As filed with the Securities and Exchange Commission on February 3, 1998
Registration No. 333-35935
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
POST-EFFECTIVE AMENDMENT NO. 1 TO
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 (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation or
organization)
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)
___________________
Copies to:
MARTIN C. LICHT, ESQ.
McLAUGHLIN & STERN, LLP
260 Madison Avenue
New York, New York 10016
(212) 508-3200
Approximate Date of Commencement of Proposed Sale to the Public:
From time to time after this Registration Statement becomes effective.
______________
<PAGE>
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
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, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box.|X|
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: |_|
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Title of Each Class of Amount to be Offering Price Per Aggregate Offering Amount of Registration
Securities to be Registered Registered Security Price Fee
- ----------------------------------------------------------- -----------------------------------------------------------------------
Common Stock, par value (1)
$.001 per share 117,306,073 $0.046875 $5,498,722 $864.56
Total Registration Fee(2).............. $864.56(3)
- ----------------------------------------------------------- -----------------------------------------------------------------------
</TABLE>
(1) Includes the registration for resale of such presently indeterminate
number of shares of Common Stock issuable upon (i) conversion of, or as
dividends on, 2,200 shares of the Company's Series A Convertible Preferred Stock
(the "Series A Preferred Stock") with a face amount of $2,200,000 issued in a
private placement in June 1997 and (ii) the payment of a 2.5% per-month penalty
payable in shares of Common Stock at the option of the holder of Series A
Preferred Stock pursuant to a Registration Rights Agreement, between the Company
and such holder. Estimated solely for purposes of calculating the registration
fee in connection with this Registration Statement and assumes that all of the
Shares and the accrued dividends thereon, are converted into shares of Common
Stock based on a price of .03125 per share of Common Stock (the average closing
bid price of the Common Stock for the five trading days ending on January 5,
1998) and using a discount rate of 25% and assuming the issuance of the
additional shares of Common Stock pursuant to the penalty. Pursuant to Rule 416,
there are also being registered such additional shares of Common Stock as may
become issuable to prevent dilution resulting from stock splits, or stock
dividends.
(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 (which date is within five business days prior to
the date of the initial filing of this Registration Statement).
(3) The amount of $864.56 was paid upon the initial filing of this
registration statement and was based upon the calculation of the registration
fee on the initial filing of the 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.
<PAGE>
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.
Dated: < R (Subject to completion) February 3 R >, 1998
NATURAL HEALTH TRENDS CORP.
<R 119,849,964 R> 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, all of which will be acquired upon the conversion of the
Company's Series A Preferred Stock, 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 January <R
30 R>, 1998, the closing bid price per share, as reported by NASDAQ was $.03125.
During the past twelve months the closing bid price of the Common Stock has been
as high as $2.50 per share and as low as $.031 per share. The Company believes
that the large decline in the price of the Common Stock is primarily due to the
fact that the Company's primary market maker ceased operations in the second
half of 1997 coupled with the sale of the shares of Common Stock issuable upon
the conversion of the Debentures. If the price of the Common Stock is less than
$1.00 in February 1998, when
<PAGE>
NASDAQ's new listing criteria goes into effect the Common Stock would be
delisted from NASDAQ. In the event that the Common Stock is delisted from
NASDAQ, an investor may find it more difficult to dispose of, or to obtain
accurate quotations as to the market value of, the Common Stock. See "RISK
FACTORS -Possible Delisting of Common Stock on NASDAQ; Possible Adverse Effect
on Trading Market."
*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, or as
dividends on, 2,200 shares of the Series A Preferred Stock having a face amount
of $2,200,000 issued in a private placement in June 1997 and (ii) the payment of
a 2.5%-per-month penalty payable in shares of Common Stock at the option of the
holder of Series A Preferred Stock pursuant to a Registration Rights Agreement,
between the Company and such holder. The number of shares of Common Stock
indicated to be issuable in connection with 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, all 2,200 shares of Series A Preferred Stock and the
dividends thereon and the applicable penalty were converted, the Company would
be obligated to issue a total of approximately <R 119,849,964 R> 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 the shares of Series A Preferred Stock will be
converted. See "RISK FACTORS - Effect of Conversion of the Debentures and Series
A Preferred Stock."
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 <R February __ R>, 1998.
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<PAGE>
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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<PAGE>
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 Company's current report on Form 8-K filed August 7, 1997, as
amended on October 6, 1997, December 24, 1997 and January 8, 1998.
7. The Company's Quarterly Report on Form 10-QSB for the period ended
June 30, 1997, as amended on December 24, 1997 and January 8, 1998.
8. The Company's Quarterly Report on Form 10-QSB for the period ended
September 30, 1997, as amended on December 24, 1997 and January 8,
1998.
9. 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 who receives
this Prospectus, 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:
Natural Health Trends Corp. 2001 West Sample Road, Pompano Beach, Florida 33064.
Telephone Number (954) 969-9771.
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<PAGE>
The Company
The Company develops and operates businesses to promote human wellness. The
Company owns and operates three vocational schools as a junior college in
Orlando, Pompano Beach and Miami, Florida (individually, the "Orlando 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 a
natural health care center in Pompano Beach, Florida (the "Natural Health Care
Center"), which provides multi-disciplinary complementary health care in the
areas of alternative and nutritional medicine. The Company <R has entered into
an agreement R> to sell the Natural Health Care Center. <R The closing is
anticipated to occur prior to February 15, 1998.R>
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 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, 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 July 23, 1997, the Company, Global Health Alternatives, Inc. ("Global")
and the stockholders of Global (the "Global Stockholders") entered into an
Amended and Restated Agreement and Plan of Reorganization (the "Reorganization
Agreement"). Pursuant to the Reorganization Agreement, the Company acquired all
of the outstanding stock of Global from the Global Stockholders in exchange for
5,800,000 shares of the Company's Common Stock. Additional shares of the
Company's Common Stock are issuable to the Global Stockholders based upon the
earnings of Global following the acquisition (the "Global Acquisition"). Global
is a company which acquires, develops and markets health care products. In
connection with the Global Acquisition, Hiram Knott and Sir Brian Wolfson joined
the Company's Board of Directors and Sir Brian Wolfson was named Chairman of the
Board of the Company. Sir Brian Wolfson is also the Chairman of the Board and
President of Global. In addition, Robert C. Bruce, the Senior Vice President,
Chief Financial Officer and Treasurer of Global was named Chief Financial
Officer of the Company. <R In January 1998, Mr. Knott resigned as a director of
the Company and Mr. Bruce resigned as the chief financial officer of the
Company. Neither of such individuals had any disagreements with the Company.R>
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.
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<PAGE>
The Company's principal offices are located at 2001 West Sample Road, Pompano
Beach, Florida 33064 and its telephone number is (954) 969-9771.
Recent Developments
In October 1997, the Company closed the Company's Natural Health Care
Center in Boca Raton, Florida, which had not been profitable. The Company has
also decided not to open additional Natural Health Care Centers and intends to
sell its remaining Natural Health Care Center by <R February 15 R> 1998.
On August 4, 1997 Samantha Haimes brought an action in the Fifteenth
Judicial Circuit of Palm Beach County, Florida, against the Company and Health
Wellness Nationwide Corp., the Company's wholly-owned subsidiary. The Company
has asserted counterclaims against Samantha Haimes and Leonard Haimes. The
complaint arises out of the defendant's alleged breach of contract in connection
with the Company's Natural Health Care Center which was located in Boca Raton,
Florida. The Company is vigorously defending the action. The plaintiff is
seeking damages in the amount of approximately $535,000.
On September 10, 1997 Rejuvenation Unlimited, Inc. and Sam Lilly, Inc.
brought an action in the Fifteenth Judicial Circuit of Palm Beach County,
Florida, arising out of the Company's alleged breach of contract in connection
with the acquisition of the Company's Natural Health Care Center which was
located in Boca Raton, Florida from the plaintiff. The plaintiff is seeking
damages in excess of $15,000.
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 nine months ended September 30, 1997 and 1996, the Company had
an unaudited net loss of $5,667,116 (on revenues of $4,752,995) and $554,285 (on
revenues of $3,582,317), 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). In addition, as of September 30, 1997 the Company had a working
capital
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<PAGE>
deficit of $2,599,640. 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.
Discontinuance of Operation of Natural Health Care Centers
During the third quarter of 1997, the Company reached a decision to
discontinue the business of the Natural Health Care Centers. Revenues from the
Natural Health Care Centers were $1,516,967 (24% of total revenue) for the nine
months ended September 30, 1997 and $1,881,663 (30% of total revenue) for the
nine months ended September 30, 1996. The Company has accrued an estimated loss
on the disposal of the Natural Health Care Centers of approximately $613,000
representing primarily accrued employment contract terminations.
Dependence Upon Proposed Expansion Program
The Company's expansion plans are based upon the Company's acquisition
of additional alternative health care product companies, and increasing student
enrollment at the Schools.
The Company through its acquisition of additional alternative health
care product companies, of which there can be no assurance, and the recent
acquisition of Global, 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 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.
<R Lack of Sufficient Number of Authorized Shares of Common Stock; Change
of Control of the Company R> - 7 -
<R The shares of Series A Preferred Stock are convertible into 119,849,964
shares of Common Stock as of January 30, 1998. As of January 30, 1998, the
Company had 30,325,435 shares of Common Stock outstanding and an additional
8,054,992 shares of Common Stock issuable upon the conversion of the Debentures.
The Company's Amended and Restated Articles of Incorporation provide for
40,000,000 authorized shares of Common Stock. Accordingly, the Company does not
have a sufficient number of shares of Common Stock authorized for the conversion
of the Series A Preferred Stock. The Company is obligated to have a sufficient
number of shares of Common Stock available for issuance upon the conversion of
the Series A Preferred Stock. In the event that the Company does not have a
sufficient number of shares of Common Stock available for issuance, then the
Company is obligated to pay the holder a penalty based on the unconverted face
amount of the Series A Preferred Stock at a rate of 24% per annum payable in
cash or shares of Common Stock, at the option of the holder. R>
<R In addition, upon the issuance of the shares of Common Stock conversion
of the Series A Preferred Stock, there may be a change in control of the
Company.R>
<PAGE>
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 and in attracting students for the Schools and clients for the
alternative health care practice.
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 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 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 Center. 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 for its operations and 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 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
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<PAGE>
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 Center competes 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 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
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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
require, among other things, the reformulation of certain products to meet new
standards, the recall or discontinuance of certain products not capable of
reformation, additional record keeping, expanded documentation of the properties
of certain products, or expanded or different labeling or scientific
substantiation. Any or all of such requirements could adversely affect the
Company's operations and its financial condition.
Regulation of Natural Health Care Center
The specialists whose services are offered at the Natural Health Care
Center, such as acupuncturists, chiropractors, physicians, nutritionists, skin
care professionals and aestheticians, 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.
Moreover, the Natural Health Care Center may be subject to scrutiny by
state or federal health care enforcement officials. Although the Company
believes its Natural Health Care Center does 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
Center 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 Center which is operated on a daily basis by alternative
health care practitioners. The profitability of the Natural Health Care Center
will be dependent on the abilities of the alternative health care practitioners
to operate the clinics effectively. However, the Company intends to sell the
remaining Natural Health Care Center by January 1998.
Health Care Reform
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
Center. 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
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<PAGE>
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 Center is 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. 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 the Company could be subject to civil and criminal penalties. 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 Center 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 Center 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
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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. The Company has not entered into any articulation
agreement with other educational 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
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 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 fourth 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 61% of their revenues for 1996
from Title IV Federal financial aid programs. The official determination of the
Company's compliance for the year ended December 31, 1996 with the 85-15 Rule
will likely be made in the second quarter of 1998. 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
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<PAGE>
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's Schools depended on government funding under 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 that, although there can be no assurance, as a result of the issuance
of Common Stock in connection with the acquisition of Global, there has not been
or will not be a change of control that will 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
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additional shares of Common Stock, including the shares of Common Stock issuable
upon the conversion of the Debentures and the Series A Preferred 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.
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 regulations in Florida are modified, 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 Orlando expire on September 30, 1998, March 31, 1998 and November 30,
1998, respectively, and are subject to renewal at such times. The license for
the Miami School and the Orlando 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 Center 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
Center. 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
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<PAGE>
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
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, 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 alternative
health care products depends primarily upon Sir Brian Wolfson of Global. The
success of the Company's Natural Health Care Center depends upon Kaye Lenzi, its
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.
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,
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<PAGE>
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 23.6% of the Company's Common Stock, excluding the
shares of Common Stock which are issuable upon the exercise of outstanding
options, warrants and conversion rights held by person other than officers and
directors, and are in a position to influence the 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 <R 30,325,435 R> shares of Common Stock outstanding, as of January
<R 30 R>, 1998, 11,956,802 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 addition, an aggregate of <R 127,904,956 R> shares of Common Stock are
issuable upon the conversion of the Debentures and the Series A Preferred Stock
as of January <R 30 R>, 1998. On the date of this Prospectus all of such shares
will be registered for resale under 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, 3,666,666 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 Stock Option Plans and an additional 6,943,344 shares of Common Stock
are issuable upon the exercise of outstanding options, warrants and conversion
rights, excluding the Debentures and the Series A Preferred Stock. 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
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<PAGE>
options, warrants, or conversion rights 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, warrants or conversion rights.
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 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 on 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, $1 million in total capital and surplus and a minimum
of 300 shareholders. In addition, continued quotation requires two marketmakers
and a minimum bid price of $1.00 per share; provided, however, under an
alternative test 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 bid price of the Company's Common Stock is presently less than
$1.00, however the Company presently has capital and surplus in excess of $2
million<R, but the Company may not be deemed to meet the public float test R>.
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 August 1997, NASDAQ approved changes to its quantitative and
qualitative standards for issuers listing on NASDAQ, the changes will apply to
the Company commencing in February 1998. For continued listing, pursuant to the
recent changes the Company, generally, must have (i) net tangible assets of at
least $2,000,000, a market capitalization of at least $35,000,000 or net income
in two of the last three years of at least $500,000, (ii) a minimum of 500,000
shares
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<PAGE>
publicly held, (iii) a minimum of $1,000,000 market value of public float, (iv)
a minimum bid price of $1.00 per share and (v) a minimum of 300 shareholders.
The Company presently has a minimum bid price of less than $1.00 per share
. The Company intends to effect a reverse stock split in order to increase the
minimum bid price . However, there can be no assurance that the Company will
effect a reverse stock split or that the reverse stock split will have the
desired effect. In addition, NASDAQ may claim that the Company's net tangible
assets are less than $2,000,000. However, the Company believes that that it has
net tangible assets of at least $2,000,000 for NASDAQ purposes. As a result of
the new rule changes, in the event that the minimum bid price of the Common
Stock is less than $1.00, the Common Stock would be subject to delisting in
February 1998, since the alternative test will no longer be applicable.
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, 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.
Dilution
The proforma net tangible book value attributable to the common stock as of
September 30, 1997, was ($4,559,290) or $(.1<R 2 R>) per share. Upon the
conversion of the Debentures and the shares of Series A Preferred Stock on
January <R 30 R>, 1998, the proforma net tangible book value as of September 30,
1997, as adjusted for the conversion of the Debentures, the Series A Preferred
Stock and the acquisition of Global would be ($1,749,625) or $(.01) per share.
Since the Company had a negative net tangible book value prior to the conversion
of the Debentures and the Series A Preferred Stock, such conversion is not
dilutive to existing shareholders. However, in the event that the Company has a
positive net tangible book value prior to the conversion of the Debentures and
the Series A Preferred Stock, such conversion would have a dilutive effect.
Moreover, the conversion of other outstanding options, warrants and conversion
rights may have a dilutive effective to existing stockholders.
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<PAGE>
Anti-Takeover Effect of Issuance of Preferred Stock
The Company's Articles of Incorporation authorize 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 Center, 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 of 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 and Series A Preferred Stock
The exact number of shares of Common Stock issuable upon conversion of
the Series A Preferred Stock offered hereby and the Company's outstanding
convertible debentures in the original principal amount of $1,000,000 (the
"Debentures") 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 and the shares of Series A Preferred Stock depending on the future
market price of the Common Stock. The Debentures and the shares of Series A
Preferred Stock are convertible into Common Stock based upon the average of the
closing bid price on NASDAQ for the five days preceding notice of conversion at
a discount. On January <R 30 R>,
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<PAGE>
1998, the five day average of the closing bid price of the Common Stock on
NASDAQ was $.03125 per share. If such price were used to determine the number of
shares of Common Stock issuable upon conversion of the Series A Preferred Stock
and the Debentures then outstanding including interest and dividends thereon,
the Company would issue a total of approximately <R 127,904,956 R> shares of
Common Stock, if all of the shares of Series A Preferred Stock and Debentures
were converted on such date. To the extent the average closing bid price is
lower or higher than $.03125 on any date on which shares of Debentures and
Series A Preferred Stock are converted, the Company would issue more or fewer
shares of Common Stock than reflected in such estimate, and such difference
could be material "DESCRIPTION OF SECURITIES - Debentures."
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 January 5,
1998, the number of 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. The Selling Stockholders
do not presently own any of such shares of Common Stock, but will acquire the
Shares upon the conversion of the Series A Preferred Stock. 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, or as dividends on, 2,200
shares of the Series A Preferred Stock with a face amount of $2,200,000 issued
in a private placement in June 1997 and (ii) the payment of a 2.5%-per-month
penalty payable in shares of Common Stock at the option of the holder of Series
A Preferred Stock pursuant to a Registration Rights Agreement between the
Company and such holder. If, however, all 2,200 shares of Series A Preferred
Stock and the dividends thereon were converted, the Company would be obligated
to issue a total of approximately <R 119,849,964 R> shares of Common Stock. Once
the Commission has declared effective the Registration Statement of which this
Prospectus forms a part, the Series A Preferred Stock is convertible into Common
Stock at a conversion price equal to 75% of the
- 20 -
<PAGE>
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 Series A Preferred Stock, no holder can convert any
portion of such holder's Series A Preferred Stock if such conversion would
increase such holder's beneficial ownership of the Common Stock (other than
shares so owned through ownership of the Series A Preferred Stock) 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 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 security holders, except for the assumed conversion price of
shares of Series A Preferred Stock into 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."
- 21 -
<PAGE>
<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>
Sovereign Partners <R 51,753,409 R> (1) <R 51,753,409 R> (2) 0
---------- ----------
Limited Partnership
Dominion Capital <R 27,238,638 R> (1) <R 27,238,638 R>(2) 0
---------- ----------
Fund Ltd.
Canadian Advantage <R 27,238,638 R> (1) <R 27,238,638 R> (2) 0
---------- ----------
Limited Partnership
FT Trading <R 13,619,279 R> (1) <R 13,619,279 R> (2) 0
---------- ----------
---------- ---------- ---
Total <R 119,849,964 R> <R 119,849,964 R> 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 the shares of Series A Preferred Stock beneficially owned by such
person, assuming an average closing bid price of .03125 for the five trading
days preceding January <R 30 R>, 1998, the price which would be utilized if the
Series A Preferred Stock was converted on January <R 30 R>, 1998. 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 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 shares of Series A Preferred Stock described in
this footnote (1). See "RISK FACTORS --Effect of Conversion the Debentures and
Series A Preferred Stock" and "DESCRIPTION OF SECURITIES."
(2) Represents the estimate of the number of shares of Common Stock issuable
upon conversion of shares of Series A Preferred Stock beneficially owned by such
person as described in Footnote (1) above.
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.
- 22 -
<PAGE>
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 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 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
Stockholders 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, 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.
- 23 -
<PAGE>
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 January <R 30 R>, 1998, the Company had
<R 30,325,435 R> shares of Common Stock issued and outstanding, which are held
by approximately 1,000 shareholders, and an additional 10,610,010 shares of
Common Stock issuable upon exercise of outstanding options, warrants and
conversion rights, including shares of Common Stock issuable under the Company's
Stock Option Plans, but excluding the shares of Common Stock issuable upon the
conversion of the Debentures and 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.
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
- 24 -
<PAGE>
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 four 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
Once the Commission has declared effective the Registration
Statement, of which this Prospectus forms a part, each share of Series A
Preferred Stock will be convertible into shares of Common Stock at a conversion
price equal to 75% (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. The
holder of each share of Series A Preferred Stock is entitled to a payment of
2.5% per month commencing August 4, 1997, until such Registration Statement
becomes effective, payable in cash or shares of Common Stock at the option of
the holder. 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 $1,300 per share.
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.
- 25 -
<PAGE>
Dividends
Eight percent of the face amount of $1,000 per share of Series
A Preferred Stock is 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, 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 $1,000 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
Shares of Series A Preferred Stock have no voting rights.
Debentures
In April 1997, the Company issued debentures in the original principal
amount of $1,000,000 (the "Debentures"), which bear interest at the rate of 6%
per annum and will mature on March 31, 2000. As of January <R 30 R>, 1998, $<R
79,707 R> of Debentures were outstanding <R and the Company had received a
notice of conversion to convert such amount into 8,054,992 shares of Common
Stock R>. 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. 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%.
- 26 -
<PAGE>
LEGAL MATTERS
Certain legal matters with respect to the issuance of the securities
offered hereby <R have been R> passed upon for the Company by Lane & Mittendorf
LLP, 320 Park Avenue, New York, New York 10022. Martin C. Licht, Esq. <R was R>
a member of Lane & Mittendorf LLP, <R which was R> counsel to the Company, <R
and Mr. Licht is now a member of McLaughlin & Stern, LLP and R> owns 50,000
shares of Common Stock and options to purchase 9,000 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.
- 27 -
<PAGE>
=====================================================
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. 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
The Company 5
Recent Developments 6
Risk Factors 6
Use of Proceeds 20
Selling Stockholders 20
Plan of Distribution 23
Description of Securities 24
Legal Matters 27
Experts 27
Until February 6, 1998 (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.
<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...........................................$ 865
Printing expenses..........................................$ 2,500
Legal fees and expenses (other than Blue Sky)..............$ 18,000
Accounting fees and expenses...............................$ 2,000
Miscellaneous expenses.....................................$ 2,000
Total .........................................$ 25,365
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 made, a party to an action or proceeding (whether civil, criminal,
administrative or investigative) by
<PAGE>
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 Amended and Restated Agreement and Plan of Reorganization dated July
23, 1997 by and among the Company, Global and the Global Stockholders. +
3.1 Amended and Restated Certificate of Incorporation of the Company.*
3.2 Amended and Restated By-Laws of the Company.*
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**
4.8 Registration Rights Agreement dated July 23, 1997 by and among the
Company, Global and the Global Stockholders. +
4.9 Agreement as to Transfers dated July 23, 1997 by and between Capital
Development, S.A. and the Company. +
4.10 Articles of Amendment of Articles of Incorporation of the Company.***
4.11 Form of Debenture**
5.1 Opinion of Counsel of Lane & Mittendorf LLP +++
10.1 Form of Employment Agreement between the Company and Neal R. Heller.*
10.2 Form of Employment Agreement between the Company and Elizabeth S.
Heller.*
10.3 Lease, dated April 29, 1993, between Florida Institute of Massage
Therapy, Inc., as tenant, and MICC Venture, as landlord, as amended.*
10.4 Agreement among Natural Health Trends Corp. Health Wellness Nationwide
Corp., Samantha Haimes and Leonard Haimes. + +
10.5 Employment Agreement between Health Wellness Nationwide Corp. and Kaye
Lenzi.+ +
10.6 Employment Agreement dated July 23, 1997 between the Company and
Robert Bruce.**
23.1 Consents 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.
<PAGE>
** Previously filed with the Company's Form 10-QSB for the quarter ended
March 31, 1997.
*** Previously filed with the Company's Form 10-QSB dated June 30, 1997.
+ Previously filed with the Company's Form 8-K dated August 7, 1997.
+ + Previously filed with the Company's Form 10-KSB for the year ended
December 31, 1996.
+++ Previously filed with this Registration Statement.
++++ Filed herewith.
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
<PAGE>
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.
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 applicable, 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 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.
<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 Post-Effective Amendment No. 1 to 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 February 2, 1998.
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/ Sir Brian Wolfson Chairman and Director February 2, 1998
Sir Brian Wolfson
/s/ Neal R. Heller President, Chief Executive February 2, 1998
Neal R. Heller Officer and Director
/s/ Elizabeth S. Heller Secretary and Director February 2, 1998
Elizabeth S. Heller
/s/ Martin C. Licht Director February 2, 1998
Martin C. Licht
/s/ Arthur Keiser Director February 2, 1998
Arthur Keiser
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Registration Statement on Form S-3,
Post-Effective Amendment No. 1 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
February 3, 1998
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Registration Statement on Form S-3,
Post-Effective Amendment No. 1 of our report dated September 24, 1997, relating
to the consolidated financial statements of Global Health Alternatives, Inc. 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
February 3, 1998
<PAGE>
