U.S.
Securities and Exchange Commission


Washington,
D.C. 20549











FORM
10-K










[X]
            Annual
      Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of
      1934 for the Fiscal Year Ended December 31,
2009





[
       ]
            Transition
      Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934
      for the Transition Period from _______ to
  _______








Commission
File Number: 333-153589








EXERCISE
FOR LIFE SYSTEMS, INC.


(Exact
name of small business issuer as specified in its charter)







North Carolina
            22-3464709(State
      or other jurisdiction of
            (IRS
      Employer Identification No.)incorporation
      or organization)





East
Field Road, Suite 200-311


Huntersville,
NC 28078


(Address
of principal executive offices)





(704)
778-1700


(Issuer's
telephone number)







Securities
registered under Section 12(g) of the Exchange Act:





Common
Stock, $.0001 par value


(Title
of Class)





Indicate
by check mark if the registrant is a well-know seasoned issuer, as defined in
Rule 405 of the Securities Act.


Yes
[  ]                                No
[x]





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act


Yes
[  ]                                No
[x]





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.


Yes
[x]                                No
[  ]





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this
chapter) during the preceding 12 months (or such shorter period that the
registrant was required to submit and post such files).


Yes
[  ]                                No
[  ]





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 if
Regulation S-K (229.405 of this Chapter) is not contained herein, and will not
be contained, to the best of the registrant’s knowledge, in definitive proxy of
information statements incorporated by reference in Part III of this Form 10-K
or any amendments to this Form 10-K.


Yes
[  ]                                No
[  ]




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.




Large
      accelerated filer
            Non-accelerated
      filer
            (Do
      not check if a smaller reporting company)Accelerated
      filer
            Smaller
      reporting company
            X





Indicate
by check mark whether the registrant is a shell company (as defined in rule
12b-2 of the exchange act).


Yes
[  ]                                No
[X]





The
Registrant’s revenues for its fiscal year ended December 31, 2009 were
$42,424.





The
aggregate market value of the voting stock and non-voting common equity on April
12, 2010 (consisting of Common Stock, $0.0001 par value per share) held by
non-affiliates was approximately $221,422.25 based upon the most recent sales
price for such Common Stock on said date ($0.145). On April 12, 2010, there were
11,527,050 shares of our Common Stock issued and outstanding, of which
approximately 1,527,050 shares were held by non-affiliates.





Number of
shares of common stock, par value $.0001, outstanding as of April 12, 2010:
11,527,050





DOCUMENTS
INCORPORATED BY REFERENCE





None





CAUTIONARY
STATEMENT REGARDING FORWARD LOOKING INFORMATION





The
discussion contained in this 10-K under the Securities Exchange Act of 1934, as
amended, contains forward-looking statements that involve risks and
uncertainties. The issuer's actual results could differ significantly from those
discussed herein. These include statements about our expectations, beliefs,
intentions or strategies for the future, which we indicate by words or phrases
such as "anticipate," "expect," "intend," "plan," "will," "we believe," "the
Company believes," "management believes" and similar language, including those
set forth in the discussions under "Notes to Financial Statements" and
"Management's Discussion and Analysis or Plan of Operation" as well as those
discussed elsewhere in this Form 10-K. We base our forward-looking statements on
information currently available to us, and we assume no obligation to update
them. Statements contained in this Form 10-K that are not historical facts are
forward-looking statements that are subject to the "safe harbor" created by the
Private Securities Litigation Reform Act of 1995.











TABLE OF
CONTENTS




PART
      I:Item
      1.                  Business
              
              
              3Item
      1A.               Risk
      Factors
              
              
              5Item
      1B.               Unresolved
      Staff Comments
              
              
              6Item
      2.                  Properties
              
              
              6Item
      3.                  Legal
      Proceedings
              
              
              6Item
      4.                  Submission
      of Matters to a Vote of Security Holders
              
              
              6PART
      II:Item
      5.                 
      Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
              
              
              6Item
      6.                  Selected
      Financial Data
              
              
              7Item
      7.                 
      Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
              
              
              7Item
      7A.               Quantitative
      and Qualitative Disclosures About Market Risk
              
              
              8Item
      8.                  Financial
      Statements and Supplementary Data
              
              
              8Item
      9.                 
      Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
              
              
              18Item
      9A.               Controls
      and Procedures
              
              
              18Item
      9A(T).          Controls
      and Procedures
              
              
              18Item
      9B.              
      Other Information
              
              
              18PART
      III:Item
      10.                Directors,
      Executive Officers and Corporate Governance
              
              
              19Item
      11.                Executive
      Compensation
              
              
              19Item
      12.               
      Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
              
              
              20Item
      13.               
      Certain
      Relationships and Related Transactions, and Director
      Independence
              
              
              20Item
      14.               
      Principal
      Accounting Fees and Services
              
              
              20PART
      IV:Item
      15.               
      Exhibits,
      Financial Statement Schedules
              
              
              21SIGNATURES:
              
              
              22




2





ITEM 1.
BUSINESS





Our
Company





Exercise
for Life Systems, Inc. is a full-service operator of personal fitness training
in and around the Lake Norman area of Charlotte, North Carolina. We operate from
our training facility located at East Field Road, Suite 200-311 Huntersville,
NC  28078. By operating our fitness center in a major metropolitan
area such as Charlotte, North Carolina, we are able to offer city-wide training
services, providing more value to clients and differentiating ourselves from
“mom and pop” competitors while achieving operating efficiencies.





We were
incorporated in New Jersey in August of 1996 until we re-domiciled to North
Carolina in September 2008. Since inception, our business, markets, the services
we offer and the way we conduct our business have not changed significantly and
are not expected to change. Changes that have been made are primarily the result
of increasing awareness of the need for exercise, weight control, good nutrition
and a healthy lifestyle among adults and children in the United States. We
believe that through more targeted sales and marketing efforts of our service
offerings we can capitalize on the opportunities in our markets, including the
aging of America and generally higher awareness levels of fitness. For many
years our target market was the 18- to 34-year old middle-income segment of the
population. In recent years, we expanded our target market to include 35- to
64-year olds. Currently, our clients range in age from approximately 12 to 91,
reflecting our many years in business and diverse client base.





Beginning
in September 2006, we changed our focus and our business plan by focusing on
improving operating margins and cash flows from our existing profit center of
personal fitness training. We first focused on operating efficiencies, enrolling
more new clients by expanding our service offerings to include discounted
services if a client purchases a bulk number of training sessions in advance. We
continue to evaluate strategic alternatives to enhance our liquidity and make
necessary investments in our ongoing business.





Business
Development





Exercise
for Life Systems was incorporated in New Jersey in 1996 as A.J. Glaser, Inc. and
later incorporated in North Carolina in 2006 also as A.J. Glaser,
Inc.  In 2008, A.J. Glaser, Inc. amended its North Carolina Articles
of Incorporation to change its name to Exercise for Life Systems,
Inc.  In September of 2008 we entered into a plan of exchange with
A.J. Glaser, Inc. whereby we exchanged 100 shares of our common stock for all of
the issued and outstanding shares of A.J. Glaser, Inc.  We entered
into this transaction in order to re-domicile our company in North Carolina
where the majority of our business is conducted.





The
Company currently operates a full-service personal fitness training center in
Cornelius, North Carolina.  Exercise for Life Systems’ product and
service offerings seek to help its clients and prospective clients achieve their
health and wellness goals while increasing its revenue, earnings, cash flow and
profitability. The Company’s primary focus is to improve operating margins and
cash flows from the Company’s existing profit center of personal fitness
training, as well as provide value added health and fitness services and to
continue helping clients achieve their health and wellness goals. Exercise for Life
Systems, Inc. is headquartered in Cornelius, North Carolina.





When it
comes to the public’s increasing awareness of the need for exercise, weight
control, good nutrition, and a healthy lifestyle, we believe that through more
targeted sales and marketing efforts of our service offerings, we can capitalize
on the opportunities in our markets, including the aging of America and
generally higher awareness levels of fitness. Beginning in 2006, we changed our
focus and our business plan by focusing on improving operating margins and cash
flows from our existing profit center of personal fitness
training.  We first focused on operating efficiencies, enrolling more
new clients by expanding our service offerings to include discounted services if
a client purchases a bulk number of training sessions in advance.  The
Company will continue to evaluate strategic alternatives to enhance our
liquidity and make necessary investments in our ongoing business as well as
strive to nurture the best practices and talent of our partners and share them
broadly to create value for our customers, shareholders, partners and
employees.





By
operating our fitness center in a major metropolitan area such as Charlotte,
North Carolina, Exercise for Life Systems is able to offer city-wide training
services, providing more value to clients and differentiating ourselves from
“mom and pop” competitors while achieving operating efficiencies.  Our
target market includes, but is not limited to, 18- to 64-year olds. Our industry
experience has allowed us to identify target markets that will be receptive to
our proprietary products and services while allowing the quickest market
penetration with as minimal competition as possible.





Business
of Issuer





Products
and Services





Our
fitness operations provide a unique platform for the delivery of value-added
services to our fitness, wellness and weight loss-conscious
clients.  By integrating personal training, nutrition advice, and our
weight management program into our core fitness training operations, we have
positioned ourselves as the total source for most of our clients’ wellness and
fitness needs.





Personal
Training.  We offer fee-based personal training services with
professionally certified personal trainers currently on staff. Integrating
personal training into select programs has helped fuel the growth of this
service. All new clients are also offered a free first work-out with a personal
trainer as an important first step toward fitness at the beginning of their
training.  Personal training package services are also offered
separately, giving customers a full range of personal training options at the
point of sale and beyond. We believe that further penetration into the existing
client base along with new personal training programs will continue to provide
revenue growth opportunities in personal training. Our multi-client personal
training sessions (small group personal training) are more affordable for our
clients, and on average, have a margin similar to or greater than one-on-one
training. We also offer a maintenance program after a client has completed a
personal training package.  This allows a client who may have stopped
training otherwise to continue using our services.  Maintenance
clients can come in once a week, bi-weekly, monthly or
quarterly.  These maintenance clients continue to increase revenue by
retaining personal trainer’s services on a more limited basis.  They
are also still a source for referrals in the future.





Supplements.  We
sell certain supplements which are scientifically-advanced formulas designed to
give the body the maximum benefit from vitamins and minerals. They are a
powerful combination of plant-derived bioflavonoid, known as oligomeric
proanthocyanidins, or OPC's. Made from a unique combination of grape seed, pine
bark and red wine extracts (in addition to bilberry and citrus extracts), these
OPC's are super-effective free radical neutralizers.* Our web site for this
product is located at http://drink2health.isotonix.com.
When one takes a daily vitamin or nutritional supplement tablet, the body must
work hard for up to four hours to digest and absorb the vitamins and minerals.
During that process, your body may not absorb enough nutrients to gain the
maximum benefit it needs to remain healthy. Our supplements use an isotonic
formula to speed nutrients to the body where they are needed most. An isotonic
formula utilizes a powder formula, that, when mixed with water, minimizes the
amount of digestion needed to deliver maximum benefit to your body. Through this
effective method, the supplements provide delivery and speed nutrients to the
body.





*The
Food and Drug Administration has not evaluated these statements. The product is
not intended to diagnose, treat, cure, or prevent any disease.





Nutrition and Weight Management
Program.  We offer a comprehensive nutrition and exercise program
customized to an individual’s unique metabolism. This program combines meal
plans, grocery lists, recipes, meal replacement bars and meal replacement shakes
to offer a comprehensive weight management program to all Exercise for Life
Systems, Inc. clients. Using computer-based or manual food logging methods, all
participants in our weight loss solution can track their progress towards
reaching their weight loss goals. This allows for the integration into a
comprehensive lifestyle, health, nutrition and fitness program.  The
weight management program can be done individually or in a group
setting.  The length of the program is 12 weeks and then we offer a
maintenance program for those who want to continue along their weight loss
journey.  All participants are weighed and measured every four weeks
so we can monitor their improvement.





Fitness
Assessments.  We offer the Polar Body Age
Assessment.  This state of the art assessment allows clients to see
their strengths and weaknesses compared to other people of their same age and
sex.  It includes weight, blood pressure, flexibility, strength, girth
measurement, cardiovascular, risk factor and weight management
assessments.  The most unique part of the Polar Body Age system is
that it takes the results of all the assessments and gives the client his or her
body age compared to chronological age. All members who sign up for personal
training are required to take the 20 page one hour assessment.  Follow
up assessments are required every 3 months or at the completion of the personal
training program.  This holds the client as well as the trainer
responsible for meeting the client’s goals.  We also offer partial
assessments for those who only want to do certain aspects of the Polar Body Age
System.  Individual body fat, blood pressure and cardiovascular
assessments are available.





3





Our
Business Model





Exercise
for Life Systems plans to generate income by integrating personal training,
nutrition advice, and the weight management program into its core fitness
training operations and by positioning itself as the total source for most of
its clients’ wellness and fitness needs.  Through its product and
service offerings, the Company will increase its revenues by offering a wide
array of health and wellness products and services to clients of all
ages.  By offering personal service, Exercise for Life Systems
positions itself to help clients successfully achieve their goals and thus help
build brand recognition.





Strategy
and Implementation Summary





We will
watch our results very carefully. Believing that a business opportunity exists
is important. However, we will not pursue a business model if we cannot afford
to be in that business. We will strategically focus on retaining existing and
signing up new clients. Our business strategy is to quickly and
aggressively pursue and expand in areas of success and market dominance that
have not already been successfully penetrated by other businesses, or to provide
services and solutions not presently offered by our
competitors.





Marketing
and Sales Strategy





We devote
substantial resources to marketing and promoting our fitness services. We
believe strong marketing support is important to attracting new clients at both
existing and new fitness centers as well as promoting our various service
offerings to both new and current clients. We also believe that our sales and
marketing efforts compliment other actions and programs to improve client
retention.





We
advertise primarily through direct mail, newspapers, telephone directories,
on-line advertising, and other promotional activities. Our advertising programs
are local. Our marketing approach and organization, as well as our creative
approach is developed to reach multiple customer segments in the 18- to 64-year
old demographic.





Our sales
and marketing programs emphasize the benefits of health, physical fitness,
nutrition and exercise by appealing to the public’s desire to lose weight, look
and feel better, be healthier, experience an improved quality of life and live
longer. We believe providing clients a solution to their fitness and nutrition
needs, along with flexible payment plans (clients can pay at the time services
are rendered or may mail in their payment), our strong brand identity and the
convenience of multiple locations, constitute additional competitive
advantages.





Our
marketing efforts also include corporate and individual marketing programs. We
sell corporate services directly to businesses, as well as directly to their
employees through a combination of offsite sales activities and corporate
events. Open houses and other activities for clients and their guests are used
to foster client loyalty and introduce prospective clients to our fitness
training center. Referral incentive programs are designed to involve current
clients in the process of new enrollments and enhance client loyalty. Direct
mail and email reminders encourage referrals and renewals of
clients.





We also
attract interest from visitors to our Internet homepage at
http://www.drmikechandler.com/personaltraining.html and continue to explore ways
to use the Internet as a customer relationship management tool. Inquiries via
the Internet have become an important source of new clients. All Internet
visitors are encouraged to download a free trial visit, as well as set an
appointment for an initial visit.





Future
Fitness Centers and Operations





Site
selection.  Our objective is to select highly-visible locations with
high traffic volume, household density and proximity to other generators of
retail traffic. Most of our fitness centers will be located near regional, urban
and suburban shopping areas and business districts of major cities.





Fitness center
model.  Our current fitness center model offers those fitness
services our clients use most frequently, such as well-equipped cardiovascular,
strength and free weight training areas along with a wide variety of exercise
classes. These centers typically are small so as to maintain economic efficiency
while still getting a solid workout.





Fitness center
operations.  Our overall goal is to maximize our clients’
experiences by combining exercise instruction with nutrition guidance to assist
our clients in achieving all of their fitness and weight loss objectives. We
believe the most effective way to retain clients is by successfully assisting
them in reaching their fitness goals and experiencing a higher quality of life.
Our ultimate goal is that they continue to exercise for the rest of their life.
We strive to employ friendly, helpful and fitness informed personnel committed
to providing a high level of customer service, creating an environment that
meets the needs of our clients. We staff our fitness center with well-trained
health, fitness and nutrition professionals. Onsite personal trainers are
available to assist in the development of a customized training regimen. Our
weight management programs and nutrition products are available at all of our
domestic fitness centers and are becoming an increasingly important part of our
total fitness offering.  All personal trainers are required to have a
four year degree in the fitness or physical education field.





Fitness
centers that we open in the future may vary in size, amenities and types of
services provided.  Our current fitness center contains a wide variety
of progressive resistance, cardiovascular and conditioning exercise equipment,
as well as free weights and stretch areas with small apparatus equipment. Some
fitness centers in the future may contain amenities such as saunas, steam rooms,
whirlpools and swimming pools, but there is no guarantee as this would be
contingent upon raising capital in the future.





Competition





We
operate in a fragmented but highly competitive market. Several of our
competitors have access to capital which has fueled their expansion and growth,
including entry into key markets served by us. In several cases, these
competitors have a more favorable liquidity position than we do. Despite
increasing levels of competition, at this time we are an efficient operator of
our fitness training center in Cornelius, North Carolina in terms of clients,
revenues and square footage of our facility. We primarily compete with other
commercial fitness centers; physical fitness and recreational facilities
established by local governments, hospitals, and businesses for their employees;
the YMCA and similar organizations; and, to a certain extent, with racquet,
tennis and other athletic clubs, weight-reduction businesses, and the home-use
fitness equipment industry. We also compete, to some degree, with entertainment
and retail businesses for the discretionary income of consumers in our target
markets. In addition, we face regional competition with increasingly large
fitness companies such as 24 Hour Fitness Worldwide, Inc., L.A. Fitness, Inc.,
Town Sports International Holdings, Inc. (NSDQ: CLUB), Life Time Fitness, Inc.
(NYSE: LTM) and Gold’s Gym International, Inc. Other competition comes from new
small footprint, lower cost competitors such as Fitness 19, Anytime Fitness and
Planet Fitness.





Competition
has increased in certain markets from competitors expanding their scope of
operations, and due to the decrease in the barriers to entry into the market
with financing available from, among others, financial institutions, landlords,
equipment manufacturers, private equity sources and the public capital markets.
We believe several competitive factors influence success in the fitness center
business, including convenience, price, customer service, and quality of
operations, quality and innovative programming as well as the ability to secure
prime real estate. We believe we benefit from our flexible and affordable client
plans, and our diverse client base, although we have been adversely affected by
our lack of capital and the aging of our facility, which affects our ability to
compete. We expect the persisting increase in competition from well-financed
competitors to continue to have an adverse effect on our business.





We
believe we compete favorably in the principal competitive factors in our market,
which consist of the following:





·
            Knowledgeable
      physical trainers,·
            Technologically
      advanced products and services; and·
            Technical
      capability and management experience and
  expertise.





Competitive
Edge





The
competitive edge of Exercise for Life Systems, Inc. is due to the
following:





Knowledge.
Through our strategic recruiting efforts at the nation’s best colleges that
offer four year degrees, we strive to hire only the best and most qualified
personal trainers and employees.  All of our trainers are required to
have a four year degree in a fitness or physical education
curriculum.  We do not experience a high turnover of personal
trainers, and as a result, our trainers are experienced with and knowledgeable
about our business, products and services.





Leading Edge Technology. Our
product and service offerings are equipped with leading edge
technology.  By offering scientifically advanced supplements,
customized nutrition and weight management programs, and state of the art
fitness assessments, we are able to offer our clients what they need to achieve
their desired goals.





People. We have a history in
working with people and helping them achieve their goals.  By hiring
our personal training managers from within the Company, our center is run by
professional managers who are familiar with our business, products and services
and who have also built a rapport with our existing clients.





4





ITEM 1A. RISK
FACTORS





In addition to the other
information set forth in this report, you should carefully consider the
following factors, which could materially affect our business, financial
condition or future results. The risks described below are not the only risks
facing us. Additional risks and uncertainties not currently known to us or that
we currently deems to be immaterial also may materially adversely affect our
business, financial condition or results of operations.





We have experienced relatively
slow growth to this date and without significant increases in the market
penetration of our services and improvements to our operating margins we will
not achieve profitability.





We
anticipate that we could incur significant losses for at least the
short-term.  We will not achieve profitable operations until we
complete our offering and successfully attract and retain a significant number
of clients to, and users of, our services and customers for our other services
and generate revenues from these sources that are sufficient to offset the
substantial up-front expenditures and operating costs associated with developing
and commercializing our services. We may never be able to accomplish these
objectives.





It
is likely that we will require significant additional financing within the next
12 months and if we are unable to raise the needed funds on an acceptable basis,
we may be forced to cease operations.





Our
current business plan calls for raising a significant amount of additional funds
within the next 12 months.  Under the plan, these new funds would be
utilized primarily for increased advertising and to expand the Company’s
infrastructure through hiring key employees. We believe that this future
financing is crucial to our ability to grow and develop our
business.  If we are unsuccessful in our ability to raise additional
funds on acceptable terms when required, our business may wither and
die.





It
will be difficult for you to evaluate us based on our past performance because
we have only a limited operating history.





We have
been engaged in personal training services for a relatively short period of
time. Accordingly, we have only limited financial results on which you can
evaluate us and our operations.  Accordingly, we should be viewed as
essentially a new business and therefore, we are subject to, and may not be
successful in addressing, the risks typically encountered by new enterprises and
companies operating in the rapidly evolving marketplace, including those risks
relating to:





o
            the
      failure to develop brand name recognition and
  reputation;





o
            the
      failure to achieve market acceptance of our
  services;





o
            a
      slow down in the growth of general consumer acceptance of personal
      training; and





o
            an
      inability to grow and adapt our business and technology to evolving
      consumer demand.





We
may not be able to successfully compete in our markets, which are characterized
by intense competition and the presence of large competitors.





Given our
relatively limited resources, we may not be able to effectively compete in our
target markets.  These markets are characterized by intense
competition and increasing numbers of new market entrants who have developed or
are developing potentially competitive services.  Most of our
competitors have significantly greater financial and operating resources
compared to us. Our ability to compete will be dependent on our ability to
enhance and upgrade our services.





Our
limited resources may restrict our ability to manage any growth we may
experience.





Growth of
our business will likely place a significant strain on our management systems
and resources and may require us to implement new operating systems, procedures
and controls.  Our failure to manage our growth and expansion could
adversely affect our business, results of operations and financial condition.
Failure to implement new systems effectively or within a reasonable period of
time could adversely affect our business, results of operations and financial
condition.





If
we lose any of our key personnel or fail to hire and retain other talented
employees, our operations could be harmed.





Our
success is dependent, in part, on the personal efforts of Adam Slazer, our
President, and other key personnel that we hope to hire after this
Offering.  Although, we plan to obtain "key-man" insurance on his life
in the amount of $1,000,000, the loss of Mr. Slazer's services could have a
material adverse effect on our business and prospects. Our success is also
dependent upon our ability to hire and retain additional qualified management,
marketing, technical, financial, and other personnel. Competition for qualified
personnel is intense and we may not be able to hire or retain additional
qualified personnel. Any inability to attract and retain qualified management
and other personnel would have a material adverse effect on our business and
operations.





We
may not be able to attract and retain a sufficient number of clients to maintain
or expand the business.





During
each of the last two fiscal years, our number of clients declined. The
profitability of our fitness operations is dependent, in large part, on our
ability to originate and retain clients.  Numerous factors have
affected our client origination and retention at our fitness centers and that
could lead to a further decline in client origination and retention rates in the
future, including the inability of us to deliver quality service at a
competitive cost, the presence of direct and indirect competition in the areas
we are located and the public’s level of interest in fitness and general
economic conditions.





We
may not be able to continue to compete effectively in the future.





We expect
the persisting increase in competition to continue to have an adverse effect on
our business, liquidity, financial condition and results of
operations.  In addition, the constraints on our liquidity have
limited our ability to invest our operating cash flow in improvements to our
fitness centers and address the aging of our facilities, which may affect our
ability to compete.  Public perception of our declining liquidity,
financial condition and results of operations, in particular with regard to our
potential failure to meet our debt obligations, may result in additional
decreases in cash client revenues (particularly those associated with longer
term client contracts) and increases in client attrition.  In
addition, if liquidity problems persist, our suppliers could refuse to provide
key products and services in the future.  Continuing liquidity
concerns could also negatively affect our relationship with employees by
decreasing productivity and increasing turnover.





Competitors
could copy our business model and erode our market share, brand recognition and
profitability.





We cannot
assure you that our competitors will not attempt to copy our business model, or
portions thereof, and that this will not erode our market share and brand
recognition and impair our growth rate and profitability. In response to any
such competitors, we may be required to decrease our membership fees, which may
reduce our operating margins and profitability.





We
have significant operations concentrated in a certain geographic area, and any
disruption in the operations of our center in this area could harm our operating
results.





Any
prolonged disruption in the operations of our center, whether due to technical
difficulties, power failures or destruction or damage to the center as a result
of a natural disaster, fire or any other reason, could harm our operating
results. In addition, our concentration in this market increases our exposure to
adverse developments related to competition, as well as economic and demographic
changes in these areas.




We
could be subject to claims related to health or safety risks at our
center.





Use of
our center poses potential health or safety risks to members or guests through
exertion and use of our equipment, facilities and services. We cannot assure you
that claims will not be asserted against us for injury or death suffered by
someone using our facilities or services.





Certain
shareholders control a substantial portion of our outstanding common
stock.





Our
executive officers, directors and principal shareholders own a significant
portion of the outstanding shares of our common stock.  Specifically,
Adam Slazer, our President, owns 10,000,000 shares of our common stock. In
addition, additional shares and/or options may be issued to our other officers,
directors and employees.  Accordingly, these persons, acting together,
will be able to influence the election of our directors and thereby influence or
direct our policies.





No
dividends have been paid on our common stock.





To date,
we have not paid any cash dividends on our common stock and we do not expect to
declare or pay dividends on the common stock in the foreseeable future. In
addition, the payment of cash dividends may be limited or prohibited by the
terms of any future loan agreements.





The
Company does not have a prior public market, and there can be no assurance that
an active trading market will exist in our Stock after the
Offering.





Prior to
the Offering, there has been no public market for the Common Stock, and there
can be no assurance that an active trading market in the Common Stock will
develop after the Offering or be sustained.  The initial public
offering price may not be indicative of the market price for the Common Stock
after the Offering.  The liquidity of and the market price for the
Common Stock can be expected to vary with changes in market and economic
conditions, the financial condition and prospects of the Company and other
factors that generally influence the market prices of
securities.  Such fluctuations may significantly affect liquidity and
market prices independent of the financial performance of and prospects for the
Company.





SHOULD ONE OR MORE OF THE FOREGOING RISKS
OR UNCERTAINTIES MATERIALIZE, OR SHOULD THE UNDERLYING ASSUMPTIONS PROVE
INCORRECT, ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THOSE ANTICIPATED,
BELIEVED, ESTIMATED, EXPECTED, INTENDED OR PLANNED.





5





ITEM 1B. UNRESOLVED STAFF
COMMENTS





None.





ITEM 2.
PROPERTIES





Our
corporate headquarters are located at East Field Road, Suite
200-311 Huntersville, NC  28078.  The Company has an
oral contract to lease the premises with its President.  The lease is
gratuitous and consists of approximately 100 square feet of office
space.  The effects of the fair value of rent of its headquarters that
is provided by a related party are immaterial to the financial statements taken
as a whole.





ITEM 3.LEGAL
PROCEEDINGS





We are not aware of any pending or
threatened legal proceedings, in which we are involved. In addition, we are not
aware of any pending or threatened legal proceedings in which entities
affiliated with our officers, directors or beneficial owners are
involved.





ITEM 4. SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS





None.





PART II





ITEM 5. MARKET FOR
REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES





Trading
Market for Common Equity





Our
common stock is quoted on the Electronic Bulletin Board under the symbol,
EFLS.OB. Trading in the common stock in the over-the-counter market has been
limited and sporadic and the quotations set forth below are not necessarily
indicative of actual market conditions. Further, these prices reflect
inter-dealer prices without retail mark-up, mark-down, or commission, and may
not necessarily reflect actual transactions. The following tables set forth the
high and low sale prices for our common stock as reported on the Electronic
Bulletin Board for the periods indicated.





Fiscal
2009                                                      Low                      High


Quarter
ended March 31,
2009*                                                $0.12                    $0.22


Quarter
ended June 30,
2009                                                     $0.09                    $0.17


Quarter
ended September 30,
2009                                           $0.085                  $0.175


Quarter
ended December 31,
2009                                           $0.085            
$0.22


Interim
period ended April 9,
2010                                           $0.005                  $0.15





*The
stock commenced trading on January 30, 2009.





Dividends





We have
never paid a cash dividend on our common stock. The payment of dividends may be
made at the discretion of our Board of Directors, and will depend upon, among
other things, our operations, capital requirements, and overall financial
condition. There are no contractual restrictions on our ability to declare and
pay dividends.





Preferred
Stock





We
currently have zero shares of preferred stock outstanding.





Number
of Holders





As of
April 12, 2010, we had 36 active common shareholders of record.





Securities
Authorized for Issuance Under Equity Compensation Plans





As of the
date of this Report, we have not authorized any equity compensation plan, nor
has our Board of Directors authorized the reservation or issuance of any
securities under any equity compensation plan.





Recent
Sales of Unregistered Securities; Use of Proceeds from Registered
Securities





During
the past three years the Registrant has issued the following securities without
registration under the Securities Act of 1933, as amended:





During
2008, we issued 1,000 common shares each to William C. Moncrief Jr., Terri Lynn
Abel, Mark A. Dell, Judith A. Newland, Thomas F. Von Ohlen, Stephen Glaser,
Stacie K. Branham, Bradley E. Turner, Stacie Dyan Cottone, Angela Cottone, Nancy
Lea Hart/Doc Hart, Tracie Zehnal, Thomas A. Brophy, Vanessa Cottone, Tara
Cottone, and Michael W. Chandler at $0.10 per share for a total of $100 from
each investor and an aggregate of $1,600. We used the proceeds from these
offerings for working capital purposes. We relied on exemptions provided by
Section 4(2) of the Securities Act of 1933, as amended. We made these offerings
based on the following facts: (1) the issuances were isolated private
transactions which did not involve a public offering; (2) there was only one
offeree in each offering, (3) each offeree has agreed to the imposition of a
restrictive legend on the face of the stock certificate representing its shares,
to the effect that it will not resell the stock unless its shares are registered
or an exemption from registration is available; (4) the offerees were
sophisticated investors very familiar with our company and stock-based
transactions; (5) there were no subsequent or contemporaneous public offerings
of the stock; (6) the stock was not broken down into smaller denominations; and
(7) the negotiations for the sale of the stock took place directly between the
offeree and our management.





Also in
2008, we issued 35,000 common shares to Steven A. Bongiovanni at $0.10 per share
for an aggregate price of $3,500.  We used the proceeds from these
offerings for working capital purposes.  We relied on exemptions
provided by Section 4(2) of the Securities Act of 1933, as amended. We made this
offering based on the following facts: (1) the issuance was an isolated private
transaction which did not involve a public offering; (2) there was only one
offeree, (3) the offeree has agreed to the imposition of a restrictive legend on
the face of the stock certificate representing its shares, to the effect that it
will not resell the stock unless its shares are registered or an exemption from
registration is available; (4) the offeree was a sophisticated investor very
familiar with our company and stock-based transactions; (5) there were no
subsequent or contemporaneous public offerings of the stock; (6) the stock was
not broken down into smaller denominations; and (7) the negotiations for the
sale of the stock took place directly between the offeree and our
management.





In 2008,
we issued 10,000 common shares each to Richard A. West, Joseph M. Wilkins,
Valerie A. Garman, and Sunbelt Studios, LLC at $0.10 per share for a total of
$1,000 from each investor and an aggregate of $4,000.  We used the
proceeds from these offerings for working capital purposes. We relied on
exemptions provided by Section 4(2) of the Securities Act of 1933, as amended.
We made these offerings based on the following facts: (1) the issuances were
isolated private transactions which did not involve a public offering; (2) there
was only one offeree in each offering, (3) each offeree has agreed to the
imposition of a restrictive legend on the face of the stock certificate
representing its shares, to the effect that it will not resell the stock unless
its shares are registered or an exemption from registration is available; (4)
the offerees were sophisticated investors very familiar with our company and
stock-based transactions; (5) there were no subsequent or contemporaneous public
offerings of the stock; (6) the stock was not broken down into smaller
denominations; and (7) the negotiations for the sale of the stock took place
directly between the offeree and our management.





During
2008, we issued 5,000 common shares each to Mark J. Koury, Christopher S.
Moseley, and George and Nellie Roth at $0.10 per share for a total of $500 from
each investor and an aggregate of $1,500.  We used the proceeds from
these offerings for working capital purposes. We relied on exemptions provided
by Section 4(2) of the Securities Act of 1933, as amended. We made these
offerings based on the following facts: (1) the issuances were isolated private
transactions which did not involve a public offering; (2) there was only one
offeree in each offering, (3) each offeree has agreed to the imposition of a
restrictive legend on the face of the stock certificate representing its shares,
to the effect that it will not resell the stock unless its shares are registered
or an exemption from registration is available; (4) the offerees were
sophisticated investors very familiar with our company and stock-based
transactions; (5) there were no subsequent or contemporaneous public offerings
of the stock; (6) the stock was not broken down into smaller denominations; and
(7) the negotiations for the sale of the stock took place directly between the
offeree and our management.





Also in
2008, we issued 50,000 common shares to Kenneth Griffin Jr and Bryan Kuskie at
$0.10 per share for an aggregate price of $10,000.  We used the
proceeds from these offerings for working capital purposes.  We relied
on exemptions provided by Section 4(2) of the Securities Act of 1933, as
amended. We made this offering based on the following facts: (1) the issuance
was an isolated private transaction which did not involve a public offering; (2)
there was only one offeree, (3) the offeree has agreed to the imposition of a
restrictive legend on the face of the stock certificate representing its shares,
to the effect that it will not resell the stock unless its shares are registered
or an exemption from registration is available; (4) the offeree was a
sophisticated investor very familiar with our company and stock-based
transactions; (5) there were no subsequent or contemporaneous public offerings
of the stock; (6) the stock was not broken down into smaller denominations; and
(7) the negotiations for the sale of the stock took place directly between the
offeree and our management.





In 2008,
we issued 2,000 common shares each to Adam D.A. Matisko, Ray Moseley, William A.
Byrd, Richard Neil Younts, Rodney Slagter, and Dean A. Stewart for a total of
$200 from each investor and an aggregate of $1,200.  We used the
proceeds from these offerings for working capital purposes. We relied on
exemptions provided by Section 4(2) of the Securities Act of 1933, as amended.
We made these offerings based on the following facts: (1) the issuances were
isolated private transactions which did not involve a public offering; (2) there
was only one offeree in each offering, (3) each offeree has agreed to the
imposition of a restrictive legend on the face of the stock certificate
representing its shares, to the effect that it will not resell the stock unless
its shares are registered or an exemption from registration is available; (4)
the offerees were sophisticated investors very familiar with our company and
stock-based transactions; (5) there were no subsequent or contemporaneous public
offerings of the stock; (6) the stock was not broken down into smaller
denominations; and (7) the negotiations for the sale of the stock took place
directly between the offeree and our management.





During
2008, we issued 2,050 common shares to Stacie D. Criscuolo at $0.10 per share
for an aggregate price of $205.  We used the proceeds from these
offerings for working capital purposes.  We relied on exemptions
provided by Section 4(2) of the Securities Act of 1933, as amended. We made this
offering based on the following facts: (1) the issuance was an isolated private
transaction which did not involve a public offering; (2) there was only one
offeree, (3) the offeree has agreed to the imposition of a restrictive legend on
the face of the stock certificate representing its shares, to the effect that it
will not resell the stock unless its shares are registered or an exemption from
registration is available; (4) the offeree was a sophisticated investor very
familiar with our company and stock-based transactions; (5) there were no
subsequent or contemporaneous public offerings of the stock; (6) the stock was
not broken down into smaller denominations; and (7) the negotiations for the
sale of the stock took place directly between the offeree and our
management.





Also in
2008, we issued 100,000 common shares to Lisa Derosa and Tray Rorie at $0.10 per
share for an aggregate price of $20,000.  We used the proceeds from
these offerings for working capital purposes.  We relied on exemptions
provided by Section 4(2) of the Securities Act of 1933, as amended. We made this
offering based on the following facts: (1) the issuance was an isolated private
transaction which did not involve a public offering; (2) there was only one
offeree, (3) the offeree has agreed to the imposition of a restrictive legend on
the face of the stock certificate representing its shares, to the effect that it
will not resell the stock unless its shares are registered or an exemption from
registration is available; (4) the offeree was a sophisticated investor very
familiar with our company and stock-based transactions; (5) there were no
subsequent or contemporaneous public offerings of the stock; (6) the stock was
not broken down into smaller denominations; and (7) the negotiations for the
sale of the stock took place directly between the offeree and our
management.





During
2008, we issued 7,500 common shares to Scott R. Tetterton at $0.10 per share for
an aggregate price of $750.  We used the proceeds from these offerings
for working capital purposes.  We relied on exemptions provided by
Section 4(2) of the Securities Act of 1933, as amended. We made this offering
based on the following facts: (1) the issuance was an isolated private
transaction which did not involve a public offering; (2) there was only one
offeree, (3) the offeree has agreed to the imposition of a restrictive legend on
the face of the stock certificate representing its shares, to the effect that it
will not resell the stock unless its shares are registered or an exemption from
registration is available; (4) the offeree was a sophisticated investor very
familiar with our company and stock-based transactions; (5) there were no
subsequent or contemporaneous public offerings of the stock; (6) the stock was
not broken down into smaller denominations; and (7) the negotiations for the
sale of the stock took place directly between the offeree and our
management.





In 2008,
we issued 7,000 common shares to Stanly Nicastro at $0.10 per share for an
aggregate price of $700.  We used the proceeds from these offerings
for working capital purposes.  We relied on exemptions provided by
Section 4(2) of the Securities Act of 1933, as amended. We made this offering
based on the following facts: (1) the issuance was an isolated private
transaction which did not involve a public offering; (2) there was only one
offeree, (3) the offeree has agreed to the imposition of a restrictive legend on
the face of the stock certificate representing its shares, to the effect that it
will not resell the stock unless its shares are registered or an exemption from
registration is available; (4) the offeree was a sophisticated investor very
familiar with our company and stock-based transactions; (5) there were no
subsequent or contemporaneous public offerings of the stock; (6) the stock was
not broken down into smaller denominations; and (7) the negotiations for the
sale of the stock took place directly between the offeree and our
management.





Also in
2008, we issued 10,000,000 common shares to Adam Slazer for his services to the
Company as Founder and President.  We relied on exemptions provided by
Section 4(2) of the Securities Act of 1933, as amended. We made this offering
based on the following facts: (1) the issuance was an isolated private
transaction which did not involve a public offering; (2) there was only one
offeree, (3) the offeree has agreed to the imposition of a restrictive legend on
the face of the stock certificate representing its shares, to the effect that it
will not resell the stock unless its shares are registered or an exemption from
registration is available; (4) the offeree was a sophisticated investor very
familiar with our company and stock-based transactions; (5) there were no
subsequent or contemporaneous public offerings of the stock; (6) the stock was
not broken down into smaller denominations; and (7) the negotiations for the
sale of the stock took place directly between the offeree and our
management.





During
2008, we issued 92,500 common shares to Guardian Registrar and Transfer, Inc.
for its services to the Company as registrar and transfer agent.  We
relied on exemptions provided by Section 4(2) of the Securities Act of 1933, as
amended. We made this offering based on the following facts: (1) the issuance
was an isolated private transaction which did not involve a public offering; (2)
there was only one offeree, (3) the offeree has agreed to the imposition of a
restrictive legend on the face of the stock certificate representing its shares,
to the effect that it will not resell the stock unless its shares are registered
or an exemption from registration is available; (4) the offeree was a
sophisticated investor very familiar with our company and stock-based
transactions; (5) there were no subsequent or contemporaneous public offerings
of the stock; (6) the stock was not broken down into smaller denominations; and
(7) the negotiations for the sale of the stock took place directly between the
offeree and our management.





In 2008,
we issued 1,000,000 common shares to Greentree Financial Group, Inc. for
professional services in connection with preparing this registration statement,
EDGAR services, selecting an independent transfer agent and advisement on blue
sky issues. These shares are valued at $.10 per share, yielding an aggregate
expense of $100,000 that will be included in our financial statements during
fiscal 2008. We relied on exemptions provided by Section 4(2) of the Securities
Act of 1933, as amended. We made this offering based on the following facts: (1)
the issuance was an isolated private transaction which did not involve a public
offering; (2) there was only one offeree, (3) the offeree has agreed to the
imposition of a restrictive legend on the face of the stock certificate
representing its shares, to the effect that it will not resell the stock unless
its shares are registered or an exemption from registration is available; (4)
the offeree was a sophisticated investor very familiar with our company and
stock-based transactions; (5) there were no subsequent or contemporaneous public
offerings of the stock; (6) the stock was not broken down into smaller
denominations; and (7) the negotiations for the sale of the stock took place
directly between the offeree and our management.





In 2008,
we issued 100 shares of common stock to A.J. Glaser, Inc. in connection with a
plan of exchange whereby we exchanged 100 shares of our stock for 100 shares of
A.J. Glaser, Inc. common stock constituting a 100% interest in A.J. Glaser,
Inc.  We entered into this exchange transaction in order to redomicile
our company to the State of North Carolina.  We chose North Carolina
because it is where the majority of our operations are conducted.  A
copy of the plan of exchange is attached hereto as Exhibit 10.3.  We
relied on exemptions provided by Section 4(2) of the Securities Act of 1933, as
amended. We made this offering based on the following facts: (1) the issuance
was an isolated private transaction which did not involve a public offering; (2)
there was only one offeree, (3) the offeree has agreed to the imposition of a
restrictive legend on the face of the stock certificate representing its shares,
to the effect that it will not resell the stock unless its shares are registered
or an exemption from registration is available; (4) the offeree was a
sophisticated investor very familiar with our company and stock-based
transactions; (5) there were no subsequent or contemporaneous public offerings
of the stock; (6) the stock was not broken down into smaller denominations; and
(7) the negotiations for the sale of the stock took place directly between the
offeree and our management.




Purchases
of Equity Securities by the Small Business Issuer and Affiliated
Purchasers





None.





Transfer
Agent





Our transfer agent is Guardian Registrar
& Transfer, Inc. located at 7951 SW 6th Street, Suite 216, Plantation,
Florida 33324.





6





ITEM 6. SELECTED FINANCIAL
DATA




If the registrant qualifies as a smaller
reporting company as defined byRule
229.10(f)(1), it is not required to provide the information required by
this Item.




ITEM 7.MANAGEMENT’S DISCUSSION AND
ANALYSIS OR PLAN OF OPERATION





Forward
Looking Statements





Certain
statements in this report, including statements of our expectations, intentions,
plans and beliefs, including those contained in or implied by "Management's
Discussion and Analysis" and the Notes to Consolidated Financial Statements, are
"forward-looking statements", within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are
subject to certain events, risks and uncertainties that may be outside our
control. The words “believe”, “expect”, “anticipate”, “optimistic”, “intend”,
“will”, and similar expressions identify forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date on which they are made. We undertake no obligation to
update or revise any forward-looking statements. These forward-looking
statements include statements of management's plans and objectives for our
future operations and statements of future economic performance, information
regarding our expansion and possible results from expansion, our expected
growth, our capital budget and future capital requirements, the availability of
funds and our ability to meet future capital needs, the realization of our
deferred tax assets, and the assumptions described in this report underlying
such forward-looking statements. Actual results and developments could differ
materially from those expressed in or implied by such statements due to a number
of factors, including, without limitation, those described in the context of
such forward-looking statements, our expansion strategy, our ability to achieve
operating efficiencies, our dependence on distributors, capacity, suppliers,
industry pricing and industry trends, evolving industry standards, domestic and
international regulatory matters, general economic and business conditions, the
strength and financial resources of our competitors, our ability to find and
retain skilled personnel, the political and economic climate in which we conduct
operations and the risk factors described from time to time in our other
documents and reports filed with the Securities and Exchange Commission (the
"Commission"). Additional factors that could cause actual results to differ
materially from the forward-looking statements include, but are not limited to:
1) our ability to successfully develop and deliver our product; 2) our ability
to compete effectively with other companies in the same industry; 3) our ability
to raise sufficient capital in order to effectuate our business plan; and 4) our
ability to retain our key executive.





Critical
Accounting Policies And Estimates





The
preparation of our financial statements requires us to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. A critical accounting policy is one that is both very important to the
portrayal of our financial condition and results, and requires management’s most
difficult, subjective or complex judgments. Typically, the circumstances that
make these judgments difficult, subjective and/or complex have to do with the
need to make estimates about the effect of matters that are inherently
uncertain.





RECENT ACCOUNTING
PRONOUNCEMENTS





In April
2008, the FASB issued new standards which provided guidance on how to determine
the useful life of intangible assets by amending the factors an entity should
consider in developing renewal or extension assumptions used in determining the
useful life of recognized intangible assets. This new guidance applies
prospectively to intangible assets that are acquired individually or with a
group of other assets in business combinations and asset acquisitions. These
standards are effective for financial statements issued for fiscal years
beginning after December 15, 2008 and interim periods within those fiscal years
and will be adopted beginning in the first quarter of fiscal
2010.  The adoption of this guidance is not expected to have any
impact on the Company’s consolidated financial position, cash flows or results
of operations.





In April
2009, the FASB issued additional guidance under the “Financial Instruments
Topic” of the ASC. This topic requires disclosure of the carrying amount and the fair
value of all financial instruments for interim and annual financial statements
of SEC-reporting entities (even if the financial instrument is not recognized in
the balance sheet), including the methods and significant assumptions used to
estimate the fair values and any changes in such methods and
assumptions.  This topic also requires disclosures in summarized
financial information in interim financial statements.  The Company
adopted this additional guidance as of November 30, 2009.  The
adoption of this additional guidance did not have any impact on the Company’s
consolidated financial position, cash flows or results of
operations.





In May
2009, the FASB issued new standards for subsequent events, which establishes
general standards of accounting for and disclosure of events that occur after
the balance sheet date but before financial statements are issued or are
available to be issued. The new standards are effective for interim and annual
reporting periods ending after June 15, 2009. The Company adopted the new
standards during fiscal 2009 and, as the pronouncement only requires additional
disclosures, the adoption did not have an impact on the Company’s consolidated
financial position, cash flows or results of operations. The Company has
evaluated subsequent events through the date that these consolidated financial
statements were issued.





In June
2009, the FASB issued the FASB Accounting Standards Codification (the
“Codification”) for financial statements issued for interim and annual periods
ending after September 15, 2009, which was effective for the Company beginning
in the fourth quarter of fiscal 2009. The Codification became the single
authoritative source for GAAP. Accordingly, previous references to GAAP
accounting standards are no longer used in the Company’s disclosures, including
these Notes to the Financial Statements. The Codification does not affect the
Company’s consolidated financial position, cash flows or results of
operations.





Off-Balance
Sheet Arrangements





We have
not entered into any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources and would be considered material to
investors. Certain officers and directors of the Company have provided personal
guarantees to our various lenders as required for the extension of credit to the
Company.





Accounting
Policies Subject to Estimation and Judgment





Management’s
Discussion and Analysis of Financial Condition and Results of Operations are
based upon our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. When preparing
our financial statements, we make estimates and judgments that affect the
reported amounts on our balance sheets and income statements, and our related
disclosure about contingent assets and liabilities. We continually evaluate our
estimates, including those related to revenue, allowance for doubtful accounts,
reserves for income taxes, and litigation. We base our estimates on historical
experience and on various other assumptions, which we believe to be reasonable
in order to form the basis for making judgments about the carrying values of
assets and liabilities that are not readily ascertained from other sources.
Actual results may deviate from these estimates if alternative assumptions or
condition are used





RESULTS
OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008





Revenues





The
Company had revenues of $45,666 for the year ended December 31, 2009 compared
with $42,424 during the year ended December 31, 2008. The increase in revenue
can be attributed to lesser traveling expenses and more client
retention.




Cost of
Sales





Cost of
revenue primarily includes supplement costs, weight loss products, maintaining
equipment, and purchasing new equipment. During the year ended December 31,
2009, we had cost of revenues of $9,215, or approximately 20.18% of revenues,
versus cost of revenues of $8,687, or approximately 20.48% of revenues. The cost
of revenue as a percentage of revenue essentially stayed the same.





Operating
Expenses





The
Company had operating expenses of $75,053 for the year ended December 31, 2009.
Our operating expenses for the year ended December 31, 2008 were $179,794. The
cost of going public and the cost of advertising to try to build business are
the causes of the operating expenses in 2008. The cost incurred for remaining a
public company accounts for the operating expense in 2009.





Other
Expenses





The
Company had no other expenses for the year ended December 31, 2009 and
2008.





Income/Losses





We had a
net (loss) of $(38,602) and $(146,057) for the years ended December 31, 2009 and
2008, respectively. The net (loss) in these periods was due primarily to
operational expenses, which were $75,053 and $179,794 for the years ended
December 31, 2009 and 2008, respectively. It is also a function of revenues,
cost of sales and other expenses as described in the upcoming paragraphs
below.





Impact of
Inflation





We
believe that inflation has had a negligible effect on operations since
inception. We believe that we can offset inflationary increases in the cost of
operations by increasing sales and improving operating
efficiencies.





Liquidity And Capital
Resources





We had
$4,918 cash for the year ended December 31, 2009. We will be required to raise
capital on an ongoing basis. In the future we will potentially need to raise
capital to sustain operations through this channel.





Going
concern





As shown
in the accompanying consolidated financial statements, we have suffered
recurring losses from operation to date. We have a retained deficiency of
$160,114 as of December 31, 2009. These factors raise substantial doubt about
our ability to continue as a going concern.





Due to
business souring and cash at low levels, management has elected
to search for acquisition candidates to enhance value to its
shareholders.





7





ITEM 7A. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Not
applicable.





ITEM 8.FINANCIAL
STATEMENTS





Financial
Summary Information





Because
this is only a financial summary, it does not contain all the financial
information that may be important to you. It should be read in conjunction with
the consolidated financial statements and related notes presented in this
section.





Audited
Financial Summary Information for the Years Ended December 31, 2009 and
2008





Statements
      of Operations
            
            For
      the year ended December 31, 2009
            
            
            For
      the year ended December 31, 2008Revenues
            
            $
            45,666
            
            
            $
            42,424Cost
      of Sales
            
            $
            (9,215)
            
            
            $
            (8,687)Gross
      profit
            
            $
            36,451
            
            
            $
            33,737Operating
      expenses
            
            $
            75,053
            
            
            $
            179,794(Loss)
      from operations
            
            $
            (38,602
            )
            
            $
            (146,057
            )Interest
      expense
            
            $
            -
            
            
            $
            -Net
      (loss)
            
            $
            (38,602
            )
            
            $
            (146,057
            )Net
      loss per common share
            
            
            **
            
            
            
            **





** Less
than $.01


Balance
      Sheet
            
            As
      of December 31, 2009Cash
            
            $
            4,918Total
      current assets
            
            $
            4,918Other
      assets
            
            $
            11,527Total
      Assets
            
            $
            16,445Current
      liabilities
            
            $
            41,407Long
      term liabilities
            
            $
            0Stockholders’
      deficit
            
            $
            24,962Total
      liabilities and stockholders’ equity
            
            $
            16,445





8
 
 CONTENTS





REPORT OF INDEPENDENT REGISTERED ACCOUNTING
FIRM......................................................................................................................................10





BALANCE
SHEET..........................................................................................................................................................................................................................11




STATEMENTS
      OF
      OPERATIONS...............................................................................................................................................................................................12




STATEMENT
      OF STOCKHOLDERS’
      EQUITY.........................................................................................................................................................................13




STATEMENTS
      OF CASH
      FLOWS..............................................................................................................................................................................................14




NOTES
      TO FINANCIAL
      STATEMENTS....................................................................................................................................................................................15





9




REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM







To the
Board of Directors:


Exercise
For Life Systems, Inc.





I have
audited the balance sheet of Exercise For Life Systems, Inc. as of December 31,
2009 and 2008, and the related statements of operations, stockholders’ equity,
and cash flows for the two years ended December 31, 2009. These financial
statements are the responsibility of the Company’s management. My responsibility
is to express an opinion on these financial statements based on our
audits.




I
conducted my audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The company is not
required to have, nor was I engaged to perform, an audit of its internal control
over financial reporting. My audit included consideration of internal control
over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company’s internal control over financial
reporting. Accordingly, I express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audits provide a reasonable
basis for my opinion.




In my
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Exercise For Life Systems, Inc. as
of December 31, 2009 and 2008, and the results of its operations and its cash
flows for the two years ended December 31, 2009 in conformity with U.S.
generally accepted accounting principles.




The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern. The Company has suffered a loss in 2009, has
negative working capital, and generated a negative internal cash flow from
operations in 2009 that raises substantial doubt about its ability to continue
as a going concern. Management’s plans in regard to these matters are described
in Note 6. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.







/s/
Traci J. Anderson, CPA


Traci J.
Anderson, CPA




Huntersville,
North Carolina





April 9,
2010




10




EXERCISE
      FOR LIFE SYSTEMS, INC.BALANCE
SHEETSAS
      OF DECEMBER 31, 2009 AND DECEMBER 31, 2008ASSETS
              
              12/31/2009
              
              
              12/31/2008CURRENT ASSETS:Cash
              
              $
              4,918
              
              
              $
              1,895TOTAL
      CURRENT ASSETS
              
              
              4,918
              
              
              
              1,895FIXED ASSETS:Machinery
      and equipment
              
              
              56,090
              
              
              
              56,090Accumulated
      depreciation
              
              
              (44,563
              )
              
              
              (33,347
              )TOTAL
      FIXED ASSETS
              
              
              11,527
              
              
              
              22,743TOTAL
      ASSETS
              
              $
              16,445
              
              
              $
              24,638LIABILITIES AND STOCKHOLDERS' EQUITY
      (DEFICIT)CURRENT LIABILITIESAccounts
      payable
              
              $
              41,407
              
              
              $
              10,998TOTAL
      CURRENT LIABILITIES
              
              
              41,407
              
              
              
              10,998STOCKHOLDERS' EQUITY
    (DEFICIT)Common
      stock ($.0001 par value, 100,000,000 shares authorized; 11,527,050 and
      11.517,050 shares issued and outstanding at December 31, 2009 and December
      31, 2008, respectively)
              
              
              1,153
              
              
              
              1,152Common
      stock subscribed but not yet issued (-0- and 10,000 shares at December 31,
      2009 and December 31, 2008, respectively)
              
              
              -
              
              
              
              1Additional
      paid in capital
              
              
              133,999
              
              
              
              133,999Retained
      deficit
              
              
              (160,114
              )
              
              
              (121,512
              )TOTAL
      STOCKHOLDERS' EQUITY (DEFICIT)
              
              
              (24,962
              )
              
              
              13,640TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
              
              $
              16,445
              
              
              $
              24,638The
      accompanying notes are an integral part of these financial
      statements
 
  11




EXERCISE
      FOR LIFE SYSTEMS, INC.STATEMENTS OF
      OPERATIONSFOR
      THE YEARS ENDED DECEMBER 31, 2009 AND 2008(Unaudited)
              
              For
      The YearEnded
      December 31,2009
              
              
              2008REVENUES:Sales
              
              $
              45,666
              
              
              $
              42,424Cost
      of sales
              
              
              (9,215
              )
              
              
              (8,687
              )Gross
      profit
              
              
              36,451
              
              
              
              33,737EXPENSES:Selling,
      general and administrative expenses
              
              
              75,053
              
              
              
              179,794Total
      expenses
              
              
              75,053
              
              
              
              179,794(Loss)
      from operations
              
              $
              (38,602
              )
              
              $
              (146,057
              )Provision
      for income taxes
              
              
              -
              
              
              
              -NET
      (LOSS)
              
              $
              (38,602
              )
              
              $
              (146,057
              )Basic
      and fully diluted net (loss) per common share:
              
              $
              *
              
              
              $
              (0.01
              )Weighted
      average common shares outstanding
              
              
              11,522,050
              
              
              
              10,758,525*
      less than $.01 per share.The
      accompanying notes are an integral part of these financial
      statements


12




EXERCISE
      FOR LIFE SYSTEMS, INC.STATEMENT OF STOCKHOLDERS'
      EQUITYFOR
      THE YEARS ENDED DECEMBER 31, 2009 AND 2008(Unaudited)
                
                
                
                
                
                
                
                Common
                
                
                CommonStock
                
                
                StockSubscribed
                
                
                Subscribed
                
                
                AdditionalCommon
      Stock
                
                
                Not
      Issued
                
                
                Not
      Issued
                
                
                Paid-in
                
                
                RetainedShares
                
                
                Amount
                
                
                Shares
                
                
                Amount
                
                
                Capital
                
                
                (Deficit)Balances,
      December 31, 2007
                
                
                10,000,000
                
                
                $
                1,000
                
                
                
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                24,545Cash
      proceeds from the sale of common stock
                
                
                424,550
                
                
                
                42
                
                
                
                10,000
                
                
                
                1
                
                
                
                24,858
                
                
                
                -Issuance
      of common stock for services rendered
                
                
                1,092,500
                
                
                
                109
                
                
                
                -
                
                
                
                -
                
                
                
                109,141
                
                
                
                -Net
      loss for the year ended December 31, 2008
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (146,057
                )Balances,
      December 31, 2008
                
                
                11,517,050
                
                
                $
                1,152
                
                
                
                10,000
                
                
                $
                1
                
                
                $
                133,999
                
                
                $
                (121,512
                )Issuance
      of common stock previously subscribed
                
                
                10,000
                
                
                
                1
                
                
                
                (10,000
                )
                
                
                (1
                )
                
                
                -
                
                
                
                -Net
      loss for the year ended December 31, 2009
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (38,602
                )Balances,
      December 31, 2009
                
                
                11,527,050
                
                
                $
                1,153
                
                
                $
                -
                
                
                $
                -
                
                
                $
                133,999
                
                
                $
                (160,114
                )The
      accompanying notes are an integral part of these financial
      statements
 
 13
  EXERCISE
      FOR LIFE SYSTEMS, INC.STATEMENTS
      OF CASH FLOWSFOR
      THE YEARS ENDED DECEMBER 31, 2009 AND 20082009
                  
                  
                  2008CASH FLOWS FROM OPERATING
      ACTIVITIES:Net
      (loss)
                  
                  $
                  (38,602
                  )
                  
                  $
                  (146,057
                  )Adjustments
      to reconcile net (loss) to net cash provided by (used in)
      operations:Depreciation
                  
                  
                  11,216
                  
                  
                  
                  11,216Common
      stock issued for services rendered and expensed
                  
                  
                  -
                  
                  
                  
                  109,250Increase
      in operating liabilities:Accounts
      payable
                  
                  
                  30,409
                  
                  
                  
                  2,270NET
      CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
                  
                  
                  3,023
                  
                  
                  
                  (23,321
                  )CASH FLOWS FROM FINANCING
      ACTIVITIES:Proceeds
      from sale of common stock to investors
                  
                  
                  -
                  
                  
                  
                  24,900NET
      CASH PROVIDED BY OPERATING ACTIVITIES
                  
                  
                  -
                  
                  
                  
                  24,900NET
      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                  
                  
                  3,023
                  
                  
                  
                  1,579CASH
      AND CASH EQUIVALENTS,BEGINNING
      OF THE YEAR
                  
                  
                  1,895
                  
                  
                  
                  316END
      OF THE YEAR
                  
                  $
                  4,918
                  
                  
                  $
                  1,895The
      accompanying notes are an integral part of these financial
      statements


14





EXERCISE
FOR LIFE SYSTEMS, INC.


NOTES TO
FINANCIAL STATEMENTS


For the
Years Ended December 31, 2009 and 2008





NOTE
1                      SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES





Business
Activity


Exercise
For Life Systems, Inc., (the “Company”) offers personal fitness training
services and products and is located in the Charlotte, North Carolina area. The
Company was incorporated in the State of North Carolina on September 27,
2006.





On June
9, 2008, the Company filed an amendment to the Articles of Incorporation with
the Secretary of State of North Carolina to change its corporate name to
Exercise For Life Systems, Inc. (FKA A.J. Glaser, Inc.). This amendment also
changed the par value of the common stock from $1 per share to $.0001 per share
and increased the authorized common shares from 100 shares to 100,000,000
shares.





Basis of
Presentation


The
financial statements include the accounts of Exercise For Life Systems, Inc.
under the accrual basis of accounting.





Management’s Use of
Estimates


The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates.





Income
Taxes


Income
taxes are provided in accordance with Statement of Financial Accounting
Standards No. 109 (SFAS No. 109), “Accounting for Income
Taxes.” A deferred tax asset or liability is recorded for all temporary
differences between financial and tax reporting and net operating loss-carry
forwards.





Deferred
tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that, some portion or all of the deferred
tax asset will not be realized. Deferred tax assets and liabilities are adjusted
for the effect of changes in tax laws and rates on the date of
enactment.





Fair Value of Financial
Instruments


The
Company’s financial instruments are cash and accounts payable. The recorded
values of cash and payables approximate their fair values based on their
short-term nature.





Comprehensive Income
(Loss) - The Company adopted Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 130, “Reporting Comprehensive
Income”, which establishes standards for the reporting and display of
comprehensive income and its components in the financial statements. There were
no items of comprehensive income (loss) applicable to the Company during the
period covered in the financial statements.





Loss Per Share - The
Company reports loss per share in accordance with Statement of Financial
Accounting Standard (SFAS) No.128. This statement requires dual presentation of
basic and diluted earnings (loss) with a reconciliation of the numerator and
denominator of the loss per share computations. Basic earnings per share amounts
are based on the weighted average shares of common outstanding. If applicable,
diluted earnings per share would assume the conversion, exercise or issuance of
all potential common stock instruments such as options, warrants and convertible
securities, unless the effect is to reduce a loss or increase earnings per
share. There were no adjustments required to net loss for the period presented
in the computation of diluted earnings per share. There were no common stock
equivalents necessary for the computation of diluted loss per
share.




Long-Lived Assets -
In accordance with SFAS No. 144, the Company reviews and evaluates its
long-lived assets for impairment whenever events or changes in circumstances
indicate that their net book value may not be recoverable. When such factors and
circumstances exist, including those noted above, the Company compares the
assets’ carrying amounts against the estimated undiscounted cash flows to be
generated by those assets over their estimated useful lives. If the carrying
amounts are greater than the undiscounted cash flows, the fair values of those
assets are estimated by discounting the projected cash flows. Any excess of the
carrying amounts over the fair values are recorded as impairments in that fiscal
period.





Property and Equipment -Property and equipment is stated at cost. Depreciation is provided by the
straight-line method over the estimated economic life of the property and
equipment remaining from five to seven years.





When
assets are sold or retired, their costs and accumulated deprecation are
eliminated from the accounts and any gain or loss resulting from their disposal
is included in the statement of operations.





The
Company recognizes an impairment loss on property and equipment when evidence,
such as the sum of expected future cash flows (undiscounted and without interest
charges), indicates that future operations will not produce sufficient revenue
to cover the related future costs, including depreciation, and when the carrying
amount of the asset cannot be realized through sale. Measurement of the
impairment loss is based on the fair value of the assets.





Revenue Recognition –
Revenue is recognized when fitness training services are completed provided
collection from the client of the resulting receivable is probable. Revenue from
product sales is recognized when the products are shipped.





Risk and Uncertainties- The Company is subject to risks common to companies in the service
industry, including, but not limited to, litigation, development of new
technological innovations and dependence on key personnel.





Cash and Cash
Equivalents - For purposes of the Statements of Cash Flows, the Company
considers highly liquid investments with an original maturity of three months or
less to be cash equivalents.





Share-Based Payments -The Company accounts for share-based compensation using the fair value
method of Financial Accounting Standard No. 123R. Common shares issued for
services rendered by a third party (both employees and non-employees) are
recorded at the fair value of the shares issued or services rendered, whichever
is more readily determinable. The Company accounts for options and warrants
under the same authoritative guidance using the Black-Scholes Option Pricing
Model.





Advertising Costs -
Advertising costs are expensed as incurred. The Company does not incur any
direct-response advertising costs.





Recent Accounting
Pronouncements- The Company has reviewed all recently issued, but not
yet effective, accounting pronouncements and do not believe the future adoption
of any such pronouncements may be expected to cause a material impact on its
financial condition or the results of its operations.





15








EXERCISE
FOR LIFE SYSTEMS, INC.


NOTES TO
FINANCIAL STATEMENTS


For the
Years Ended December 31, 2009 and 2008





NOTE
1                      SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)





FASB Accounting
Standards Codification


(Accounting Standards Update (“ASU”)
2009-01)





In
June 2009, FASB approved the FASB Accounting Standards Codification (“the
Codification”) as the single source of authoritative nongovernmental GAAP. All
existing accounting standard documents, such as FASB, American Institute of
Certified Public Accountants, Emerging Issues Task Force and other related
literature, excluding guidance from the Securities and Exchange Commission
(“SEC”), have been superseded by the Codification. All other non-grandfathered,
non-SEC accounting literature not included in the Codification has become
nonauthoritative. The Codification did not change GAAP, but instead introduced a
new structure that combines all authoritative standards into a comprehensive,
topically organized online database. The Codification is effective for interim
or annual periods ending after September 15, 2009, and impacts the
Company’s consolidated financial statements as all future references to
authoritative accounting literature will be referenced in accordance with the
Codification. There have been no changes to the content of the Company’s
financial statements or disclosures as a result of implementing the Codification
during the fiscal year ended December 31, 2009.





As a
result of the Company’s implementation of the Codification during the fiscal
year ended December 31, 2009, previous references to new accounting standards
and literature are no longer applicable. In the current annual consolidated
financial statements, the Company will provide reference to both new and old
guidance to assist in understanding the impacts of recently adopted accounting
literature, particularly for guidance adopted since the beginning of the current
fiscal year but prior to the Codification.





Subsequent
Events


(Included in Accounting Standards
Codification (“ASC”) 855 “Subsequent Events”, previously SFAS No. 165
“Subsequent Events”)





SFAS
No. 165 established general standards of accounting for and disclosure of
events that occur after the balance sheet date, but before the consolidated
financial statements are issued or available to be issued (“subsequent events”).
An entity is required to disclose the date through which subsequent events have
been evaluated and the basis for that date. For public entities, this is the
date the consolidated financial statements are issued. SFAS No. 165 does
not apply to subsequent events or transactions that are within the scope of
other GAAP and did not result in significant changes in the subsequent events
reported by the Company. SFAS No. 165 became effective for interim or
annual periods ending after June 15, 2009 and did not impact the Company’s
consolidated financial statements. The Company evaluated for subsequent events
through the issuance date of the Company’s consolidated financial statements. No
recognized or non-recognized subsequent events were noted.





Determination of
the Useful Life of Intangible Assets


(Included in ASC 350 “Intangibles —
Goodwill and Other”, previously FSP SFAS No. 142-3 “Determination of the
Useful Lives of Intangible Assets”)





FSP SFAS
No. 142-3 amended the factors that should be considered in developing
renewal or extension assumptions used to determine the useful life of a
recognized intangible asset under previously issued goodwill and intangible
assets topics. This change was intended to improve the consistency between the
useful life of a recognized intangible asset and the period of expected cash
flows used to measure the fair value of the asset under topics related to
business combinations and other GAAP. The requirement for determining useful
lives must be applied prospectively to intangible assets acquired after the
effective date and the disclosure requirements must be applied prospectively to
all intangible assets recognized as of, and subsequent to, the effective date.
FSP SFAS No. 142-3 became effective for consolidated financial


Recent Accounting
Pronouncements (cont.)- statements issued for fiscal years beginning
after December 15, 2008, and interim periods within those fiscal years. The
adoption of FSP SFAS No. 142-3 did not impact the Company’s consolidated
financial statements.





Noncontrolling
Interests


(Included in ASC 810
“Consolidation”, previously SFAS No. 160 “Noncontrolling Interests in
Consolidated Financial Statements an amendment of ARB
No. 51”)





SFAS
No. 160 changed the accounting and reporting for minority interests such
that they will be recharacterized as noncontrolling interests and classified as
a component of equity. SFAS No. 160 became effective for fiscal years
beginning after December 15, 2008 with early application prohibited. The
Company implemented SFAS No. 160 at the start of fiscal 2009 and no longer
records an intangible asset when the purchase price of a noncontrolling interest
exceeds the book value at the time of buyout. The adoption of SFAS No. 160
did not have any other material impact on the Company’s financial
statements.





Consolidation of
Variable Interest Entities — Amended


(To be included in ASC 810
“Consolidation”, SFAS No. 167 “Amendments to FASB Interpretation No.
46(R)”)





SFAS
No. 167 amends FASB Interpretation No. 46(R) “Consolidation of
Variable Interest Entities regarding certain guidance for determining whether an
entity is a variable interest entity and modifies the methods allowed for
determining the primary beneficiary of a variable interest entity. The
amendments include: (1) the elimination of the exemption for qualifying
special purpose entities, (2) a new approach for determining who should
consolidate a variable-interest entity, and (3) changes to when it is
necessary to reassess who should consolidate a variable-interest entity. SFAS
No. 167 is effective for the first annual reporting period beginning after
November 15, 2009, with earlier adoption prohibited. The Company will adopt
SFAS No. 167 in fiscal 2010 and does not anticipate any material impact on
the Company’s financial statements.





NOTE
2                      INCOME
TAXES





At
December 31, 2009 the Company had federal and state net operating loss carry
forwards of approximately $49,000 that expire in various years through the year
2023.





Due to
operating losses, there is no provision for current federal or state income
taxes for the years ended December 31, 2009 and 2008.





Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amount used for federal and state income tax purposes.





The
Company’s deferred tax asset at December 31, 2009 consists of net operating loss
carry forwards calculated using federal and state effective tax rates equating
to approximately $20,000 less a valuation allowance in the amount of
approximately $20,000. Because of the Company’s lack of earnings history, the
deferred tax asset has been fully offset by a valuation allowance. The valuation
allowance increased by approximately $16,000 and $4,000 for the years ended
December 31, 2009 and 2008, respectively.





16





EXERCISE
FOR LIFE SYSTEMS, INC.


NOTES TO
FINANCIAL STATEMENTS


For the
Years Ended December 31, 2009 and 2008





NOTE
2                      INCOME TAXES
(CONT.)





The
Company’s total deferred tax asset as of December 31, 2009 is as
follows:





Net operating loss carry
forwards             $  20,000


Valuation
allowance                                    (20,000)





Net
deferred tax
asset                                                                $      --


======


The
reconciliation of income taxes computed at the federal and state statutory
income tax rate to total income taxes for the years ended December 31, 2009 and
2008 is as follows:





Income
tax computed at the federal statutory
rate                           34%


Income
tax computed at the state statutory
rate                                
6%


Valuation
allowance                                                                           (40%)





Total
deferred tax
asset                                                                      0%





NOTE
3                      CAPITAL
STOCK





The
Company is authorized to issue 100,000,000 common shares at $.0001 par value per
share.





During
the year ended December 31, 2008, the Company issued 1,000,000 and 92,500
restricted common shares to unrelated service providers in exchange for
consulting services to be rendered during such year pursuant to a private
placement made under Regulation 504. These shares were priced at the private
placement price which approximated the fair value of the services rendered. The
Company recorded $109,250 in non-cash consulting expense during the year ended
December 31, 2008 for these shares.





During
the year ended December 31, 2008, the Company issued 424,550 common shares to
accredited investors in exchange for $24,900 in capital contributions pursuant
to a private placement made under Regulation 504.





NOTE
4                      INCOME (LOSS) PER
SHARE





Income
(loss) per share is computed by dividing the net income (loss) by the weighted
average number of common shares outstanding during the period. Basic and diluted
loss per share was the same for the years ended December 31, 2009 and
2008.





NOTE
5                      LEASE COMMITMENTS AND
RELATED PARTY TRANSACTIONS





The
Company has an oral, month-to-month lease with its President. The lease is
gratuitous and consists of approximately 100 square feet of office space. The
effects of the fair value of rent of its headquarters that is provided by a
related party are immaterial to the financial statements taken as a
whole.





NOTE
6                      SUPPLEMENTAL CASH FLOW
INFORMATION





Supplemental
disclosures of cash flow information for the years ended December 31, 2009 and
2008 are summarized as follows:





Cash paid
during the period for interest and income taxes:




2009           2008


Income
Taxes                      $   --             $  --


Interest                                $   --       
      $  --





NOTE
7                      GOING CONCERN AND
UNCERTAINTY





The
Company has suffered a loss from operations in 2009. In addition, the Company
has generated a negative internal cash flow from its business operations in 2008
and has negative working capital at December 31, 2009. These factors raise
substantial doubt as to the ability of the Company to continue as a going
concern.





Management’s
plans with regard to these matters encompass the following actions: 1) obtain
funding from new investors to alleviate the Company’s working deficiency, and 2)
implement a plan to increase sales. The Company’s continued existence is
dependent upon its ability to resolve it liquidity problems and increase
profitability in its current business operations. However, the outcome of
management’s plans cannot be ascertained with any degree of certainty. The
accompanying financial statements do not include any adjustments that might
result from the outcome of these risks and uncertainties.





Due to
business souring and cash at low levels, management has elected
to search for acquisition candidates to enhance value to its
shareholders.





17





ITEM 9. CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE





None.





ITEM 9A. CONTROLS AND
PROCEDURES





We
maintain disclosure controls and procedures designed to ensure that information
required to be disclosed in reports filed under the Securities Exchange Act of
1934 (“Exchange Act”) is recorded, processed, summarized and reported within the
specified time periods. Our Chief Executive Officer and our Chief Financial
Officer (collectively, the “Certifying Officers”) are responsible for
maintaining our disclosure controls and procedures. The controls and procedures
established by us are designed to provide reasonable assurance that information
required to be disclosed by the issuer in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the Commission’s rules and forms.





To
evaluate the effectiveness of our internal controls over financial reporting, we
have adopted the framework prescribed by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).  We believe that this
framework will assist in the provision of reasonable assurance of the
effectiveness and efficiency of operations, the reliability of financial
reporting, and compliance with applicable laws and regulations.  In
adopting the COSO framework, we maintain a control environment, perform
risk assessments, carry out control activities, emphasize quality information
and effective communication, and perform monitoring.  In the
maintenance of a control environment, we are committed to integrity and ethical
values as well as to competence.  We strive to assign authority and
responsibility in a manner that supports our internal controls, and we also
maintain human resources policies and procedures designed to support our
internal controls.  Our risk assessments are designed to ensure the
achievement of company-wide and process-level objectives as well as to identify
and analyze risks while managing change.  We believe that all of these
components together form a foundation for sound internal control through
directed leadership, shared values and a culture that emphasizes accountability
for control.





As of the
end of the period covered by this report, the Certifying Officers evaluated the
effectiveness of our disclosure controls and procedures. Based on the
evaluation, the Certifying Officers concluded that our disclosure controls and
procedures were effective to provide reasonable assurance that information
required to be disclosed by us in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the applicable rules and forms, and that it is accumulated
and communicated to our management, including the Certifying Officers, as
appropriate to allow timely decisions regarding required
disclosure.





The
Certifying Officers have also concluded, based on our evaluation of our controls
and procedures that as of December 31, 2009, our internal controls over
financial reporting are effective and provide a reasonable assurance of
achieving their objective.





Due to
its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements under all potential conditions. Therefore,
effective internal control over financial reporting provides only reasonable,
and not absolute, assurance that a restatement of our financial statements would
be prevented or detected.





This
annual report does not include an attestation report of our registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit us to provide only management's report in this
annual report.





Changes
in Internal Control Over Financial Reporting





There
were no changes in the our internal control over financial reporting that
occurred during the period covered by this report that have materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting.





This annual report does not include an
attestation report of our registered public accounting firm regarding
internal control over financial reporting. Management's report was not subject
to attestation by our registered public accounting firm pursuant to
temporary rules of the Securities and Exchange Commission that permit us to
provide only management's report in this annual report.





ITEM
9A(T).CONTROLS
AND PROCEDURES





(a) Conclusions
regarding disclosure controls and procedures. Disclosure controls and
procedures are the Company’s controls and other procedures that are designed to
ensure that information required to be disclosed by the Company in the reports
that the Company files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission’s rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company in the reports that it files
under the Exchange Act is accumulated and communicated to the Company’s
management, including its Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding required disclosure.
Management is responsible for establishing and maintaining adequate internal
control over financial reporting.





Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-14(c) promulgated under the Exchange Act as of December 31, 2009,
and, based on their evaluation, as of the end of such period, the our disclosure
controls and procedures were effective as of the end of the period covered by
the Annual Report,





(b) Management’s
Report On Internal Control Over Financial Reporting. It is management’s
responsibilities to establish and maintain adequate internal controls over the
Company’s financial reporting. Internal control over financial reporting is
defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a
process designed by, or under the supervision of, the issuer’s principal
executive and principal financial officers and effected by the issuer’s
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles and includes those policies and procedures that:





•           Pertain
to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the issuer;
and





•           Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles and that receipts and expenditures of the issuer are being
made only in accordance with authorizations of management of the issuer;
and





•           Provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the issuer’s assets that could have a
material effect on the financial statements.





As of the
end of the period covered by the Annual Report, an evaluation was carried out
under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, of the effectiveness of
our internal control over financial reporting.





Management
assessed the effectiveness of our internal control over financial reporting as
of December 31, 2009. In making this assessment, management used the criteria
set forth by the Committee of Sponsoring Organizations of the Treadway
Commission in Internal Control-Integrated Framework.





Based on
that evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that, as of the end of such period, internal controls over financial
reporting were effective as of the end of the period covered by the
Report.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate. All internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation. Because of the inherent
limitations of internal control, there is a risk that material misstatements may
not be prevented or detected on a timely basis by internal control over
financial reporting. However, these inherent limitations are known features of
the financial reporting process. Therefore, it is possible to design into the
process safeguards to reduce, though not eliminate, this risk.





This
Annual Report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit us to provide only management’s report in this Annual
Report.





(c) Changes in
internal control over financial reporting. There were no changes in our
internal control over financial reporting identified in connection with the
evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that
occurred during our last fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.





ITEM 9B. OTHER
INFORMATION





None.





18





PART
III





ITEM 10. DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(A) OF THE EXCHANGE ACT





Directors
and Executive Officers





Our
directors are elected at the annual meeting of shareholders and hold office for
one year and until their successors are elected and qualified. Our officers are
appointed by the Board of Directors and serve at the pleasure of the Board. We
have not entered into any employment agreements with our executive
officers.





NAME
            
            AGE
            
            POSITIONAdam
      Slazer
            
            
            41
            
            Founder,
      President, Chief Executive Officer, and
Director





Adam
Slazer, Founder, President, CEO, and Director





Since
1991, Adam Slazer has lived by his deep-rooted inner vision of exercise and
fitness.  He created Exercise for Life Systems, Inc. to teach people
the practical side and tremendous benefits of exercise.  With spirited
enthusiasm and absolute professionalism, he instructs and motivates a wide range
of clients to achieve and maintain their health and fitness
goals.  His knowledge and passion for fitness have helped many people
make a lifetime commitment to their health and to themselves.  Adam is
a certified personal trainer with a Bachelor of Science degree in physical
education from Southern Connecticut State University.  In addition to
guiding women, men, athletes, and executives down the fitness road, his
experience includes working with the strength coach for the New York
Yankees.





Family Relationships.





None.





Legal
Proceedings.





No
officer, director, or persons nominated for such positions and no promoter or
significant employee has been involved in legal proceedings that would be
material to an evaluation of our management.





Audit
Committee





We do not
have a separately designated standing audit committee. Pursuant to Section
3(a)(58)(B) of the Exchange Act, the entire Board of Directors acts as an audit
committee for the purpose of overseeing the accounting and financial reporting
processes, and audits of our financial statements. The Commission recently
adopted new regulations relating to audit committee composition and functions,
including disclosure requirements relating to the presence of an "audit
committee financial expert" serving on its audit committee. In connection with
these new requirements, our Board of Directors examined the Commission's
definition of "audit committee financial expert" and concluded that we do not
currently have a person that qualifies as such an expert. We have had minimal
operations for the past two (2) years. Presently, there is only one director
serving on our Board, and us are not in a position at this time to attract,
retain and compensate additional directors in order to acquire a director who
qualifies as an "audit committee financial expert", but we intend to retain an
additional director who will qualify as such an expert, as soon as reasonably
practicable. While neither of our current directors meets the qualifications of
an "audit committee financial expert", each of our directors, by virtue of his
past employment experience, has considerable knowledge of financial statements,
finance, and accounting, and has significant employment experience involving
financial oversight responsibilities. Accordingly, we believe that our current
director capably fulfills the duties and responsibilities of an audit committee
in the absence of such an expert.





Code of
Ethics





We have
adopted a code of ethic (the "Code of Ethics") that applies to our principal
chief executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions. The Code of
Ethics is being designed with the intent to deter wrongdoing, and to promote the
following:





•
            Honest
      and ethical conduct, including the ethical handling of actual or apparent
      conflicts of interest between personal and professional
      relationships


•
            Full,
      fair, accurate, timely and understandable disclosure in reports and
      documents that a small business issuer files with, or submits to, the
      Commission and in other public communications made by the small business
      issuer


•           
  Compliance with applicable governmental laws, rules and
regulations


The
prompt internal reporting of violations of the code to an appropriate person or
persons identified in the code


•            
 Accountability for adherence to the code





Section
16(a) Beneficial Ownership Reporting Compliance





Under
Section 16(a) of the Exchange Act, all executive officers, directors, and each
person who is the beneficial owner of more than 10% of the common stock of a
company that files reports pursuant to Section 12 of the Exchange Act, are
required to report the ownership of such common stock, options, and stock
appreciation rights (other than certain cash-only rights) and any changes in
that ownership with the Commission. Specific due dates for these reports have
been established, and we are required to report, in this Form 10-K, any failure
to comply therewith during the fiscal year ended December 2009. We believe that
all of these filing requirements were satisfied by our executive officers,
directors and by the beneficial owners of more than 10% of our common stock. In
making this statement, we have relied solely on copies of any reporting forms
received by it, and upon any written representations received from reporting
persons that no Form 5 (Annual Statement of Changes in Beneficial Ownership) was
required to be filed under applicable rules of the Commission.





ITEM 11. EXECUTIVE
COMPENSATION





The
following table sets forth for the fiscal year ended December 31, 2009, 2008,
2007, the compensation awarded to, paid to, or earned by, our executive
officers:





SUMMARY COMPENSATION
  TABLEName
      and principal position
              (a)
            Year
              (b)
            Salary
      ($)
              (c)
            Bonus
      ($)
              (d)
            Stock
      Awards ($)
              (e)
            Option
      Awards ($)
              (f)
            Non-Equity
      Incentive Plan Compensation ($)
              (g)
            Nonqualified
      Deferred Compensation Earnings ($)
              (h)
            All
      Other Compensation ($)
              (i)
            Total
      ($)
              (j)Adam
      Slazer
            2009
              2008
              2007
            $3,000
              $4,800
              $6,000
            -
            -
            -
            -
            -
            -
            $3,000
              $4,800
              $6,000





Outstanding Equity Awards At Fiscal
Year-End Table





None.





Option
Exercises And Stock Vested Table





None.





Pension
Benefits Table





None.





Nonqualified
Deferred Compensation Table





None.





All
Other Compensation Table





None.





Perquisites
Table





None.





Potential
Payments Upon Termination Or Change In Control Table





None.





Long-Term
Incentive Plan Awards





We do not
have any long-term incentive plans that provide compensation intended to serve
as incentive for performance to occur over a period longer than one fiscal year,
whether such performance is measured by reference to our financial performance,
our stock price, or any other measure.





Compensation
of Directors





The
directors did not receive any other compensation for serving as members of the
board of directors. The Board has not implemented a plan to award options. There
are no contractual arrangements with any member of the board of
directors.





We do not
intend to pay any additional compensation to our directors. As of the date
hereof, we have not entered into employment contracts with any of our officers
and we do not intend to enter into any employment contracts until such time as
it profitable to do so





19





ITEM 12. SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCK HOLDER
MATTERS.





As of April 12, 2010, we had 36 active
stockholders of record and 11,527,050 shares of our Common Stock outstanding.
The following table sets forth as of April 12, 2010, certain information with
respect to the beneficial ownership of Common Stock by (i) each of our Director,
nominee and executive officer; (i) each person who owns beneficially more than
5% of the common stock; and (iii) all Directors, nominees and executive officers
as a group. The percentage of shares beneficially owned is based on there having
been 11,527,050 shares of our Common Stock outstanding as of April 12,
2010.





OFFICERS,
DIRECTORS AND BENEFICIAL OWNERS, AS OF APRIL 12, 2010





Name of Beneficial Owner
            
            Number of Shares
              of Common Stock 
      (1)
            
            
            Percent of
              ClassAdam
      Slazer
            
            
            10,000,000
            
            
            
            86.75
            %Greentree
      Financial Group, Inc.
            
            
            1,000,000
            
            
            
            8.67
            %All  Directors
      and executive officers of the Company as a group (1
person)
            
            
            10,000,000
            
            
            
            86.75
            %





(1)
            Based
      on 11,527,050 issued and outstanding shares of common
    stock.





Changes
in Control





None.





ITEM 13.CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE





None.





ITEM 14. PRINCIPAL
ACCOUNTING FEES AND SERVICES





Fees
Billed For Audit and Non-Audit Services





The
following table represents the aggregate fees billed for professional audit
services rendered to the independent auditor, Traci J. Anderson, CPA
("Anderson") for our audit of the annual financial statements for the years
ended December 31, 2009 and 2008. Audit fees and other fees of auditors are
listed as follows:





Year Ended December 31
            2009
            
            2008AndersonAudit
      Fees (1)
            $
      5,000
            
            $
            3,500
            
            
            (3)Audit-Related
      Fees (4)
            
            
            
            --Tax
      Fees (5)
            
            
            
            --All
      Other Fees (6)
            
            
            
            --Total
      Accounting Fees and Services
            $
      5,000
            
            $
            3,500





(1)
            Audit Fees. These are
      fees for professional services for the audit of our annual financial
      statements, and for the review of the financial statements included in our
      filings on Forms 10-Q, and for services that are normally provided in
      connection with statutory and regulatory filings or
      engagements.(2)
            The
      amounts shown for Anderson relate to services in connection with consents
      and assistance with and review of documents filed with the Securities and
      Exchange Commission.





(3)
            Audit-Related Fees.
      These are fees for the assurance and related services reasonably related
      to the performance of the audit or the review of our financial
      statements.(4)
            Tax Fees. These are
      fees for professional services with respect to tax compliance, tax advice,
      and tax planning.





(5)
            All Other Fees. These
      are fees for permissible work that does not fall within any of the other
      fee categories, i.e., Audit Fees, Audit-Related Fees, or Tax
      Fees.





Pre-Approval
Policy for Audit and Non-Audit Services





We do not
have a standing audit committee, and the full Board performs all functions of an
audit committee, including the pre-approval of all audit and non-audit services
before we engage an accountant. All of the services rendered to us by Traci J.
Anderson CPA were pre-approved by our Board of Directors.





We are
presently working with its legal counsel to establish formal pre-approval
policies and procedures for future engagements of our accountants. The new
policies and procedures will be detailed as to the particular service, will
require that the Board or an audit committee thereof be informed of each
service, and will prohibit the delegation of pre-approval responsibilities to
management. It is currently anticipated that our new policy will provide (i) for
an annual pre-approval, by the Board or audit committee, of all audit,
audit-related and non-audit services proposed to be rendered by the independent
auditor for the fiscal year, as specifically described in the auditor's
engagement letter, and (ii) that additional engagements of the auditor, which
were not approved in the annual pre-approval process, and engagements that are
anticipated to exceed previously approved thresholds, will be presented on a
case-by-case basis, by the President or Controller, for pre-approval by the
Board or audit committee, before management engages the auditors for any such
purposes. The new policy and procedures may authorize the Board or audit
committee to delegate, to one or more of its members, the authority to
pre-approve certain permitted services, provided that the estimated
fee for any such service does not exceed a specified dollar amount (to be
determined). All pre-approvals shall be contingent on a finding, by the Board,
audit committee, or delegate, as the case may be, that the provision of the
proposed services is compatible with the maintenance of the auditor's
independence in the conduct of its auditing functions. In no event shall any
non-audit related service be approved that would result in the independent
auditor no longer being considered independent under the applicable rules and
regulations of the Securities and Exchange Commission.





(a)
On December 31, 2009, our Chief Executive Officer and Chief Financial Officer
made an evaluation of our disclosure controls and procedures. In our opinion,
the disclosure controls and procedures are adequate because the systems of
controls and procedures are designed to assure, among other items, that 1)
recorded transactions are valid; 2) valid transactions are recorded; and 3)
transactions are recorded in the proper period in a timely manner to produce
financial statements which present fairly the financial condition, results of
operations and cash flows for the respective periods being presented. Moreover,
the evaluation did not reveal any significant deficiencies or material
weaknesses in our disclosure controls and procedures.





(b)
There have been no significant changes in our internal controls or in other
factors that could significantly affect these controls since the last
evaluation.





20





PART
IV





ITEM 15.EXHIBITS, FINANCIAL
STATEMENT SCHEDULES





(a)
            Financial
      Statements





1. The
following financial statements of Exercise for Life Systems, Inc. are included
in Part II, Item 8:





Report of
Independent Registered Public Accounting Firm Balance Sheet at December 31,
2009


Statements
of Operations - for the years endedDecember 31, 2009 and
2008


Statements
of Cash Flows - for the years ended December 31, 2009 and 2008


Statements of Stockholders’ Equity -
for the years ended December 31, 2009 and
2008


Notes to Financial
Statements





2.
Exhibits





14.1 Code
of Ethics *


31.1. Rule 13a-14(a)/15d-14(a) Certifications of Chief Executive
Officer and Chief Financial Officer


32.1. Section 1350 Certifications of Chief Executive Officer and
Chief Financial Officer





* Filed
previously.





(b)
            Reports
      on Form 8-K





None





21





SIGNATURES





Pursuant
to the requirement of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.





Exercise
for Life Systems, Inc.





Date:
April 12,
2010                                        /s/ Adam
Slazer


Adam
Slazer


President