substantial doubt as to the Company's ability to continue as a going concern as
of December 31, 2021. The unaudited condensed consolidated financial statements
in this report on Form 10-Q have been prepared assuming that the Company will
continue as a going concern. As discussed in the notes to the unaudited
condensed consolidated financial statements, these conditions raise substantial
doubt from the Company's ability to continue as a going concern. The Company's
plans in regard to these matters are also described in the notes to the
Company's unaudited condensed consolidated financial statements. The unaudited
condensed consolidated financial statements do not include any adjustments
relating to the recoverability and classification of asset carrying amounts or
the amount and classification of liabilities that might result should the
Company be unable to continue as a going concern.
The Company anticipates the receipt of funding within such period, but there can
be no assurance that it will occur. If the Company is unable to meet its
internal revenue forecasts or obtain additional financing on a timely basis, it
may have to delay vendor payments and/or initiate cost reductions, which would
have a material adverse effect on the Company's business, financial condition
and results of operations, and ultimately it could be forced to discontinue the
Company's operations, liquidate, and/or seek reorganization under the U.S.
bankruptcy code. No assurance can be given that any future financing will be
available or, if available, that it will be on terms that are satisfactory to
the Company. Even if the Company is able to obtain additional financing, it may
contain restrictions on our operations, in the case of debt financing or cause
substantial dilution for our stockholders, in case of equity financing.
Furthermore, COVID-19 has also caused severe disruptions in transportation and
limited access to the Company's facilities resulting in limited support from its
staff and professional advisors. This in turn has limited the Company's
resources in promoting its services and acquiring additional capital.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Critical Accounting Policies and 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
us 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
accruals, stock-based compensation and income taxes. Actual results could
materially differ from those estimates.
The Company accounts for revenues under FASB ASC 606, which is a comprehensive
new revenue recognition model that requires revenue to be recognized in a manner
to depict the transfer of goods or services to a customer at an amount that
reflects the consideration expected to be received in exchange for those goods
or services. The Company considers revenue realized or realizable and earned
when all the five following criteria are met: (1) Identify the Contract with a
Customer, (2) Identify the Performance Obligations in the Contract, (3)
Determine the Transaction Price, (4) Allocate the Transaction Price to the
Performance Obligations in the Contract, and (5) Recognize Revenue When (or As)
the Entity Satisfies a Performance Obligation.
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). 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.
Recent Accounting Standards
We have implemented all new accounting standards that are in effect and may
impact our consolidated 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.
© Edgar Online, source Glimpses