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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 September 30, 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
incorporation or organization) Identification No.)
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 $0.01 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 September 30, 2000, there were outstanding 60,609,774 shares of True
Health, Inc., Common Stock, par value $.01.
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 September 30, 2000 and December 31, 1999
Statements of Income (Loss) for the Three and Nine Months Ended September 30,
2000 and 1999
Statements of Cash flows for the Three and Nine Months Ended September 30, 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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TRUE HEALTH, INC.
Balance Sheets
September 30, 2000 (Unaudited) and December 31, 1999
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<TABLE>
<S> <C> <C>
September 30,
2000 December 31,
(Unaudited) 1999
ASSETS ------------- ------------
Current assets:
Cash $ 1,125 $ 2,085
Accounts receivable, trade - 438
Inventory 9,656 9,229
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Total current assets 10,781 11,752
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Office and computer equipment, net of
accumulated depreciation of $1,418 and $1,110 717 1,025
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Total other assets 717 1,025
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Total assets $ 11,498 $ 12,777
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LIABILITIES
Current liabilities:
Short term note payable $ - $ 90
Accounts payable and accrued expenses 14,834 7,940
Due to related parties 79,493 70,414
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Total current liabilities 94,327 78,444
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Total liabilities 94,327 78,444
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Commitments and contingencies - -
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 100,000,000 shares authorized,
60,609,774 and 60,609,774 shares issued and outstanding 606,098 606,098
Capital in excess of par value 277,621 277,621
Deficit accumulated during the development stage (966,548) (949,386)
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Total stockholders' equity (82,829) (65,667)
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Total liabilities and stockholders' equity $ 11,498 $ 12,777
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</TABLE>
The accompanying notes are an integral part of these statements.
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TRUE HEALTH, INC.
Statements of Income (Loss) For The Periods Ended
September 30, 2000 and 1999
(Unaudited)
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<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2000 1999 2000 1999
-------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Sales $ 8,012 $ 9,621 $ 20,575 $ 25,962
Cost of sales 1,235 1,224 4,000 5,423
-------------- -------------- ------------- --------------
Gross profit 6,777 8,397 16,575 20,539
-------------- -------------- ------------- --------------
Selling, general, and administrative expenses:
Salaries and sales commissions 2,422 1,219 6,372 3,072
Research and development 24 18 639 155
Depreciation 103 201 308 604
Advertising and promotion 841 574 3,691 1,015
Other 6,979 3,858 22,605 10,685
-------------- -------------- ------------- --------------
Total selling, general, and administrative expenses 10,369 5,870 33,615 15,531
-------------- -------------- ------------- --------------
Loss from operations (3,592) 2,527 (17,040) 5,008
-------------- -------------- ------------- --------------
Other income (expense):
Interest expense (25) - (122) (155)
-------------- -------------- ------------- --------------
Total other income (expense) (25) - (122) (155)
-------------- -------------- ------------- --------------
Income (loss) before taxes on income (3,617) 2,527 (17,162) 4,853
Provision (credit) for taxes on income - - - -
-------------- -------------- ------------- --------------
Net income (loss) $ (3,617) $ 2,527 $ (17,162) $ 4,853
============== ============== ============= ==============
Income (Loss) per common share, basic $ (0.00006) $ 0.00004 $ (0.00028) $ 0.00008
============== ============== ============= ==============
Weighted average number of shares outstanding 60,609,774 61,409,774 60,609,774 61,409,774
============== ============== ============= ==============
</TABLE>
The accompanying notes are an integral part of these statements.
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TRUE HEALTH, INC.
Statements of Cash Flows For The Periods Ended
September 30, 2000 and 1999
(Unaudited)
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<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
------------------------------- -------------------------------
2000 1999 2000 1999
------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (3,617) $ 2,527 $ (17,162) $ 4,853
Adjustments to reconcile net income to cash provided (used)
by operating activities:
Depreciation 103 201 308 604
Decrease (increase) in accounts receivable - 92 438 342
Decrease (increase) in inventory (301) (361) (427) (618)
Increase (decrease) in accounts payable and accrued expenses 3,529 (442) 6,894 (1,440)
------------- -------------- ------------- -------------
Net cash provided (used) by operating activities (286) 2,017 (9,949) 3,741
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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 197 (877) 9,079 (1,757)
Repayments of short term notes payable - (317) (90) (874)
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Net cash provided (used) by financing activities 197 (1,194) 8,989 (2,631)
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Net increase (decrease) in cash and cash equivalents (89) 823 (960) 1,110
Cash and cash equivalents:
Beginning of year 1,214 354 2,085 67
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End of year $ 1,125 $ 1,177 $ 1,125 $ 1,177
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Supplemental cash flow disclosures:
Cash paid for interest $ 25 $ - $ 122 $ 155
</TABLE>
The accompanying notes are an integral part of these statements.
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TRUE HEALTH, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Note 1 - Basis of presentation:
The financial statements include the accounts of True Health, Inc. The Balance
Sheets for the periods ended September 30, 2000 and December 31, 1999, the
Statements of Income (Loss) for the three and nine months ended September 30,
2000 and 1999, and the Statements of Cash Flows for the three and nine months
ended September 30, 2000 and 1999 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 September 30, 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 $960,000 on a cumulative basis. At September 30, 2000,
current liabilities exceeded current assets by approximately $83,000, 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 $20,575 the first nine months of 2000, versus $25,962
in the first nine months of 1999. The decrease in sales during the first nine
months of 2000, is due primarily to initial new clinic sales which occurred only
during the first half of 1999. The Company has now been focusing more effort
toward testing products and getting ready to introduce new products on the
market. Selling, general, and administrative expenses increased to $33,615 from
$15,531. This increase was primarily due to increased legal and professional
expenses related to costs incurred in SEC filings. The increase in selling,
general and administrative expenses is also due to an increase in advertising
and promotion expense as the company increased its sales efforts during the nine
month period.
The Company had total assets of $11,498 on September 30, 2000, compared to
$12,777 on December 31, 1999.
The company is currently negotiating with three companies interested in
promoting True Health products, two in the states and one overseas. True Health
will begin the sale of one of it's new products after the first of the year. 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 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.
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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: 11/14/00 By: /s/ Richard M. Stokley
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(Signature)
Richard M. Stokley
President
