As filed with the Securities and Exchange Commission on June 11, 1997
Registration No. ______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
-----------
NATURAL HEALTH TRENDS CORP.
(Exact name of Registrant as specified in its charter)
Florida
8200
59-2705336
(State or other jurisdiction
of incorporation or
organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification No.)
NATURAL HEALTH TRENDS CORP.
2001 West Sample Road
Pompano Beach, Florida 33064
(954) 969-9771
(Name, address and telephone number
including area code of principal executive offices)
NEAL R. HELLER
Natural Health Trends Corp.
2001 West Sample Road
Pompano Beach, Florida 33064
(954) 969-9771
(Name, address and telephone number including area code of agent for service)
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Copies to:
MARTIN C. LICHT, ESQ.
LANE & MITTENDORF LLP
320 Park Avenue
New York, New York 10022
(212) 508-3200
Approximate Date of Commencement of Proposed Sale to the
Public: From time to time after this Registration Statement
becomes effective.
--------------
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box.|X|
<PAGE>
If this Form is filed to register additional securities for an offering pursuant
to Rule 462 (b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.|_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: |_|
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CALCULATION OF REGISTRATION FEE
<TABLE>
===============================================================================================================
Amount of
Title of Each Class of Amount to be Offering Price Per Aggregate offering Registration
Securities to be Registered Registered Security Price Fee
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<S> <C> <C> <C> <C>
Common Stock, par value (1) $.001 per share 1,681,482 $1.0625 1,786,575 541.39
Total Registration Fee(2)............... 541.39
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</TABLE>
(1) Includes the registration for resale of such presently indeterminate number
of shares of Common Stock issuable upon (i)conversion of $1,000,000 of the
Company's 6% Convertible Debentures (the "Debentures") or as accrued interest
thereon, issued in a private placement in April 1997 and (ii) 200,000 shares of
Common Stock underlying warrants (the "Warrants") to purchase up to 200,000
shares of Common Stock issued in connection with the sale of the Debentures in
April 1997. Estimated solely for purposes of calculating the registration fee in
connection with this Registration Statement and assumes that all of the
Debentures and the accrued interest thereon, are converted into shares of Common
Stock based on a price of $.675 per share of Common Stock (the average closing
bid price of the Common Stock for the five trading days ending on June 9, 1997)
and using a discount rate of 25%. Pursuant to Rule 416, there are also being
registered such additional shares of Common Stock as may be issued pursuant to
the anti-dilution provisions of the Warrants.
(2) The offering price per share is estimated pursuant to Rule 457(c) solely for
the purpose of calculating the registration fee and is based upon the average of
the bid and asked prices of the Common Stock of the Company reported on the
NASDAQ SmallCap Market on June 9, 1997 (which date is within five business days
prior to the date of the filing of this Registration Statement).
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation, or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
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(Subject to Completion)
Dated June 9, 1997
NATURAL HEALTH TRENDS CORP.
1,681,482 Shares of Common Stock*
All of the shares of Common Stock, $ .001 par value (the "Common
Stock"), of Natural Health Trends Corp., a Florida corporation (the "Company"),
offered hereby (the "Shares") are being offered by certain selling security
holders (the "Selling Stockholders") as more fully described herein. Pursuant to
a registration rights agreement, the Company has agreed to bear all expenses
(other than underwriting discounts and selling commissions of any underwriters,
brokers, dealers or agents retained by the Selling Stockholders) in connection
with the registration and sale of the Shares being offered by the Selling
Stockholders. In addition, the Company has agreed to indemnify the Selling
Stockholders against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act"). The Company will
receive none of the proceeds from any sale of the Shares by or for the account
of the Selling Stockholders. See "SELLING STOCKHOLDERS" and "PLAN OF
DISTRIBUTION."
The Shares may be sold from time to time by the Selling Stockholders.
Such sales may be made on The NASDAQ SmallCap Market ("NASDAQ"), in negotiated
transactions or otherwise at prices and at terms then prevailing; at prices
related to the then current market price; or at negotiated prices. The Shares
may be sold by any one or more of the following methods: (a) a block trade in
which the broker or dealer so engaged will attempt to sell the securities as
agent but may position and resell a portion of the block as principal to
facilitate the transaction; (b) purchases by a broker or dealer as principal and
resale by such broker or dealer for its account; (c) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; and (d)
privately negotiated transactions. In addition, any Shares that qualify for sale
pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this
Prospectus.
The Selling Stockholders and any broker-dealers, agents or underwriters
that participate with the Selling Stockholders in the distribution of the Shares
may be deemed to be "underwriters" within the meaning of the Securities Act and
any commissions received by such broker-dealers, agents or underwriters and any
profit on the resale of the Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
The Common Stock is traded on NASDAQ under the symbol "NHTC." On June 9,
1997, the closing bid price per share, as reported by NASDAQ was $1.00.
*The shares of Common Stock offered hereby include the resale of such
presently indeterminate number of shares of Common Stock as shall be issued in
respect of all shares of Common Stock issuable upon (i) conversion of $1,000,000
of the Company's 6% convertible debentures (the "Debentures"), and the accrued
interest thereon, issued in a private placement in April 1997 and (ii) 200,000
shares of Common Stock underlying the Warrants to purchase up to 200,000 shares
of Common Stock issued in connection with the sale of the Debentures in April
1997. The number of shares of Common Stock indicated to be issuable in
connection with
<PAGE>
such transactions and offered for resale hereby is an estimate determined in
accordance with a formula based on the market prices of the Common Stock, as
described in this Prospectus, and is subject to adjustment and could be
materially less or more than such estimated amount depending upon factors which
cannot be predicated by Company at this time. If, however, the Debentures in the
principal amount of $1,000,000 and the accrued interest thereon were converted
on June 10, 1997, the Company would be obligated to issue a total of
approximately 1,481,482 shares of Common Stock. This presentation is not
intended to constitute a prediction as to the future market price of the Common
Stock or as to the number of shares of Common Stock into which Debentures will
be converted. See "RISK FACTORS - Effect of Conversion of Debentures."
THIS OFFERING INVOLVES SUBSTANTIAL INVESTMENT RISKS, AND SECURITIES SHOULD
BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO SUSTAIN THE LOSS OF THEIR ENTIRE
INVESTMENT. SEE "RISK FACTORS" ON PAGE 6.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is _________________, 1997.
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AVAILABLE INFORMATION
A Registration Statement on Form S-3 (the "Registration Statement"),
under the Securities Act, relating to the securities offered hereby has been
filed by the Company with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. Certain financial and other information relating to the
Company is contained in the documents indicated below under "Incorporation of
Certain Documents by Reference" which are not presented herein or delivered
herewith. For further information with respect to the Company and the securities
offered hereby, reference is made to such Registration Statement, exhibits and
schedules. Statements contained in this Prospectus as to the contents of any
contract or other document referred to are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as exhibits to the Registration Statement, each such statement being qualified
in all respects by such reference. A copy of the Registration Statement may be
inspected without charge or may be obtained from the Commission upon the payment
of certain fees prescribed by the Commission at the public reference facilities
maintained by the Commission in Washington, D.C. at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's Regional Offices in
New York at 7 World Trade Center , 13th Floor, New York, New York 10048 and in
Chicago at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"), and in accordance
therewith files periodic reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information concerning
the Company may be inspected or copied at the public reference facilities at the
Commission located at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549,
and at the Commission's Regional Offices in New York, 7 World Trade Center, 13th
Floor, New York, New York 10048, and in Chicago, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
documents can be obtained at the public reference section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates or by
reference to the Company on the Commission's Worldwide Web page
(http:www.sec.gov).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated herein by reference:
1. The Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996.
2. The Company's Current Report on Form 8-K dated January 7, 1997.
3. The Company's Current Report on Form 8-K dated January 31, 1997.
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4. The Company's Current Report on Form 8-K dated February 19, 1997.
5. The Company's Quarterly Report on Form 10-QSB for the period
ended March 31, 1997.
6. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed on June 20,
1995, pursuant to Section 12(g) of the Exchange Act.
All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in and to be a part of
this Prospectus from the date of filing of such reports and documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in the
Registration Statement containing this Prospectus or in any other subsequently
filed document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the request of such person, a copy of any or all
of the foregoing documents referred to above which have been or may be
incorporated herein by reference, other than exhibits to such documents (unless
such exhibits are specifically incorporated by reference into the information
that this Prospectus incorporates). Requests for such documents should be
directed to: National Health Trends Corp. 2001 West Sample Road, Pompano Beach,
Florida 33064.
The Company
The Company develops and operates businesses to promote human wellness.
Doing business as the Florida Institute, the Company owns and operates three
vocational schools as a junior college in Oviedo, Pompano Beach and Miami,
Florida (individually, the "Oviedo School," the "Pompano Beach School" and the
"Miami School" and collectively the "Schools") that offer training and
preparation for licensing in therapeutic massage and for registration in
holistic skin care. Through its wholly owned subsidiary, Health Wellness
Nationwide Corp. ("HWNC"), the Company owns two natural health care centers, one
in Boca Raton, Florida and the other in Pompano Beach, Florida (the "Natural
Health Care Centers"), both of which provide multi-disciplinary complementary
health care in the areas of alternative and nutritional medicine.
The Schools seek to fulfill the educational needs of adults seeking
augmented career skills or whose educational needs have not been met in
traditional educational environments. These individuals are primarily high
school graduates and underemployed adults seeking specific career
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skills and training. As of December 31, 1996, 650 students were enrolled in the
Schools. The Schools are licensed under Florida law and approved by the United
States Department of Education (the "USDOE") to provide financial aid to
qualified applicants. For the year ended December 31, 1996, the Schools derived
approximately 61% of their revenues from financial aid provided under Federal or
state assistance programs.
The Company plans to expand its business operations by increasing the
enrollment of the Schools, opening additional Natural Health Care Centers, as
well as acquiring, developing and marketing proprietary lines of health care
products. However, there can be no assurance that the Company will be able to
successfully expand its operations.
On March 19, 1997, the Company, GHA Holdings, Inc. ("Holdings"), a
wholly-owned subsidiary of the Company, and Global Health Alternatives, Inc.
("Global") entered into an Agreement and Plan of Reorganization (the
"Reorganization Agreement"). The Reorganization Agreement provides for the
purchase by Holdings of substantially all of the assets of Global in exchange
for 5,800,000 shares of the Company's Common Stock. Global is a company which
acquires, develops and markets health care products. In addition, additional
shares are issuable based upon the earnings of Global following the consummation
of the acquisition. The closing of the transactions contemplated by the
Reorganization Agreement are contingent upon the happening of certain
conditions. There can be no assurance that the Company will consummate such
acquisition.
The Company was incorporated under the name Florida Institute of Massage
Therapy, Inc. in Florida in December 1988 and changed its name to Natural Health
Trends Corp. in June 1993. The Company's principal offices are located at 2001
West Sample Road, Pompano Beach, Florida 33064 and its telephone number is (954)
969-9771.
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RISK FACTORS
AN INVESTMENT IN THE COMPANY INVOLVES SUBSTANTIAL INVESTMENT RISKS AND
SECURITIES SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO SUSTAIN THE
LOSS OF THEIR ENTIRE INVESTMENT. IN EVALUATING AN INVESTMENT IN THE COMPANY AND
ITS BUSINESS PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK
FACTORS AMONG OTHERS.
Historical Losses
For the three months ended March 31, 1997 and 1996, the Company had an
unaudited net loss of $677,340 (on revenues of $2,073,833) and $88,354 (on
revenues of $1,781,238), respectively. The Company had a net loss of $889,539
(on revenues of $7,218,841) for the year ended December 31, 1996. For the year
ended December 31, 1995, the Company had a net loss of $1,838,548 (on revenues
of $3,941,259). There is no assurance that the Company can generate net income,
increase revenues or successfully expand its operations in the future. The
Company is subject to all of the problems, expenses, delays and other risks
inherent in a business with a relatively short history of operations and in a
business seeking to expand its operations, including the Company's lack of
experience in connection with operating a business offering products and
services to the public and the establishment of new businesses in undeveloped
and evolving industries. Therefore, the Company cannot predict with certainty
the success or failure of its future operations.
Dependence Upon Proposed Expansion Program
The Company's expansion plans are based upon the Company's acquisition
of Global and additional alternative health care product companies, the
acquisition of additional alternative heath care clinics and increasing student
enrollment at the Schools.
The Company through its acquisition of Global and the acquisition of
additional alternative health care product companies, of which there can be no
assurance, intends to develop and market a proprietary line of alternative
health care products. The Company's growth will be dependent, in part, upon the
development of an alternative health care product line which will be dependent
upon a number of factors, including: (i) the Company's ability to identify and
acquire suitable alternative health care product companies; (ii) achieving
market acceptance of the Company's products; (iii) regulatory constraints; (iv)
the ability of the Company to market and produce the alternative health care
products on a cost-effective basis; and (v) whether anticipated performance
levels of new alternative health care products will be achieved.
The Company owns and operates two Natural Health Care Centers and plans
to acquire others. The Company's success in increasing revenues from its Natural
Health Care Centers
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<PAGE>
will depend upon a number of factors, including: (i) the Company's ability to
identify and acquire suitable alternative health care practices, the
availability of suitable markets, and the Company's ability to obtain good
locations within those markets; (ii) whether new Natural Health Care Centers
will be opened in accordance with the Company's plans; (iii) regulatory
constraints; (iv) the ability of the Company to operate the Natural Health Care
Centers effectively; and (v) whether anticipated performance levels at new
Natural Health Care Centers will be achieved. Any significant delay in the
opening of new Natural Health Care Centers or the failure of new Natural Health
Care Centers to achieve anticipated performance levels could adversely affect
the Company. In pursuing its expansion strategy, the Company intends to expand
its presence into new geographic markets. In entering a new geographic market,
the Company will be required to comply with laws and regulations of
jurisdictions that differ from those applicable to the Company's current
operations, as well as face competitors with greater knowledge of such markets
than the Company. There can be no assurance that the Company will be able to
effectively establish a presence in any new market.
The success of the Company's plans to increase revenue from the Schools
will be dependent upon the ability of the Schools to enroll students, as well
as, the ability of the Schools' students to qualify for financial aid, the
ability of the Schools to maintain its accreditation and to comply with
government regulations, the development of additional programs of study and the
transferability of credits from the Schools to four year colleges and
universities. There can be no assurance that the Company will be able to
maintain or increase the enrollment of the Schools and increase revenue.
Many of the factors required for the various new operations to succeed
will be beyond the Company's control. These include, but are not limited to, the
effectiveness of the Company's marketing efforts in the sale of the Company's
products, in attracting students for the Schools and clients for the alternative
health care practices.
The Company's growth depends to a significant degree on its ability to
carry out its proposed expansion program, including identifying and acquiring
acquisition candidates. There can be no assurance that the Company will be able
to hire, train and integrate employees, and adapt its management, information
and other operating systems, to the extent necessary to grow in a profitable
manner. In addition, the costs associated with the Company's planned expansion
may be significantly greater than anticipated and may have a materially adverse
impact upon the Company's results and prospects. In the event that the Company's
plans for expansion are not successful, there could be a materially adverse
effect on the Company's business.
Uncertainty of Market Acceptance
The Company's expansion plans are based on offering alternative health
care products and services. The Company does not believe that the market for
products and services related to alternative health care, subject to certain
limited exceptions, is either well-developed or has an established history.
Management believes that, as is typical in an undeveloped industry, demand and
market acceptance for the services and products that the Company intends to
market
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will be subject to a high level of uncertainty. The Company does not intend to
conduct any formal marketing or other concept feasibility studies to predict the
commercial viability of its concepts. The Company has limited financial,
personnel and other resources to undertake marketing activities. The Company's
success will be dependent on, among other things, its ability to identify and
acquire potential acquisition candidates in connection with the Company's
Natural Health Care Centers and products business; to maintain the necessary
licenses and accreditation to operate as a degree-granting junior college; to
achieve a sufficient level of enrollment in the Schools; and to qualify for,
receive and maintain any licenses necessary to operate, and to obtain a
sufficient level of acceptance of the services of the Natural Health Care
Centers. In light of the relatively undeveloped markets for the Company's
services and products and the lack of significant funds for marketing, there can
be no assurance that substantial markets will develop and, if so, whether the
Company can exploit them profitably.
Need for Additional Financing
The Company will require additional financing to pursue its expansion
plans. If the Company secures such financing, there can be no assurance that
such financing will be sufficient. If the Company's revenues are not adequate to
fund its operations, or to enable the Company to implement its present plans for
expansion, then the Company will have to seek further financing. In addition,
the Company intends to seek to acquire and open additional Natural Health Care
Centers and acquire additional alternative health care product companies, of
which there can be no assurance. As it is likely that revenues from the
Company's operations at such time will not be sufficient, the Company will be
required to raise additional capital to make such acquisitions and finance the
operations of such new businesses. Such additional financing may be in the form
of indebtedness from institutional lenders or other third parties or as equity
financing. There can be no assurance that such financing will be available and,
if so, on acceptable terms. Any such financing may result in significant
dilution to the Company's shareholders or cause the Company to become overly
leveraged.
Competition
The Schools compete with (i) regional vocational schools and national
vocational schools which offer occupational training programs in massage
therapy, holistic skin care and in related and unrelated fields, (ii) two and
four year universities and colleges, and (iii) on-the-job training offered by
private and government employers. Many current and future competitors have
greater financial, recruiting and job placement resources than the Company, have
longer operating histories and are more established than the Company, and have
more extensive facilities and more personnel than the Company has now or will
have in the foreseeable future.
The Company's Natural Health Care Centers compete and will compete with
doctors, hospitals and medical clinics offering traditional forms of health care
and other practicing therapists offering traditional forms of health care, as
well as with other providers of holistic forms of health care and health
maintenance. Many of these competitors will have established practices and
greater financial resources than the Company. In addition, the services offered
by
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the Company's competitors may be covered by medical insurance or other third
party reimbursement.
The sales of vitamin, minerals and other alternative health care related
products which the Company intends to offer are highly competitive, and the
Company expects competitive pressures to continue in the future. In the vitamin
and mineral supplement line, the Company will compete on a regional basis
directly with specialty health retailers and also with mass merchandisers such
as drug stores and supermarkets. Many of the Company's competitors are larger
and have greater resources than the Company. The Company's future performance
will be subject to a number of factors beyond its control, including any future
economic downturns and any cyclical variations in the retail market for vitamin,
mineral and other alternative health care related products, as well as the
publication of positive or negative product safety and efficacy studies by the
U.S. Department of Health and Human Services and other health and medical
authorities.
Government Regulation of Alternative Health Care Products
The processing, formulation, packaging, labeling and advertising of the
Company's alternative health care products will be subject to regulation by one
or more federal agencies, including the Food and Drug Administration (the
"FDA"), the Federal Trade Commission (the "FTC"), the Consumer Product Safety
Commission and the United States Department of Agriculture and the Environmental
Protection Agency. These activities are also regulated by various agencies of
the states and localities. The FDA, in particular, regulates the advertising,
labeling and sales of vitamin and mineral supplements if the FDA believes they
are unapproved drugs or food additives rather than food supplements. Compliance
with the rules and regulations of such agencies is complex and entails continued
diligence.
The Company cannot determine what effect additional legislation,
rule-making, or other governmental regulations or administrative orders, when
and if promulgated, would have on its business in the future. They could,
however, require the reformulation of certain products to meet new standards,
require the recall or discontinuance of certain products not capable of
reformation, or impose additional recordkeeping, expanded documentation of the
properties of certain products, expanded or different labeling, and scientific
substantiation. Any or all of such requirements could adversely affect the
Company's operations and its financial condition.
Regulation of Natural Health Care Centers
The specialists whose services are offered at the Natural Health Care
Centers and other proposed Natural Health Care Centers, such as acupuncturists,
chiropractors, physicians, nutritionists, skin care professionals and
estheticians, are subject to ongoing professional licensing requirements. The
failure of such persons to practice in accordance with professional licensing
requirements could have a material adverse effect on the Company.
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Moreover, the Natural Health Care Centers may be subject to scrutiny by
state or federal health care enforcement officials. Although the Company
believes its Natural Health Care Centers do not violate applicable federal or
state health care regulatory requirements, there can be no assurance that health
care enforcement officials will not take a contrary view. Investigations or
prosecutions by such enforcement officials could have a material adverse effect
on the Company, even if the operation of the Company's Natural Health Care
Centers were subsequently determined lawful.
Reliance on Alternative Health Care Practitioners
The Company's revenue is dependent, in part, on revenue generated by the
Natural Health Care Centers which are operated on a daily basis by alternative
health care practitioners. There can be no assurance that any such Health Care
Center will result in a successful practice. The profitability of the Natural
Health Care Centers will be dependent on the abilities of the alternative health
care practitioners to operate the clinics effectively.
Health Care Reform
Although Congress failed to pass comprehensive health care reform
legislation in 1996, the Company anticipates that Congress and state
legislatures will continue to review and assess health care delivery and payment
systems and may in the future propose and adopt legislation effecting
fundamental changes in the health care delivery system, which may affect the
Company's Natural Health Care Centers. Also, Congress is expected to consider
major reductions in the rate of increase of Medicare and Medicaid spending as
part of efforts to balance the budget of the United States. The Company cannot
predict the ultimate timing, scope or effect of any legislation concerning
health care reform, including legislation affecting the Medicare and Medicaid
programs. Any proposed federal legislation, if adopted, could result in
significant changes in the availability, delivery, pricing and payment for
health care services and products. Various state agencies also have undertaken
or are considering significant health care reform initiatives. Although it is
not possible to predict whether any health care reform legislation will be
adopted or, if adopted, the exact manner and the extent to which the Company
will be affected, it is likely that the Company will be affected in some
fashion, and there can be no assurance that any health care reform legislation,
if and when adopted, will not have a material adverse effect on the Company.
State Laws Regarding Prohibition of Corporate Practice of Medicine
The Company's Natural Health Care Centers are wholly-owned by the
Company. Corporations such as the Company are not permitted under certain state
laws to practice medicine or exercise control over the medical judgments or
decisions of practitioners. Corporate practice of medicine laws and their
interpretations vary from state to state and are enforced by the courts and by
regulatory authorities with broad discretion. The Company believes that it
performs only non-medical services, does not represent to the public or its
clients that it offers medical services, but instead offers non-medical
alternative health care services. Expansion of
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the operations of the Company to certain jurisdictions may require structural
and organizational modifications of the Company's form of relationship with
alternative health care practitioners in order to comply with corporate practice
of medicine laws, which could have an adverse effect on the Company. Although
the Company believes its operations as currently conducted are in material
compliance with existing applicable laws, there can be no assurance that the
Company's structure will not be challenged as constituting the unlicensed
practice of medicine. If such a challenge were made successfully in any state,
the Company could be subject to civil and criminal penalties under such state's
law. Such results could have a material adverse effect upon the Company.
Lack of Third Party Reimbursable Insurance Coverage
The Company anticipates that medical insurance coverage and other third
party reimbursement will not be available for most of the services offered by
the Company's Natural Health Care Centers and to the extent that such services
are covered, coverage may be limited. The lack of medical insurance coverage or
other third party reimbursement for all of the services performed at the Natural
Health Care Centers may affect the ability to attract and retain patients.
Ability to Increase Enrollment at the Schools
In January 1997, the Company was granted a license to operate its
Schools as a degree-granting junior college. However, the success of the
Company's plans to operate the Schools as a degree-granting junior college will
be dependent upon, among other things, the ability of the Schools to enroll
students, the development of additional programs of study and the
transferability of credits from the Schools to four year colleges and
universities.
The transferability of credits from one educational institution to
another, absent an articulation agreement between the two schools, is generally
at the discretion of the receiving institution. The factors that receiving
institutions typically consider include, but are not limited to, the similarity
of accrediting commissions, the licensing status of the two institutions and the
similarity of program content, curriculum and textbooks. In addition, many
institutions enter into articulation agreements which establish specific
guidelines for the transfer of credits from one institution to another. However,
these agreements are not required by law, and the content may vary dramatically
depending on whether the institution is a public, private, academic or
vocational/technical school. Absent articulation agreements between the two
schools, consideration for the acceptance of transfer of credits is more
subjective than the transfer of credits between otherwise similar public or
private institutions. There can be no assurance that credits from the Schools'
courses will be transferable. If the ability of the Schools' students to
transfer credits to four year colleges and universities is limited, then the
Schools' ability to recruit new students may be impaired.
Dependence on Accreditation and Student Financial Aid Programs
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<PAGE>
The Company and its Schools must comply with a variety of Federal and state
regulations in order for eligible students to qualify for government financial
aid for tuition and related expenses. These include requirements that the
Schools offer a mandated minimum tuition refund to students who leave the
Schools before completing their programs of study and that the percentage of
students enrolled without a high school or general equivalency diploma be below
specified levels. In addition, under U.S. Department of Education ("USDOE")
regulations, educational institutions with annual student loan default rates in
excess of 25% (30% prior to 1994) for three consecutive years may lose their
eligibility for student loans. The Schools' student loan default rates for 1993
and 1994 were determined to be 10% and 9.9%, respectively. The default rates for
1995 and 1996 will not be available from the USDOE until the third quarters of
1997 and 1998, respectively. Moreover, under Federal regulations, a student
drop-out rate in excess of 33% may impair an institution's ability to administer
financial aid programs and is one factor in determining whether to deny an
institution's certification to participate in Federal student aid programs. A
student drop-out rate exceeding 33%, however, is not alone sufficient to
disqualify an institution from such participation, but must be viewed in
conjunction with other factors such as loss of state licensing, loss of
accreditation, poor periodic reviews or high student loan default rates. The
Schools' dropout rate in 1996 was approximately 12%. The Schools may also be
deemed ineligible to participate in financial aid programs if the USDOE
determines that 85% or more of the Schools' operating revenue is derived from
Title IV financial aid programs (the "85-15 Rule"). According to the Company's
preliminary calculations, the Schools derived approximately 66% of their
revenues for 1995 from Title IV Federal financial aid programs. The official
determination of the Company's compliance for the year ended December 31, 1995
with the 85-15 Rule will likely be made in the second quarter of 1997. There can
be no assurance that the Schools will be able to meet the standards set by USDOE
regulations or otherwise remain eligible to participate in Federal financial aid
programs.
Federal regulations require the accreditation of a school by a private
commission recognized by the USDOE. The accreditation commission, in turn, sets
additional standards relating to curricula, teacher qualifications and other
matters. When a school wishes to participate in student aid programs, the school
applies for accreditation from an accrediting body and a designation from the
USDOE that it is an approved educational institution where eligible students may
participate in government-sponsored student financial aid programs. The
Company's Schools are accredited by the Accrediting Commission of the Career
Schools and Colleges of Technology and the Schools' Therapeutic Massage Training
Program is accredited by the Commission on Massage Training
Approval/Accreditation of the American Massage Therapy Association. There can be
no assurance that the Company's Schools will be able to maintain their
accreditation.
The loss of accreditation would result in the loss of the Company's
ability to offer Federal financial aid under Title IV of the Higher Education
Act of 1965, as amended ("Title IV") (Federal Pell Grants and/or Federal Family
Educational Loan Programs), and would severely restrict the Company's ability to
attract substantial numbers of students. During the year ended December 31, 1996
the Company' Schools depended on government funding under
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<PAGE>
Federal student financial aid programs for approximately 61% of its revenues,
respectively. Numerous Federal projects, including Title IV financial aid
programs, that provide funds for student loans and grants, are currently under
scrutiny by the U.S. Congress. There can be no assurance that these Federal
programs, or other state programs, will not be reduced or eliminated. The loss
of accreditation or a reduction of Federal student financial aid programs would
have a material adverse effect on the Company.
Possible Loss of Student Financial Aid, License and Accreditation in the Event
of a Change of Control of the Company
Under current USDOE regulations, a change in control of the Schools
could result in a temporary or a permanent loss of Federal financial aid funds
to the Schools' students. In addition, under the regulations of the State Board
of Independent Postsecondary, Vocational, Technical, Trade and Business Schools
of the Florida Department of Education (the "Florida State Board") a change of
ownership resulting in a change of control may result in the termination of the
Schools' licenses. The Schools will also require the approval of the Schools'
accrediting commission upon a change of control. Pursuant to the USDOE
regulations, a determination of a change of control would involve a review of
which persons or entities have the power to direct or cause the direction of
management and policies of the Schools. Under the Florida State Board's
regulations, a change of control constitutes a change in the authority to
establish or modify school policies, standards and procedures or the authority
to make the effective decisions regarding the implementation or enforcement of
school policies, standards and procedures. In such event, the prior approval of
the Florida State Board is required. Under the rules of the Schools' accrediting
commission, a change of control occurs when a person or a corporation obtains
authority to control the actions of the institution, including a change of
control which occurs as a result of a transfer in voting interest. The Company
believes, although there can be no assurance, that as a result of the issuance
of Common Stock in connection with the acquisition of Global Health
Alternatives, Inc., that there has not been or would be a change of control that
would result in a loss of its eligibility for Federal financial aid funds, a
review of its licenses, or the requirement of prior approval by its accrediting
commission. Should the percentage ownership of the Company's Common Stock by the
Company's present shareholders, officers and directors decrease further through
the issuance of additional shares of Common Stock, the issue of whether there
was a change of control, if raised by the USDOE, the Florida State Board or the
accrediting commission, would be determined pursuant to the standards set forth
above, on the basis of the facts then existing, including the percentage
ownership of the present shareholders, officers and directors, as compared with
the holdings of others and other factors relating to the actual control of the
Company. Should there be a determination that a change of control had occurred
by the USDOE, the Florida State Board or the Schools' accrediting commission and
there was disruption or termination of the availability of Federal financial aid
to the Schools' students or a termination or interruption of the licenses or
accreditation of the Schools, there would be a material adverse effect on the
Company, its business and its prospects.
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<PAGE>
Dependence on State Licensing of the Schools
The Company is dependent on state licensing from the Florida State Board
to operate its Schools and to recruit students. Extensive and complex
regulations govern these matters. Moreover, many other states require
post-secondary educational institutions operated with private investment capital
to post surety bonds as a precondition to licensing. Although the Company is not
required to post surety bonds with state regulatory authorities at this time,
there is no assurance that the Company will not be required to do so in the
future. Moreover, if certain financial tests recently adopted by the California
legislature and similar regulations adopted or proposed by other state
regulators are adopted in Florida, or if the Company expands into jurisdictions
in which such regulations are in effect, the Company may be unable to satisfy
the applicable requirements. The Company might be unable to operate its Schools
or otherwise be materially and adversely affected if it is unable to comply with
current or future rules and regulations.
The present state licenses for the Company's Schools in Miami, Pompano
Beach and Oviedo expire on September 30, 1997, March 31, 1998 and November 30,
1997, respectively, and are subject to renewal at such times. The license for
the Miami School and the Oviedo School must be renewed on an annual basis. The
license for the Pompano Beach School must be renewed on a biennial basis since
it has been licensed and in good standing for more than five years. There can be
no assurance that the Florida State Board will renew the licenses of each of the
Schools. The failure of the Florida State Board to renew each of the Schools'
licenses would have a material adverse effect on the Company.
Potential Liability; Insurance
The operation of the Natural Health Care Centers and the offering of
alternative health care products exposes the Company to the possibility of
personal injury, products or other liability claims. The Company maintains a
general liability insurance policy which is subject to a $1,000,000 per
occurrence limit with a $2,000,000 aggregate limit. The Company also maintains a
professional liability insurance policy which is subject to a $1,000,000 per
occurrence limit with a $3,000,000 aggregate limit. The Company carries
$1,000,000 of malpractice insurance with respect to the Natural Health Care
Centers. The Company anticipates procuring additional insurance in connection
with the Company's proposed expansion plans. There can be no assurance, however,
that the Company's insurance will be sufficient to cover potential claims or
that an adequate level of coverage will be available in the future at reasonable
cost, if at all. A successful claim against the Company which exceeds, or is not
covered by, its insurance policies could have a material adverse effect on the
Company. In addition, the Company may be required to expend significant
resources and energy in defending against any claims.
Dependence on Key Personnel
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<PAGE>
The Company believes that its success depends to a significant extent on
the efforts and abilities of Neal R. Heller, President and a director of the
Company, and on Elizabeth S. Heller, Secretary, Treasurer and a director of the
Company. Mr. and Mrs. Heller have each entered into employment agreements with
the Company that expire in December 1997. The success of the Company's Natural
Health Care Centers depends upon Kaye Lenzi, their administrator, and other
alternative care practitioners. The loss or curtailment of the services of any
of such employees would have a materially adverse effect on the Company. The
ability of the Company to realize its business strategy might be jeopardized if
any of such individuals becomes incapable of fulfilling his or her obligations
to the Company and a qualified successor is not found promptly. The Company's
success also depends upon its ability to attract and retain qualified personnel,
including both instructors and practitioners of other holistic health care
services. While the Company believes there are numerous qualified holistic
health care practitioners currently available, competition for such personnel
may increase. If the Company acquires existing Natural Health Care Centers to be
operated, the Company will be dependent on the key employees of such clinics.
Risk of Foreclosure of Mortgaged Property
The Company's property in Pompano Beach, Florida, (the "Pompano
Property") is encumbered by mortgages securing repayment of loans. In the event
that the Company defaults on its obligations under such mortgage loans, the
mortgagee could foreclose on the mortgages encumbering the Pompano Property. A
foreclosure of the mortgage loans on the Pompano Property would have a material
adverse effect on the Company.
Indemnification of Officers and Directors
The Articles of Incorporation of the Company provide that the Company
shall indemnify to the fullest extent permitted by Florida law any person whom
it may indemnify thereunder, including directors, officers, employees and agents
of the Company. Such indemnification (other than as ordered by a court) shall be
made by the Company only upon a determination that indemnification is proper in
the circumstances because the individual met the applicable standard of conduct.
Advances for such indemnification may be made pending such determination. In
addition, the Articles of Incorporation provide for the elimination, to the
extent permitted by Florida law, of personal liability of directors to the
Company and its shareholders for monetary damages for breach of fiduciary duty
as directors. The foregoing may reduce the likelihood of derivative litigation
against directors and officers of the Company and may discourage or deter
shareholders or management from suing directors or officers for breaches of
their duty of care, even though such an action, if successful, might otherwise
benefit the Company and its shareholders.
Control by Current Shareholders, Officers and Directors
The current officers and directors of the Company beneficially own an
aggregate of approximately 41% of the Company's Common Stock and are in a
position to influence the
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<PAGE>
election of the Company's directors and otherwise essentially control the
outcome of all matters requiring shareholder approval including election of the
Company's directors.
No Dividends
The Company has not paid any cash dividends on its Common Stock to date
and does not anticipate declaring or paying any cash dividends in the
foreseeable future. In addition, future financing arrangements, if any, may
preclude or otherwise restrict the payment of dividends.
Shares Eligible for Future Sale
Of the 12,811,261 shares of Common Stock currently outstanding 6,156,802
are "restricted securities" as that term is defined in Rule 144 under the
Securities Act and may only be sold pursuant to a registration statement filed
under the Securities Act or in compliance with Rule 144 or another exemption
from the registration requirements of the Securities Act. In general, under Rule
144, subject to the satisfaction of certain other conditions, a person,
including an affiliate of the Company, who has beneficially owned restricted
shares of Common Stock for at least one year is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of 1% of
the total number of outstanding shares of the same class, or if the Common Stock
is quoted on NASDAQ or a stock exchange, the average weekly trading volume
during the four calendar weeks immediately preceding the sale. A person who
presently is not and who has not been an affiliate of the Company for at least
three months immediately preceding the sale and who has beneficially owned the
shares of Common Stock for at least three years is entitled to sell such shares
under Rule 144 without regard to any of the volume limitations described above.
In addition, 666,666 shares of Common Stock are reserved for issuance
upon the exercise of options which have been granted or may be granted under the
Company's 1994 Stock Option Plan and 6,143,344 shares of Common Stock are
issuable upon the exercise of outstanding options, warrants and conversion
rights excluding the Convertible Series A Preferred Stock with a face amount of
$2,200,000. To the extent that options are exercised, dilution to the interests
of the Company's shareholders may occur. Moreover, the terms upon which the
Company will be able to obtain additional equity capital may be adversely
affected, since the holders of the outstanding options or warrants can be
expected to exercise them, to the extent they are able to, at a time when the
Company would, in all likelihood, be able to obtain any needed capital on terms
more favorable to the Company than those provided in the options or warrants.
Limited Prior Public Market; Potential Volatility of Stock Price
The Company's Common Stock has been traded on NASDAQ since June 21,
1995. There can be no assurance that an active public market will continue for
the Common Stock, or that the market price for the Common Stock will not decline
below its current price. Such price may be influenced by many factors,
including, but not limited to, investor perception of the Company and its
industry and general economic and market conditions. The trading price of
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<PAGE>
the Common Stock could be subject to wide fluctuations in response to
announcements of business developments by the Company or its competitors,
quarterly variations in operating results, and other events or factors. In
addition, stock markets have experienced extreme price volatility in recent
years. This volatility has had a substantial effect on the market prices of
companies, at times for reasons unrelated to their operating performance. Such
broad market fluctuations may adversely affect the price of the Common Stock.
Possible Delisting of Common Stock for NASDAQ; Possible Adverse Effect on
Trading Market
The Common Stock is quoted on the NASDAQ SmallCap Market. There are a
number of continuing requirements that must be met in order for the Common Stock
to remain eligible for quotation on NASDAQ. In order to continue to be quoted on
NASDAQ, a company must maintain $2 million in total assets, a $200,000 market
value of the public float and $1 million in total capital and surplus. In
addition, continued quotation requires two marketmakers and a minimum bid price
of $1.00 per share; provided, however, that if a company falls below such a
minimum bid, it will remain eligible for continued quotation on NASDAQ if the
market value of the public float is at least $1 million and the company has $2
million in capital and surplus. The failure to meet these maintenance criteria
in the future could result in the delisting of the Company's Common Stock from
NASDAQ. In such event, trading, if any, in the Common Stock may then continue to
be conducted in the non-NASDAQ over-the-counter market. As a result, an investor
may find it more difficult to dispose of, or to obtain accurate quotations as to
the market value of, the Common Stock. In November 1996, NASDAQ approved changes
to its quantitative and qualitative standards for issuers listing on NASDAQ,
subject to public comment and approval by the Commission. Among the proposed
changes are the elimination of the alternative test for issuers failing to meet
the minimum bid price of $1.00, an increase in the quantitative standards for
both the NASDAQ National Market and the NASDAQ SmallCap Market, and the
corporate governance requirements applicable to the NASDAQ National Market would
be applicable to the NASDAQ SmallCap Market.
In addition, if the Common Stock were delisted from trading on NASDAQ
and the trading price of the Common Stock were less than $5.00 per share,
trading in the Common Stock would also be subject to the requirements of certain
rules promulgated under the Securities Exchange Act of 1934, which require
additional disclosure by broker dealers in connection with any trades involving
a stock defined as a penny stock (generally, any non-NASDAQ equity security that
has a market price of less than $5.00 per share, subject to certain exceptions).
Such rules require the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and the risks associated
therewith, and impose various sales practice requirements on broker-dealers who
sell penny stocks to persons other than established customers and accredited
investors (generally institutions). For these types of transactions, the
broker-dealer must make a special suitability determination for the purchaser
and have received the purchaser's written consent to the transaction prior to
sale. The additional burdens imposed upon broker-dealers may discourage
broker-dealers from effecting transactions in penny stocks,
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<PAGE>
which could reduce the liquidity of the shares of Common Stock and thereby have
a material adverse effect on the trading market for the securities.
Anti-Takeover Effect of Issuance of Preferred Stock
The Company's Articles of Incorporation authorizes the issuance of
1,500,000 shares of "blank check" preferred stock with such designations, rights
and preferences as may be determined from time to time by the Board of
Directors. Accordingly, the Board of Directors is empowered, without shareholder
approval, to issue preferred stock with dividends, liquidation, conversion,
voting or other rights which could decrease the amount of earnings and assets
available for distribution to holders of Common Stock and adversely affect the
relative voting power or other rights of the holders of the Company's Common
Stock. In the event of issuance, the preferred stock could be used, under
certain circumstances, as a method of discouraging, delaying or preventing a
change in control of the Company.
Risks Associated with Forward-Looking Statements
This Prospectus contains certain forward-looking statements regarding
the plans and objectives of management for future operations, including plans
and objectives relating to the development of Natural Health Care Centers, the
operation of the Schools and the acquisition of companies that offer alternative
health care products. The forward-looking statements included herein are based
on current expectations that involve numerous risks and uncertainties. The
Company's plans and objectives are based on a successful execution of the
Company's expansion strategy and assumptions that Company's operations will be
profitable, that the alternative health care industry will not change materially
or adversely, and that there will be no unanticipated material adverse change in
the Company's operations or business. Assumptions relating to the foregoing
involve judgments with respect to, among other things, future economic,
competitive and market conditions and future business decisions, all of which
are difficult or impossible to predict accurately and many of which are beyond
the control of the Company. Although the Company believes that its assumptions
underlying the forward-looking statements are reasonable, any of the assumptions
could prove inaccurate and, therefore, there can be no assurance that the
forward-looking statements included herein will prove to be accurate. In light
of the significant uncertainties inherent in the forward-looking statements
included herein, particularly in view of the Company's early stage operations in
various new businesses, the inclusion of such information should not be regarded
as a representation by the Company or any other person that the objectives and
plans of the Company will be achieved.
Effect Of Conversion Of The Debentures
The exact number of shares of Common Stock issuable upon conversion of
the Debentures offered hereby will vary inversely with the market price of the
Common Stock. The holders of Common Stock may be materially diluted by
conversion of the Debentures depending on the future market price of the Common
Stock. The Debentures are convertible into Common Stock based upon the average
of the closing bid price on NASDAQ for the five days
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<PAGE>
preceding notice of conversion, discounted by 25%. On June 9, 1997, the five day
average of the closing bid price of the Common Stock on NASDAQ was $.90 per
share. If such price were used to determine the number of shares of Common Stock
issuable upon conversion of the Debentures including interest thereon, the
Company would issue a total of approximately 1,481,482 shares of Common Stock,
if all of the Debentures were converted on such date. To the extent the average
closing bid price is lower or higher than $.90 on any date on which the
Debentures are converted, the Company would issue more or fewer shares of Common
Stock than reflected in such estimate, and such difference could be material.
USE OF PROCEEDS
Since this Prospectus relates to the offering of Shares by the Selling
Stockholders, the Company will not receive any proceeds from the sale of the
Shares offered hereby. See "SELLING STOCKHOLDERS."
SELLING STOCKHOLDERS
The following table sets forth the name and the number of shares of
Common Stock beneficially owned by each Selling Stockholder as of June 9, 1997,
the number of the shares to be offered by each Selling Stockholder pursuant to
this Prospectus and the number of shares to be beneficially owned by each
Selling Stockholder after the offering if all of the shares offered hereby by
such Selling Stockholder are sold as described herein. Except as noted below,
the Selling Stockholders have not held any position or office with, been
employed by, or otherwise had a material relationship with, the Company, other
than as stockholders of the Company subsequent to their respective acquisition
of shares of Common Stock. The Shares are being registered to permit public
secondary trading of the Shares, and the Selling Stockholders may offer the
Shares for resale from time to time. See "PLAN OF DISTRIBUTION."
Certain Shares being offered hereby by the Selling Stockholders may be
acquired, from time to time, upon (i) conversion of $1,000,000 of the Debentures
and the accrued interest thereon issued in a private placement in April 1997 and
(ii) 200,000 shares of Common Stock underlying the Warrants to purchase up to
200,000 shares of Common Stock issued in connection with the sale of the
Debentures in April 1997. Once the Commission has declared effective the
Registration Statement of which this Prospectus forms a part, the Debentures are
convertible into Common Stock at a conversion price equal to 75% of the average
closing bid price of the Common Stock as reported on the NASDAQ for the five
consecutive trading days immediately preceding the date of conversion. Pursuant
to the terms of the Debentures, no holder can convert any portion of such
holder's Debentures if such conversion would increase such holder's beneficial
ownership of the Common Stock (other than shares so owned through ownership of
the Debentures) to in excess of 4.9%.
In recognition of the fact that Selling Stockholders may wish to be
legally permitted to sell their Shares when they deem appropriate, the Company
has filed with the Commission, under the Securities Act, a Registration
Statement on Form S-3, of which this Prospectus forms
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<PAGE>
a part, with respect to the resale of the Shares from time to time on NASDAQ or
in privately-negotiated transactions and has agreed to prepare and file such
amendments and supplements to the Registration Statement as may be necessary to
keep the Registration Statement effective until the Shares are no longer
required to be registered for the sale thereof by the Selling Stockholders.
The Company has agreed to pay for all costs and expenses incident to the
issuance, offer, sale and delivery of the Shares, including, but not limited to,
all expenses and fees of preparing, filing and printing the Registration
Statement and Prospectus and related exhibits, amendments and supplements
thereto and mailing of such items. The Company will not pay selling commissions
and expenses associated with any such sales by the Selling Stockholders. The
Company has agreed to indemnify the Selling Stockholders against civil
liabilities including liabilities under the Securities Act.
Except as otherwise indicated, to the knowledge of the Company, all
persons listed below have sole voting and investment power with respect to their
securities. The information in the table concerning the Selling Stockholders who
may offer Shares hereunder from time to time is based on information provided to
the Company by such securityholders, except for the assumed conversion price of
the Debentures into shares of Common Stock, which is based solely on the
assumptions discussed or referenced in footnote (1) to the table. Information
concerning such Selling Stockholders may change from time to time and any
changes of which the Company is advised will be set forth in a Prospectus
Supplement to the extent required. See "PLAN OF DISTRIBUTION."
<TABLE>
Number of Shares of Number of Shares Number of Shares
Name of Selling Common Stock of Common Stock Beneficially Owned
Stockholder Beneficially Owned Offered Hereby After Offering
<S> <C> <C> <C>
The Endeavor Capital 1,481,482(1)(2) 1,481,482 0
Fund S.A.
Windward Island Ltd. 100,000(3) 100,000 0
J.W. Charles Securities, 100,000(3) 100,000 0
Inc.
Total 1,681,482 1,681,482 0
</TABLE>
(1) Such beneficial ownership represents the aggregate of (a) the number of
shares of Common Stock beneficially owned by each such person and (b) an
estimate of the number of the shares of Common Stock issuable upon the
conversion of Debentures beneficially owned by such person, assuming an average
closing bid price for the five trading days preceding June 9, 1997, the price
which would be utilized if the Debentures were converted on June 10, 1997. The
actual number of shares of Common Stock offered hereby is subject to adjustment
based on the market price of the Common Stock and could be materially less or
more than the
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<PAGE>
estimated amount indicated depending upon factors which cannot be predicted by
the Company at this time. This presentation is not intended to constitute a
prediction as to the future market price of Common Stock. The number of shares
of Common Stock beneficially owned prior to the offering assumes conversion of
all of the Debentures described in this footnote (1). See "RISK FACTORS --
Effect On Conversion Debentures" and "DESCRIPTION OF SECURITIES."
(2) Represents the estimate of the number of shares of Common Stock issuable
upon conversion of the Debentures beneficially owned by such person as described
in Footnote (1) above.
(3) Represents the number shares of Common Stock issuable upon the exercise of
the Warrants.
The Selling Stockholders are offering the Shares for their own account,
and not for the account of the Company. The Company will not receive any
proceeds from the sale of the Shares by the Selling Stockholders.
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling Stockholders.
Such sales may be made through ordinary brokerage transactions, the
over-the-counter market, or otherwise at prices and at terms then prevailing, at
prices related to the then current market price or at negotiated prices. The
Shares may be sold by any one or more of the following methods: (a) a block
trade in which the broker or dealer so engaged will attempt to sell the
securities as agent but may position and resell a portion of the block as
principal to facilitate the transaction; (b) purchases by a broker as principal
and resale by such broker or dealer for its account, (c) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; and (d)
privately negotiated transactions. In addition, any Shares that qualify for sale
pursuant to Rule 144 may be sole under Rule 144 rather than pursuant to this
Prospectus.
The Selling Stockholders and any broker-dealers, agents or underwriters
that participate with the Selling Stockholder in the distribution of the Shares
may be deemed to be "underwriters" within the meaning of the Securities Act and
any commissions received by such broker-dealer, agent or underwriter and any
profit on the resale of the Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
Under the Exchange Act and the regulations thereunder, any person
engaged in a distribution of the Shares offered by this Prospectus may
simultaneously engage in market making activities with respect to the Common
Stock during any applicable "Cooling off" periods prior to the commencement of
such distribution. In addition, and without limiting the foregoing, the Selling
Stockholder will be subject to applicable provisions of the Exchange Act and the
rules and regulations thereunder including, without limitation, Rules 10b-6 and
10b-7,
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<PAGE>
which provisions may limit the timing of purchases and sales of Common Stock by
the Selling Stockholders.
The Company has agreed to indemnify the Selling Stockholders against
liabilities incurred by the Selling Stockholders by reason of misstatements or
omissions to state material facts in connection with the statements made in this
Prospectus and the Registration Statement of which it forms a part. The Selling
Stockholders, in turn, have agreed to indemnify the Company against liabilities
incurred by the Company by reason of misstatements or omissions to state
material facts in connection with statements made in the Registration Statement
and prospectus based on information furnished in writing by the Selling
Stockholders. To the extent that such section of the Registration Rights
Agreement may purport to provide exculpation from possible liabilities arising
under the Federal securities laws, it is the opinion of the Commission that such
indemnification is contrary to public policy and unenforceable.
DESCRIPTION OF SECURITIES
General
The total authorized capital stock of the Company is 40,000,000 shares
of Common Stock, $.001 par value per share, and 1,500,000 shares of Preferred
Stock, $.001 par value per share. As of March 31, 1997, the Company had
12,811,261 shares of Common Stock issued and outstanding, which were held by
approximately 1,000 shareholders, and an aggregate of 6,143,344 shares of Common
Stock issuable upon exercise of outstanding options, warrants and conversion
rights, excluding the shares of Common Stock issuable upon the conversion of the
Debentures and the Series A Preferred Stock.
Common Stock
Each share of Common Stock entitles the holder thereof to one vote on
all matters submitted to a vote of the shareholders. Since the holders of Common
Stock do not have cumulative voting rights, holders of more than 50% of the
outstanding shares can elect all of the directors of the Company then being
elected and holders of the remaining shares by themselves cannot elect any
directors. The holders of Common Stock do not have preemptive rights or rights
to convert their Common Stock into other securities. Holders of Common Stock are
entitled to receive ratably such dividends as may be declared by the Board of
Directors out of funds legally available therefor. In the event of a
liquidation, dissolution or winding up of the Company, holders of the Common
Stock have the right to a ratable portion of the assets remaining after payment
of liabilities subject to any superior claims of any shares of Preferred Stock
hereafter issued. See "- Preferred Stock." All shares of Common Stock
outstanding and to be outstanding upon completion of the Offering are and will
be fully paid and nonassessable.
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<PAGE>
Preferred Stock
The Company is authorized by its Articles of Incorporation to issue a
maximum of 1,500,000 shares of preferred stock, in one or more series and
containing such rights, privileges and limitations, including voting rights,
dividend rates, conversion privileges, redemption rights and terms, redemption
prices and liquidation preferences, as the Board of Directors of the Company
may, from time to time, determine. Except for the 2,200 shares of Series A
Preferred Stock, no shares of Preferred Stock have ever been issued.
The issuance of shares of preferred stock pursuant to the Board's
authority could decrease the amount of earnings and assets available for
distribution to holders of Common Stock, and otherwise adversely affect the
rights and powers, including voting rights, of such holders and may have the
effect of delaying, deferring or preventing a change in control of the Company.
The Company is not required by current Florida Law to seek shareholder approval
prior to any issuance of authorized but unissued stock and the Board of
Directors does not currently intend to seek shareholder approval prior to any
issuance of authorized but unissued shares of preferred stock or Common Stock,
unless otherwise required by law.
Series A Preferred Stock
The Company has 2,200 shares of Series A Preferred Stock outstanding
with a face amount of $2,200,000. The shares of Series A Preferred Stock were
issued to five investors in a private placement in June 1997.
For a full description of the relative rights, preferences, privileges
and restrictions, including among other things, dividend rights, conversion
rights, liquidation preferences and terms of redemption, reference is made to
the articles of amendment of articles of incorporation, filed in the office of
the Secretary of State of Florida, a copy of which is available from the Company
upon request.
Conversion
Commencing on August 4, 1997 and provided that there is an effective
registration statement covering the resale of the shares of Common Stock
issuable upon the conversion of the shares of Series A Preferred Stock, each
share of Series A Preferred Stock is convertible into shares of Common Stock at
a conversion price equal to 80% (the "Applicable Percentage") of the average
closing bid price of the Common Stock as reported by NASDAQ, during the five
trading days immediately preceding the date notice of conversion is given to the
Company. In the event that a registration statement covering the resale of the
shares of Common Stock issuable upon the conversion of the shares of Series A
Preferred Stock is not effective by August 4, 1997, then the Applicable
Percentage is reduced to 75% and the holder of each share of Series A Preferred
Stock is entitled to a payment of 2.5% per month until a registration statement
is effective, payable in cash or shares of Common Stock at the option of the
holder.
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<PAGE>
Shares of Series A Preferred Stock are converted automatically into shares of
Common Stock on June 4, 2000.
Except in the case of the automatic conversion of the shares of Series A
Preferred Stock, the holder can convert any portion of such holder's shares of
Series A Preferred Stock if such conversion would not increase such holder's
beneficial ownership of Common Stock (other than shares of Common Stock owned
through ownership of the Series A Preferred Stock) to in excess of 4.9%.
Redemption
The Company has the right through January 31, 1998, in its discretion, to
redeem any or all of the shares of Series A Preferred Stock on a pro rata basis
from time to time upon not less than two business days prior written notice at a
price of $1,250 per share through august 4, 1997 and at a price of $1,300 per
share from August 5, 1997 through January 31, 1998.
Ranking
The Series A Preferred Stock ranks, with respect to dividend rights and with
respect to rights of liquidation, dissolution and winding up, senior to the
Common Stock.
Dividends
8% of the face amount of $1,000 per share of Series A Preferred Stock,
payable upon the conversion of the shares in Common Stock or cash. If dividends
are paid in shares of Common Stock, the number of shares of Common Stock payable
as dividends will be determined by dividing the amount of the accrued dividends
by the applicable conversion price.
Liquidation
In the event of any liquidation, dissolution or winding up of the Company,
then out of the assets of the Company before any distribution or payment to the
holders of Common Stock, the holders of the Series A Preferred Stock will be
entitled to be paid $10,000 per share. In the event of any liquidation,
dissolution or winding up of the Company, the Company by resolution of the Board
of Directors will, to the extent of any legally available funds therefor,
declare a dividend payable only in cash on the Series A Preferred Stock, in an
amount equal to the accrued and unpaid dividends, calculated at the dividend
rate on the Series A Preferred Stock up to and including the date of such
liquidation, dissolution or winding up and, if accrued, an amount payable in
cash only equal to any remaining accrued and unpaid dividends, calculated at the
dividend rate, will be added to the amount to be received by the holders of the
Series A Preferred Stock upon such liquidation, dissolution or winding up.
Voting Rights
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<PAGE>
Shares of Series A Preferred Stock have no voting rights.
Debentures
The Debentures are in the principal amount of $1,000,000, bear interest
at the rate of 6% per annum and mature on March 31, 2000.
The Debentures are convertible into shares of Common Stock commencing on
the earlier of July 3, 1997 with respect to $500,000 of principal amount and
August 3, 1997 with respect to $500,000 of the principal amount or the effective
date of the registration statement covering the resale of the shares of Common
Stock issuable upon the conversion of the Debentures. The Debentures are
convertible into shares of Common Stock at a conversion price equal to the
lesser of $1.4375 or 75% of the average closing bid price of the Common Stock as
reported by NASDAQ, during the five trading days immediately preceding the date
notice of conversion is given to the Company.
The Company has the right to redeem the Debentures for a redemption
price equal to 125% of the principal amount of the Debentures. In the event that
the resale of the shares of Common Stock issuable upon the conversion of the
Debentures is not registered by July 3, 1997, then the Company shall pay to
holder 3% of the principal amount of the Debentures for each month thereafter
until the effective date of the registration statement covering the resale of
the shares of Common Stock.
The holder of the Debentures shall not be entitled to convert any portion of
the Debentures to the extent that after such conversion, the number of shares of
Common Stock (other than shares of Common Stock owned through ownership of the
Debentures which may be deemed to be beneficially owned by the holder would be
in excess of 4.9%.
Warrants
The shares of Common Stock offered hereby include up to 200,000 shares of
Common Stock issuable upon the exercise of the Warrants issued in April 1997 in
connection with the sale of the Debentures. The Warrants are exercisable at a
price of $2.4375 with respect to 100,000 shares of Common Stock and at a price
of $3.25 per share with respect 100,000 shares of Common Stock. The Warrants
expire on April 3, 2002. The exercise price of Warrants and the number of shares
of Common Stock issuable upon exercise are subject to adjustments to protect
against dilution in the event of stock dividends, stock splits combinations,
subdivisions or reclassifications.
LEGAL MATTERS
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<PAGE>
Certain legal matters with respect to the issuance of the securities
offered hereby will be passed upon for the Company by Lane & Mittendorf LLP, 320
Park Avenue, New York, New York 10022. Martin C. Licht, Esq. a member of Lane &
Mittendorf LLP, counsel to the Company, owns 50,000 shares of Common Stock and
options to purchase 209,000 shares of Common Stock and is a member of the Board
of Directors of the Company.
EXPERTS
The financial statements of the Company incorporated herein by reference
to the Company's Annual Report on Form 10-KSB have been audited by Feldman Radin
& Co., P.C., independent auditors. The financial statements referred to above
are included in reliance upon such reports given upon the authority of such firm
as experts in accounting and auditing.
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<PAGE>
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- --------------------------------------------------------------------------------
No dealer, salesperson or any other person is authorized to give any information
or to make any representations in connection with this Prospectus and, if given
or made, such information or representations must not be relied upon as having
been authorized by the Company or the Underwriter. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any security
other than the securities offered by this Prospectus, or an offer to sell or a
solicitation of an offer to buy any securities by anyone in any jurisdiction in
which such offer or solicitation is not authorized or is unlawful. The delivery
of this Prospectus shall not, under any circumstances, create any implication
that the information herein is correct as of any time subsequent to the date of
the Prospectus. ---------------------
TABLE OF CONTENTS
Page
Available Information ............................................
Incorporation of Certain Documents by Reference ..................
The Company ......................................................
Risk Factors .....................................................
Use of Proceeds ..................................................
Selling Stockholders .............................................
Plan of Distribution .............................................
Description of Securities ........................................
Legal Matters ....................................................
Experts ..........................................................
Until , 1997 (25 days after the date of this Prospectus), all dealers
effecting transactions in the securities, whether or not participating in the
distribution, may be required to deliver a Prospectus. This is in addition to
the obligation of dealers to deliver a Prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.
================================================================================
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses which will be paid by the
Company in connection with the shares of Common Stock being registered. With the
exception of the registration fee, all amounts shown are estimates.
Registration fee..............................................$ 477
Printing expenses.............................................$ 2,500
Legal fees and expenses (other than Blue Sky).................$ 18,000
Accounting fees and expenses..................................$ 2,500
Miscellaneous expenses........................................$ 2,000
Total ................................................$ 25,477
Item 15. Indemnification of Officers and Directors.
Section 607.0850 of the Florida Business Corporation Act (the "FBCA")
permits, in general, a Florida corporation to indemnify any person who was or is
a party to an action or proceeding by reason of the fact that he or she was a
director or officer of the corporation, or served another entity in any capacity
at the request of the corporation, against liability incurred in connection with
such proceeding including the estimated expenses of litigating the proceeding to
conclusion and the expenses, actually and reasonably incurred in connection with
the defense or settlement of such proceeding, including any appeal thereof, if
such person acted in good faith, for a purpose he or she reasonably believed to
be in, or not opposed to, the best interests of the corporation and, in criminal
actions or proceedings, in addition had no reasonable cause to believe that his
or her conduct was unlawful. Section 607.0850(6) of the FBCA permits the
corporation to pay in advance of a final disposition of such action or
proceeding the expenses incurred in defending such action or proceeding upon
receipt of an undertaking by or on behalf of the director or officer to repay
such amount as, and to the extent, required by statute. Section 607.0850 of the
FBCA provides that the indemnification and advancement of expense provisions
contained in the FBCA shall not be deemed exclusive of any rights to which a
director or officer seeking indemnification or advancement of expenses may be
entitled.
The Company's Certificate of Incorporation provides, in general, that
the Company shall indemnify, to the fullest extent permitted by Section 607.0850
of the FBCA, any and all persons whom it shall have power to indemnify under
said section from and against any and all of the expenses, liabilities or other
matters referred to in, or covered by, said section. The Certificate of
Incorporation also provides that the indemnification provided for therein shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled under any By-Law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to actions taken in his or her official capacity
and as to acts in another capacity while holding such office.
In accordance with that provision of the Certificate of Incorporation,
the Company shall indemnify any officer or director (including officers and
directors serving another corporation, partnership, joint venture, trust, or
other enterprise in any capacity at the Company's request) made, or threatened
to be
II-1
<PAGE>
made, a party to an action or proceeding (whether civil, criminal,
administrative or investigative) by reason of the fact that he or she was
serving in any of those capacities against judgments, fines, amounts paid in
settlement and reasonable expenses (including attorney's fees) incurred as a
result of such action or proceeding. Indemnification would not be available if a
judgment or other final adjudication adverse to such director or officer
establishes that (i) his or her acts were committed in bad faith or were the
result of active and deliberate dishonesty or (ii) he or she personally gained
in fact a financial profit or other advantage to which he or she was not legally
entitled.
The Registration Rights Agreement contains, among other things,
provisions whereby the Selling Stockholders agree to indemnify the Company, each
officer and director of the Company who has signed the Registration Statement,
and each person who controls the Company within the meaning of Section 15 of the
Securities Act, against any losses, liabilities, claims or damages arising out
of alleged untrue statements or alleged omissions of material facts with respect
to information furnished to the Company by the Selling Stockholders for use in
the Registration Statement or Prospectus. See Item 17, "UNDERTAKINGS."
Item 16. Exhibit Index.
Number Description of Exhibit
2.1 Agreement and Plan of Reorganization dated as of March 19, 1997 among
the Company, GHA Holdings, Inc. and Global Health Alternatives, Inc.+
4.1 Specimen Certificate of the Company's Common Stock.*
4.2 Form of Class A Warrant.*
4.3 Form of Class B Warrant.*
4.4 Form of Warrant Agreement between the Company and Continental Stock
Transfer & Trust Company.*
4.5 Form of Underwriter's Warrants.*
4.6 1994 Stock Option Plan.*
4.7 Form of Debenture.+
5.1 Opinion of Counsel of Lane & Mittendorf LLP
23.1 Consent of Feldman Radin & Co., P.C.
23.2 Consent of Lane & Mittendorf LLP (included in Exhibit 5.1)
* Previously filed with Registration Statement No. 33-91184 (and incorporated
herein by reference).
** Previously filed with the Company's Form 10-KSB for the year ended December
31, 1996 (and incorporated herein by reference).
+ Previously field with the Company's Form 10-QSB for the three months ended
March 31, 1997 (and incorporated herein by reference).
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<PAGE>
Item 17. Undertakings.
1. The undersigned, Company, hereby undertakes:
(a) To file, during any period in which the Company offers or
sells securities, a post-effective amendment(s) to this
registration statement:
(1) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(2) To reflect in the prospectus any facts or events
which, individually or together, represent a
fundamental change in the information in the
registration statement; and
(3) To include any additional or changed material
information with respect to the plan of
distribution not previously disclosed in the
registration statement or any material change to
such information in the registration statement;
Provided, however, that paragraphs (1)(a)(1) and 1(a)(2) do not apply if
the information required or to be included in a post effective amendment by
these paragraphs is contained in periodic reports filed by the Company pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") that are incorporated by reference in this Registration
Statement.
(b) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering; and
(c) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and
the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
2. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission (the "Commission") such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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<PAGE>
3. That, for purposes of determining any liability under the Act, each
filing of the Company's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act (and where applicaable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new regisstration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-4
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has authorized this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the County of Broward, State of Florida, on June 10, 1997.
NATURAL HEALTH TRENDS CORP.
By:/s/ Neal R. Heller
Neal R. Heller, President
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints NEAL R. HELLER and/or ELIZABETH S. HELLER his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or either of them or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/Neal R. Heller President, Chief Executive June 10, 1997
Neal R. Heller Officer and Director
(Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer)
/s/Elizabeth S. Heller Secretary, Treasurer June 10, 1997
Elizabeth S. Heller and Director
/s/ Martin C. Licht Director June 10, 1997
Martin C. Licht
/s/ Arthur Keiser Director June 10, 1997
Arthur Keiser
Exhibit 5.1
LANE & MITTENDORF LLP
320 Park Avenue
New York, New York 10022
(212) 508-3200
Facsimile: (212) 508-3230
June 11, 1997
Natural Health Trends Corp.
2001 West Sample Road
Pompano Beach, FL 33064
Attn: Neal R. Heller
Re: Registration Statement on Form S-3
Gentlemen:
We refer to the offering (the "Offering") of the shares of common
stock, $.001 par value (the "Common Stock"), of Natural Health Trends Corp., a
Florida corporation (the "Company") issuable upon the conversion of $1,000,000
of the Company's convertible debentures (the "Debentures"), being registered for
resale on behalf of the Selling Stockholders as described in the Registration
Statement on Form S-3 to be filed with the Securities and Exchange Commission as
subsequently amended from time to time (collectively, the "Registration
Statement").
In furnishing our opinion, we have examined copies of the
Registration Statement and the Exhibits thereto. We have conferred with officers
of the Company and have examined the originals or certified, conformed or
photostatic copies of such records of the Company, certificates of officers of
the Company, certificates of public officials, and such other documents as we
have deemed relevant and necessary under the circumstances as the basis of the
opinion expressed herein. In all such examinations, we have assumed the
authenticity of all documents submitted to us as originals or duplicate
originals, the conformity to original documents of all document copies, the
authenticity of the respective originals of such latter documents, and the
correctness and completeness of such certificates. Finally, we have obtained
from officers of the Company such assurances as we have considered necessary for
the purposes of this opinion.
Based upon and subject to the foregoing and such other matters of
fact and questions of law as we have deemed relevant in the circumstances, and
in reliance thereon, it is our opinion that the shares of Common Stock, to be
sold for the account of the Selling Stockholders, issuable upon conversion of
the Debentures in accordance with their terms will, upon execution and delivery
of proper certificates therefor, be duly authorized, validly issued and
outstanding, fully paid and nonassessable.
<PAGE>
We hereby consent to the use of our name in the Registration
Statement and to the inclusion of this opinion in the Exhibits to the
Registration Statement.
It should be noted that Martin C. Licht, a partner of this firm,
serves in a business capacity on the Board of Directors of the Company. No
knowledge that he may have as a result of his business association with the
Company is to be imputed to this firm.
We are admitted to the practice of law only in the State of New
York. The opinions set forth herein are based upon the laws of the State of New
York, the corporate law of the State of Florida and the Federal laws of the
United States.
This opinion is limited to the matters set forth herein, and may
not be relied upon in any matter by any other person or used for any other
purpose other than in connection with the corporate authority for the issuance
of the shares of Common Stock pursuant to and as contemplated by the
Registration Statement.
Very truly yours,
LANE & MITTENDORF LLP
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Registration Statement on Form S-3 of our
report dated March 7, 1997, relating to the consolidated financial statements of
Natural Health Trends Corp. and the reference to our firm under the caption
"Experts" in this Registration Statement.
FELDMAN RADIN & CO., P.C.
Certified Public Accountants
New York, New York
June 11, 1997
