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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934*
(AMENDMENT NO. 3)
HEALTHRITE INC. (FORMERLY VITAMIN SPECIALTIES CORP.)
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(NAME OF ISSUER)
COMMON STOCK, PAR VALUE $.001 PER SHARE
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(TITLE OF CLASS OF SECURITIES)
42221F101
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(CUSIP NUMBER)
LEO SILVERSTEIN, BROCK SILVERSTEIN LLC
800 THIRD AVENUE, 21ST FLOOR, NEW YORK, N.Y. 10022 (212) 371-2000
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(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS)
JULY 19, 1999
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(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ]
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following pages)
Page 1 of 5 pages
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SCHEDULE 13D
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CUSIP NO. 42221F101 PAGE 2 OF 5 PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
John L. Teeger
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(A) X
(B)[ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OTHER (SEE ITEM 3)
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
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7 SOLE VOTING POWER
NUMBER OF 1,113,000 shares
SHARES -----------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY 10,000 shares
OWNED BY EACH -----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING PERSON 1,113,000 shares
WITH -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
10,000 shares
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,123,000 shares
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
21.0%, based upon 5,345,251 shares outstanding as of March 31,
1999, as reported in the Issuer's Quarterly Report on Form 10-QSB.
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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ITEM 1. SECURITY AND ISSUER.
No change.
ITEM 2. IDENTITY AND BACKGROUND.
No change.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
No change.
ITEM 4. PURPOSE OF TRANSACTION
Item 4 is hereby amended to state as follows:
A. The Company filed its Report on Form 10-Q for the three months ended
March 31, 1998 (the "Report") and issued on May 21, 1998 a press release
advising of its first quarter 1998 operating results (the "Press Release"). The
Report as supplemented by the Press Release, appears to contain material untrue
statements and omits to state material facts.
The Report states that the Company suffered a net loss
attributable to common stockholders of $710,000 for the three months ended March
31, 1998 and refers to "increased advertising expenses of $470,000 arranged by
prior management". The Press Release describes such expense as incurred under "a
Bee Products advertising campaign planned and executed by former management".
The Report fails to disclose the other components of the loss but the Press
Release states that $216,000 of the $240,000 balance is the result of
extraordinary expenses affiliated with the proxy contest and costs attributable
to correcting previous marketing direction.
As members of prior management until January 19, 1998, in the
capacities of Chairman of the Board and Vice Chairman, respectively, Mr. Haber
and Mr. Teeger, are not aware of any advertising program or campaign initiated
or funded by the Company prior to January 1, 1998 for the sale of "Bee Products"
(whatever group of products to which this name refers) which resulted in
expenditures in the amount of $470,000 or a material portion of that amount.
The amount of extraordinary expense affiliated with the proxy
contest was not provided (the Company reported $220,000 of proxy contest expense
for 1997), nor were the amount and nature of costs attributable to correcting
previous marketing direction.
The Report states that the Company has assigned the "Nautilus"
distribution rights for network marketing and related inventory to Worldwide
Universal Health Inc. for which it will receive over $100,000. The Report fails
to disclose the substantial amounts expended under the Program initiated,
developed and managed under the prior tenure of Mr. Bradley T. MacDonald as
Chief Executive Officer and the amount of inventory assigned to the program. As
of December 31, 1997 before a write down, if any, of the related assets, the
"Nautilus" inventory alone was substantially in excess of $100,000.
The Company issued a press release on May 4, 1998 advising
that Mr. David Panasci had resigned as a Director and Chairman of the Board's
Audit Committee. The Report failed to disclose the resignation and neither the
Report nor the May 4 press release disclosed that in the proxy campaign
conducted by current management leading to the election in January 1998 of Mr.
Panasci (less than four months prior to his resignation), and six of the other
current Directors, its proxy soliciting materials represented that Mr. Panasci,
described as a former senior executive of Fays Drug Stores, a chain of retail
drug stores, will be instrumental in developing a plan for the Company to effect
sales
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to the drug industry.
B. On July 27, 1998, the Company filed a Form 8K stating that it had
completed a private placement of 880,000 shares of Common Stock at $1.25 per
share, which compares with a 52-week market price range of $1.12 to $2.81. Of
these shares, current officers and directors purchased 325,000 shares, and a
supplier of raw materials to the Company purchased 400,000 shares over which the
Chief Executive Officer retained voting control.
C. On November 9, 1998, Mr. McDonald stated in a press release that the
Company had "successfully launched, Medifast Take Shape to over 23,000 drug and
combo stores throughout the United States." No further announcement has been
made relating to this launch.
D. On November 10, 1998, the Company issued a press release reflecting
a loss of $225,000 for the nine months ended September 30, 1998 after giving
effect to other income of $130,000 related to the sale of assets of a
discontinued product line. For the one year and nine months ended September 30,
1998 during which Mr. MacDonald has been CEO for all but five months, the
Company has generated net losses of $4,045,000.
E. The proxy statement filed by management with respect to the 1998
Annual Meeting of Stockholders failed to disclose that Heartland Value Fund, a
"series" of Heartland Group, Inc., beneficially owns more than 5% of the
outstanding shares of common stock of the issuer.
F. On December 21, 1998, the Company issued a press release announcing
that the shareholders "overwhelmingly voted in favor of the current Board of
Directors on December 17, 1998." This is false and misleading since shareholders
holding at least 1,069,000 shares voted against the current Board of Directors.
It should be noted that of the Directors, three are Mr. MacDonald, his brother,
and his personal religious advisor.
G. On December 31, 1998, the Company issued a press release stating
that David C. Carter, formerly Executive Vice President, resigned to pursue
other interests. Mr. Carter had previously been reported by management as being
a major contributor to the management team with extensive distribution
experience in the drug industry. No additional information related to his
departure has been provided.
H. On March 12, 1999, the Company announced that Mr. Charles Walgreen,
Sr., the president of its Montana Naturals Int'l Inc. subsidiary who was elected
a director on December 17, 1998 had resigned from his position with the
subsidiary and from the Board of Directors of the Company.
I. On April 1, 1999 the Company filed Form 12b-25 with the Securities
and Exchange Commission ("SEC") stating that its filing of Form 10-KSB for the
year ended December 31, 1998 was late due to the Company being unsuccessful in
rendering the technical problems related to the "upgrade and conversion" of its
computer system to be Y2K compliant.
J. On April 15, 1999 the Company filed Form 10-KSB for the year ended
December 31, 1998 reporting a loss of $1,053,000 for the year. On May 18, 1999,
the Company filed Form 10-QSB/A for the quarter ended March 31,1999 reporting a
loss of $769,000 for the quarter. There have been no subsequent filings. For the
two years and three months ended March 31, 1999 during which Mr. McDonald has
been CEO for all but five months, the Company has generated net losses of
$5,612,000.
K. To our best knowledge and belief, during the period May 1 to July 10
1999 the Board of Directors has undergone several changes that have neither been
reported to shareholders nor have the appropriate forms been filed with the SEC.
We understand that (1) Mr. Scott Zion was appointed a director at the
recommendation of Heartland Value Fund which owns 500,000 Common Shares, and
voted in favor of Mr. McDonald's slate of Directors in a contested proxy contest
in January 1998; (2) Mr. John W. Galuchi Jr., an Executive Vice President of
Pure World Inc., which owns 400,000 Common shares and which pursuant to the
terms of their issue are voted by Mr. McDonald, resigned as a director, and (3)
Mr. Donald H. Green, Chairman and Chief Executive Officer of Southern
Supermarkets, LLC, resigned as a director. Both Mr. Galuchi and Mr. Green were
elected as directors of the Company at a stockholder's meeting held
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on December 17, 1998. No information has been provided or reported as to the
identities and backgrounds of their successors.
L. To our best knowledge and belief, within the past two months, the
Company received an offer to purchase equity from an independent third party. A
Committee of the Board of Directors was appointed to review and negotiate the
offer. The offer was contingent on the termination of Mr. McDonald's employment
agreement. We have been advised that the Committee found the offer acceptable
but that Mr. McDonald has proposed as one of the conditions to termination of
his agreement that the Company provide him with the right to convert his holding
of approximately 300,000 Common shares plus other compensation into 600,000
shares of Preferred Stock convertible into common at 75 cents per share.
For the reasons outlined above, it is clear that Mr. McDonald continues
to demonstrate none of the skills to operate a Company successfully. In addition
by not reporting as described above material information either to stockholders
or to the SEC, he is withholding information. Further by insisting on an
unreasonable severance arrangement, Mr. McDonald continues to demonstrate that
he is interested only in retaining control of the Company to the detriment of
the Company at a time when it is in default of its bank covenants and has an
urgent need for capital.
In light of the foregoing, Mr. Teeger and Mr. Haber intend to explore
various alternatives which may be available to protect and enhance stockholder
values by securing the resignation or dismissal of Mr. MacDonald from any
management position with the Company. These alternatives include, but are not
limited to, a solicitation of stockholders of the Company directly or through a
committee of interested stockholders to effect a change in management, the
acquisition of additional shares for such purpose or seeking a financially
capable candidate to acquire the Company on terms which reflect the fair value
of the Company.
Except for the foregoing, neither Mr. Teeger and Mr. Haber has a plan
or proposal which relates to or would result in:
(a) The acquisition by any person of additional securities of
the Company, or the disposition of securities of the Company;
(b) An extraordinary corporate transaction such as a merger,
reorganization, or liquidation involving the Company or any of its subsidiaries;
(c) A sale or transfer of a material amount of assets of the
Company or any of its subsidiaries;
(d) Any change in the present Board of Directors or management
of the Company, including any plans or proposals to change the number of or term
of Directors or to fill any existing vacancies on the Board;
(e) Any material change in the present capitalization or
dividend policy of the Company;
(f) Any other material change in the Company's business or
corporate structure;
(g) Changes in the Company's charter, by-laws, or instruments
corresponding thereto or other actions that may impede the acquisition of
control of the Company by any person;
(h) Causing the Common Stock to cease to be authorized to be
quoted in the inter-dealer quotation system of the National Association of
Securities Dealers, Inc.;
(i) Although the Common Stock maybe eligible for termination
of registration pursuant to section 12(g)(4) of the Securities Act of 1933, to
have such registration terminated; or
(j) Any action similar to any of those enumerated above.
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ITEM 5. INTEREST IN THE SECURITIES OF THE ISSUER.
No change.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
None.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
None.
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SIGNATURE
After reasonable inquiry and to the best of his knowledge and belief,
the undersigned certifies that the information set forth in this Statement is
true, complete, and correct. The undersigned also certifies that with respect to
Mr. Haber the information reflects only that information the undersigned knows
or has reason to know.
/s/ John L. Teeger
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John L. Teeger
