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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15 OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
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Commission file number 0-30351
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TRUE HEALTH, INC.
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(Exact name of small business issuer as specified in its charter)
Utah 75-2263732
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
5 Tansey Circle, Mesquite, Texas 75149
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(Address of principal executive offices)
(972) 644-1200
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(Issuer's telephone number)
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $0.001 Per Share
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
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As of March 31, 2000, there were outstanding 60,609,774 shares of True
Health, Inc., Common Stock, par value $.001.
Transitional Small Business Disclosure Format (Check one):
Yes No X
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FORM 10-QSB
TRUE HEALTH, INC.
Index to Form 10-QSB
PART I
FINANCIAL INFORMATION (UNAUDITED)
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets as of March 31, 2000 and March 31, 1999
Statements of Loss for the Three Months Ended March 31, 2000 and 1999
Statements of Cash flows for the Three Months Ended March 31, 2000 and 1999
Notes to Financial Statements
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
PART II
OTHER INFORMATION
Item 1
SIGNATURES
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PART I. FINANCIAL INFORMATION
ITEM 1. Financial statements
TRUE HEALTH, INC.
Balance Sheets
March 31, 2000 and 1999
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<TABLE>
<CAPTION>
2000 1999
(Unaudited) (Unaudited)
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<S> <C> <C>
ASSETS
Current assets:
Cash $ 3,996 $ 281
Accounts Receivable, trade 89 -
Inventory 9,855 8,402
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Total current assets $ 13,940 8,683
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Office and computer equipment, net of
accumulated depreciation of $1,213 and $506 921 1,628
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Total assets $ 14,861 $ 10,311
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LIABILITIES
Current liabilities:
Short term notes payable $ -0- $ 874
Accounts payable and accrued expenses 3,815 5,327
Due to related parties 78,185 70,962
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Total current liabilities 82,000 77,163
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STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.01 par value, 100,000,000
shares authorized 60,609,774 and 61,409,774
shares issued and outstanding $ 606,098 $ 614,097
Capital in excess of par value 277,621 274,622
Accumulated deficit (950,858) (955,571)
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Total stockholders' equity (deficit) (67,139) (66,852)
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$ 14,861 $ 10,311
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</TABLE>
See accompanying notes.
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<TABLE>
<CAPTION>
TRUE HEALTH, INC.
Statements of Income (Loss)
For The 3 Months Ended March 31, 2000 and 1999
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2000 1999
(Unaudited) (Unaudited)
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<S> <C> <C>
Sales $ 6,564 $6,421
Cost of sales 1,608 1,982
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Gross profit 4,956 4,439
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Selling, general, and administrative expenses:
Salaries and sales commissions 771 1,008
Research and development 168 -
Depreciation 103 201
Advertising and promotion 869 265
Other 4,461 3,540
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Total selling, general, and administrative expenses 6,372 5,014
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Loss from operations (1,416) (575)
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Other income (expense)
Interest expense (56) (43)
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Total other income (expense) (56) (43)
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Income (loss) before taxes on income (1,472) (618)
Provision (credit) for taxes on income - -
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Net income (loss) $(1,472) $ (618)
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Income (Loss) per common share, basic $(.000024) $(.000009)
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Weighted average number of shares outstanding 61,328,130 63,790,585
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</TABLE>
See accompanying notes.
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<TABLE>
<CAPTION>
TRUE HEALTH, INC.
Statements of Cash Flows
For The 3 Months Ended March 31, 2000 and 1999
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2000 1999
(Unaudited) (Unaudited)
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<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (1,472) $ (618)
Adjustments to reconcile net income to cash
provided (used) by operating activities:
Depreciation 103 201
Decrease (increase) in accounts receivable 349 342
Decrease (increase) in inventory (626) 921
Increase (decrease) in accounts payable and
accrued expenses (4,124) (179)
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Net cash provided (used) by operating activities (5,770) 667
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Cash flows from investing activities:
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Net cash provided (used) by investing activities - -
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Cash flows from financing activities:
Advances from related parties 7,771 (180)
Repayment of short term notes payable (90) (273)
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Net cash provided (used) by financing activities 7,681 (453)
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Net increase (decrease) in cash and cash equivalents 1,911 214
Cash and cash equivalents:
Beginning of period 2,085 67
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End of period $ 3,996 $ 281
========= =========
Supplemental cash flow disclosures:
Cash paid for interest $ 56 $ 43
</TABLE>
See accompanying notes.
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TRUE HEALTH, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1 - Basis of presentation:
The financial statements include the accounts of True Health, Inc. The balance
sheets for the three months ended March 31, 1999 and 2000, the statements of
loss for the three months ended March 31, 1999 and 2000, and the statements of
cash flows for the three months ended March 31, 1999 and 2000 have been prepared
by the Company without audit. In the opinion of management, these financial
statements include all adjustments necessary to present fairly the financial
position, results of operations and cash flows as of March 31, 2000 and for all
periods presented. All adjustments made have been of a normal recurring nature.
Certain information and footnote disclosures normally included in the financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. The Company believes that the disclosures
included are adequate and provide a fair presentation of interim period results.
Interim financial statements are not necessarily indicative of financial
position of operating results for an entire year. It is suggested that these
interim financial statements be read in conjunction with the audited financial
statements and the notes thereto included in the Company's Form 10-KSB for the
year ended December 31, 1999 filed with the United States Securities and
Exchange Commission (SEC) on or about April 15, 2000.
Note 2 - The Company, nature of operations:
True Health, Inc. (the Company) is a Utah corporation engaged in the marketing
of nutrition supplement/meal replacement products under the brand name True
Health. Substantially all of its revenues are derived from these products. The
products are distributed from the Company's facilities in Texas to customers
throughout the world. The accompanying financial statements have been prepared
on the basis of generally accepted accounting principles.
Note 3 - Summary of significant accounting policies:
Following is a summary of the Company's organization and significant accounting
policies:
Basis of presentation -The accounting and reporting policies of the Company
conform to generally accepted accounting principals.
Use of estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Revenue and expense recognition - The Company follows the accrual method
of accounting. Revenues are recognized when the goods are shipped and expenses
are recognized when incurred.
Cash and cash equivalents - Cash and cash equivalents include all highly liquid
investments with an original maturity of three months or less.
Inventory - Inventories are stated at the lower of cost or market, with cost
determined using the first-in first-out (FIFO) method.
Income taxes - Deferred income taxes are reported for timing differences between
items of income or expense reported in the financial statements and those
reported for income tax purposes. The Company accounts for income taxes in
accordance with Statement of Financial Accounting Standards No. 109, Accounting
for Income Taxes, which requires the use of the asset/liability method of
accounting for income taxes. Deferred income tax assets and liabilities are
recognized for the future tax effects that will result from differences between
the income tax and financial statement basis of assets and liabilities, and for
loss and credit carryforwards. Deferred tax assets and liabilities are measured
using currently enacted tax rates
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expected to be in effect when the differences are used for tax purposes, but
deferred tax assets are recognized only when future realization is more likely
than not. Provisions for currently payable income taxes are computed on the
current year's income taxable for federal and state income tax reporting
purposes.
Earnings (loss) per share - Earnings (loss) per share is computed on the
weighted average number of shares outstanding during the year, in accordance
with FASB Statement Number 128, Earnings Per Share.
Advertising - The Company expenses advertising costs as incurred.
Fair value of financial instruments and derivative financial instruments - The
carrying amounts of cash, accounts receivable, accounts payable, notes payable,
and accrued expenses approximate fair value because of the short maturity of
these items. These fair value estimates are subjective in nature and involve
uncertainties and matters of significant judgment, and, therefore, cannot be
determined with precision. Changes in assumptions could significantly affect
these estimates.
Note 4 - Going concern:
The Company has experienced losses in eight of the previous ten years. Losses
amount to more than $940,000 on a cumulative basis. At March 31, 2000, current
liabilities exceeded current assets by approximately $68,000, resulting in a
working capital deficiency; there is also a capital deficit of the same
approximate amount. Management is currently investigating alternative marketing
strategies, methods, and markets, and is seeking additional outside financing
and/or equity investors, but there is no assurance that management's efforts in
this regard will be successful. Moreover, substantially all revenues are
derived from a single product or line of products, creating a concentration of
business; should the Company be unable for any reason to continue sales of the
products, it would have a severe impact on the Company's business. All of the
above factors create substantial doubt about the Company's ability to continue
as a going concern.
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TRUE HEALTH, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The Company had sales of $6,564 the first quarter of 2000, versus $6,421 in
1999. The Company has been focusing more effort toward testing products and
getting ready to introduce new products on the market. Selling, general, and
administrative expenses increased to $6,372 from $5,014. This increase is due
to related increase in advertising and computer expense in increased sales
efforts beginning late in the quarter.
The Company had total assets of $14,861 on March 31, 2000, compared to $10,311
on March 31, 1999.
The Company has developed three new formulas, and expects to begin marketing one
of the products very soon. The Company expects that seeking investment capital
and the sale of stock will provide cash requirements for operations. However,
there can be no assurance that these activities will, in fact, provide the
necessary working capital for operations.
OTHER MATTERS
The Company utilizes "off-the-shelf" computer software in its operations
obtained from major vendors such as Quicken and Microsoft. Currently,
management believes that most critical systems are year 2000 compliant.
This form 10-QSB includes or may include certain forward-looking statements
concerning the Company's financial position, business strategy, budgets,
projected costs and plans and objectives of management for future operations as
well as other statements including words such as "anticipate," "believe,"
"plan," "estimate," "expect," "intend," and other similar expressions. Although
the Company believes its expectations reflected in such forward-looking
statements are based on reasonable assumptions, readers are cautioned that no
assurance can be given that such expectations will prove correct and that actual
results and developments may differ materially from those conveyed in such
forward-looking statements. Important factors that could cause actual results
to differ materially from the expectations reflected in the forward-looking
statements in the Form 10-SB include, among others, the pace of technological
change, the Company's ability to manage growth, general business and economic
conditions in the Company's operating regions, and competitive and other
factors, all as more fully described in the Company's Report on Form 10-SB for
the period ended December 31, 1999, under Management's Discussion and Analysis
of Financial Condition and Results of Operations. "Assumptions Underlying
Certain Forward-Looking Statements and Factors that May Affect Future Results"
and elsewhere from time to time in the Company's other SEC reports. Such
forward-looking statements speak only as of the date on which they are made and
the Company does not undertake any obligation to update any forward-looking
statement to reflect events or circumstances after the date of this Form 10-QSB.
If the
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Company does update or correct one or more forward-looking statements, investors
and others should not conclude that the Company would make additional updates or
corrections with respect thereto or with respect to other forward-looking
statements. Actual results may vary materially.
ITEM 1. EXHIBITS AND REPORTS ON FORM 8-K
None.
All other items in PART II are either not applicable to the Company during
the current quarter, the answer is negative, or a response has been
previously reported and an additional report of the information is not
required, pursuant to the instructions to PART II.
SIGNATURES
Pursuant to the requirements 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.
TRUE HEALTH INC.
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(Registrant)
Date: 5-13-00 By: /s/ RICHARD M. STOKLEY
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(Signature)
Richard M. Stokley
President
<TABLE> <S> <C>
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF TRUE HEALTH, INC. AS OF MARCH 31, 2000 AND FOR THE THREE
MONTHS THEN ENDED, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 3,996
<SECURITIES> 0
<RECEIVABLES> 89
<ALLOWANCES> 0
<INVENTORY> 9,855
<CURRENT-ASSETS> 13,940
<PP&E> 2,134
<DEPRECIATION> (1,213)
<TOTAL-ASSETS> 14,861
<CURRENT-LIABILITIES> 82,000
<BONDS> 0
0
0
<COMMON> 606,098
<OTHER-SE> (673,237)
<TOTAL-LIABILITY-AND-EQUITY> 14,861
<SALES> 6,564
<TOTAL-REVENUES> 6,564
<CGS> 1,608
<TOTAL-COSTS> 1,608
<OTHER-EXPENSES> 6,372
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 56
<INCOME-PRETAX> (1,472)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,472)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,472)
<EPS-BASIC> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
