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FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10QSB/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-25238
NATURAL HEALTH TRENDS CORP.
(Exact Name of Small Business Issuer as Specified in its Charter)
Florida 59-2705336
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
2161 Hutton Drive, #126
Carrollton, Texas 75006
(Address of Principal Executive Office) (Zip Code)
(972) 241-8479
(Issuer's telephone number including area code)
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
The number of shares of issuer's Common Stock, $.001 par value, outstanding as
of June 30, 2000 were 10,383,016 shares.
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NATURAL HEALTH TRENDS CORP.
QUARTERLY PERIOD ENDED JUNE 30, 2000
INDEX
Page
Number
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheet 1
Condensed Consolidated Statements of Operations 2
Condensed Consolidated Statements of Cash Flows 3
Notes to Condensed Consolidated Financial Statements 4-5
Item 2. Management's Discussion and Analysis of Plan
of Operations 6-9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Signature 11
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NATURAL HEALTH TRENDS CORP.
CONSOLIDATED BALANCE SHEET
June 30, December 31,
2000 1999
ASSETS (Unaudited)
Current Assets
Cash $ 418,657 $ 434,063
Restricted cash 66,324 152,505
Account receivables 615,222 407,490
Inventory 801,300 847,212
Prepaid expenses and other current assets 19,923 120,481
------------ ----------
Total Current Assets 1,921,426 1,961,751
Property and Equipment, net 453,847 567,065
Long Term Prepaids 164,464 54,228
Patents and Customer Lists 7,970,440 7,912,594
Goodwill 688,355 682,654
Deposits and Other Assets 118,351 75,607
------------ ----------
Total Assets $11,316,882 $ 11,253,899
============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Checks written in excess of deposits $ 528,631 $ 556,884
Accounts payable 4,827,078 4,511,772
Accrued expenses 977,107 404,458
Accrued bonus payable 213,467 472,503
Accrued payroll payable 736,211 668,390
Notes payable 455,735 854,684
Notes payable related parties 179,168 112,363
Current portion of long term debt 75,995 75,995
Deferred Revenue - 527,831
Other current liabilities 193,360 231,926
------------ ----------
Total Current Liabilities 8,186,752 8,416,806
Capital Lease Obligations,
net of current portion 42,607 53,158
------------ ----------
Total Liabilities 8,229,359 8,469,964
------------ ----------
Stockholders' Equity:
Preferred stock 5,804,542 5,163,695
Common stock 10,383 7,990
Additional paid in capital 22,143,071 21,443,914
Cumulative adjustments on foreign exchange 6,084 -
Deferred Compensation (610,036) (666,000)
Accumulated deficit (24,266,521) (23,165,664)
------------ ----------
Total Stockholders' Equity 3,087,523 2,783,935
------------ ----------
Total Liabilities and Stockholders' Equity $11,316,882 $ 11,253,899
============ ==========
See Notes to Consolidated Financial Statements.
1
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Six Months ended
June 30,
--------------------------
2000 1999
---------- ----------
Revenues $4,954,672 $ 7,365,489
Cost of sales 1,146,051 1,497,735
---------- ----------
Gross profit 3,808,621 5,867,754
Distributor commissions 2,119,218 3,531,367
Selling, general and administrative expenses 2,559,640 3,503,362
---------- ----------
Operating loss (870,237) (1,166,975)
Minority interest in loss of subsidiaries 64,536 10,616
Gain (loss) on foreign exchange (16,445) 2,582
Interest (net) (18,200) (38,059)
----------- ----------
Loss from continuing operations (840,345) (1,191,837)
Discontinued operations:
Loss from discontinued operations (4,822) (22,944)
---------- ----------
Loss before extraordinary gain (845,167) (1,214,781)
Extraordinary gain - forgiveness of debt - 1,471
---------- ----------
Net loss (845,167) (1,213,310)
Preferred stock dividends 204 1,043,039
---------- ----------
Net loss to common shareholders $ (845,371) $(2,256,349)
========== ==========
Basic and diluted loss per common share:
Continuing operations $ (0.10) $ (0.19)
Preferred stock dividend - (0.17)
---------- ----------
Net loss to common shareholders $ (0.10) $ (0.36)
========== ==========
Basic and diluted weighted common shares
used 8,754,116 6,220,331
========== ==========
See Notes to Consolidated Financial Statements.
2
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NATURAL HEALTH TRENDS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended
June 30,
------------------------------
2000 1999
------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(845,167) $(1,213,310)
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities:
Depreciation and amortization 261,871 386,775
Loss on disposal of fixed asset 78,565 -
Issuance of common stock in settlement
of notes payable 1,908 -
Issuance of common stock in settlement
of interest 485 -
Changes in assets and liabilities
Increase in accounts receivable (207,732) (472,488)
(Increase) decrease in inventories 258,834 288,476
(Increase) decrease in prepaid expenses (9,678) (35,011)
(Increase) decrease in deposits and other assets (42,744) 99,541
Increase (decrease) in accounts payable and
cash overdraft 287,052 (1,631,560)
Increase (decrease) in accrued expenses 381,434 1,458,038
Increase in accrued Interest - -
Decrease in deferred compensation 55,964 -
Decrease in deferred revenue (527,831) -
Increase (decrease) in other current liabilities (31,410) 257,501
Increase (decrease) in accrued expenses
for discontinued operations - (10,000)
------------- ------------
Total Adjustments 506,718 341,272
------------- ------------
NET USED IN OPERATING ACTIVITIES (338,449) (872,038)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures - (21,701)
Proceeds from the sale of fixed assets 10 -
Business acquisitions, net of cash acquired (208,203) (417,541)
(Increase) decrease in Restricted Cash 86,181 (60,746)
------------- -----------
NET CASH USED IN INVESTING ACTIVITIES (122,012) (499,988)
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in due to affiliate - 250,000
Proceeds from related party - 60,268
Proceeds from preferred stock 1,000,000 1,201,015
Proceeds from notes payable and long-term debt 39,701 130,000
Payments of notes payable and long-term debt (235,493) -
Redemption of preferred stock (359,153) -
------------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 445,055 1,641,283
NET INCREASE (DECREASE)IN CASH (15,406) 269,257
CASH, BEGINNING OF PERIOD 434,063 294,220
------------- ----------
CASH, END OF PERIOD $418,657 $ 563,477
3
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1. BASIS OF PRESENTATION
The accompanying unaudited financial statements of Natural Health
Trends Corp. (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial
information and with instructions to Form 10-QSB and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments considered necessary for a fair presentation (consisting of
normal recurring accruals) of financial position and results of
operations for the interim periods have been presented. The preparation
of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates. Operating results for the six month period ended June 30,
2000 are not necessarily indicative of the results that may be expected
for the year ending December 31, 2000. For further information, refer
to the consolidated financial statements and footnotes thereto included
in the Company's Annual report on Form 10-KSB for the year ended
December 31, 1999.
Reclassifications
Certain prior period amounts have been reclassified to conform to the
current period presentation.
The Company had a working capital deficiency of approximately
$6,260,000 for the six months ended June 30, 2000 and $6,597,000 for
the year ended December 31, 1999, and they recorded net losses of
approximately $845,000 and $575,000 respectively, that raise
substantial doubt about the Company's ability to continue as a going
concern. The Company's continued existence is dependent on its ability
to obtain additional debt or equity financing and to generate profits
from operations.
2. In March 2000, the Company sold 1,000 shares of Series J Preferred
Stock, par value $1,000 per share. The preferred stock pays a dividend
at the rate of 10% per annum. The preferred stock and the accrued
dividends thereon are convertible into shares of the Company's common
stock at a conversion price equal to the lower of the closing bid
price on the date of issuance or 70% of the average closing bid price
of the common stock for the lowest three trading days during the
twenty day period immediately preceding the date on which the Company
received notice of conversion from a holder. In connection with the
offering of the Series J Preferred Stock, the Company issued warrants
to purchase 141,907 shares of it's common stock at an exercise price
of $1.41 per share.
4
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3. During the first quarter of 2000, the Company received notice of
conversion on 359 shares of Series H Preferred Stock. The Company
issued 434,660 shares of common stock in settlement of the 359 shares
of Series H Preferred Stock and the accrued dividends thereon. The
following table sets forth the conversions and the stock price thereof
as of the date of conversion.
Conversion Date Series H Common stock
Preferred Stock conversion price
Face Value
------------------- -- ----------------- --- -----------------
01/25/00 $34,000 $1.01
01/27/00 15,154 1.04
02/15/00 125,000 0.95
02/16/00 185,000 1.02
4. During the second quarter of 2000, the Company received notice of
conversion on $350,000 convertible Notes Payable. The Company
issued 1,958,505 shares of common stock in settlement of $350,000
of Notes Payable and the accrued interest thereon. The following
table sets forth the conversions and the stock price thereof as of
the date of conversion.
Conversion Date Common stock
Note Payable conversion price
Face Value
------------------- -- ----------------- --- -----------------
04/28/00 $75,000 $0.19
04/28/00 66,667 0.19
04/28/00 66,667 0.19
04/28/00 33,333 0.19
04/28/00 33,333 0.19
05/11/00 75,000 0.20
5. On July 24, 2000, the Company was delisted from the the NASDAQ
Small Cap trading board. The common stock is now traded on the
NASDAQ Bulletin Board, due to the Company's non-compliance with
NASDAQ maintenance criteria.
5
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Item 2. Management's Discussion and Analysis or Plan of Operations
The following discussions should be read in conjunction with the
condensed consolidated financial statements and notes contained in Item 1
hereof.
Forward Looking Statements
When used in Form 10-QSB and in future filings by the Company
with the Securities and Exchange Commission, the words "will likely
result", "the Company expects", "will continue", "is anticipated",
"estimated", "projected", "outlook" or similar expressions are intended
to identify "forward- looking statements" within the meaning of the
Private Securities Litigation Act of 1995. The Company wishes to caution
readers not to place undue reliance on such forward-looking statements,
each of which speak only as of the date made. Such statements are subject
to certain risks and uncertainties that could cause actual results to
differ materially from historical earnings and those presently
anticipated or projected. The Company has no obligation to publicly
release the results of any revisions, which may be made to any
forward-looking statements to reflect anticipated or unanticipated events
or circumstances occurring after the date of such statements.
Overview
Prior to August 1997, the Company's operations consisted of the
operations of Natural Health Care Centers, and vocational schools. Upon
the acquisition of Global Health Alternatives, Inc. ("GHA") on July 23,
1997, the Company commenced marketing and distributing a line of natural,
over-the-counter homeopathic pharmaceutical products. In February 1999,
the Company formed a subsidiary, Kaire Nutraceuticals, Inc. ("KNI"), and
acquired substantially all of the assets of Kaire International, Inc. and
commenced marketing and distributing a line of natural, herbal based
dietary supplements and personal care products through an established
network marketing system. The Company discontinued the operations of the
natural health care centers during the third quarter of 1997 and sold the
vocational schools in August 1998. During most of the year ended December
1997, the Company's ongoing lines of business were not in operation, not
having been acquired until July 1997 and February 1999, respectively.
Six Months Ended June 30, 2000 Compared To The Six Months Ended June 30,
1999.
Net Sales. Net sales for six months ended June 30, 2000 were
approximately $4,955,000 as compared to net sales for the six months
ended June 30, 1999 of approximately $7,365,000, a decrease of
approximately $2,411,000 or 48.6%. Sales declines were primarily due to
the licensing of the GHA product lines resulting in approximately
$513,000 decline in sales, the closure of KNI's United Kingdom
subsidiary, a $260,000 decline and declines in Australia of $120,000, New
Zealand of $453,000, and Trinidad and Tobaggo of $69,000. North American
sales declined approximately $996,000 due to the outsourcing of KNI's
fullfillment center at the end of 1999 which negatively impacted it's
product distribution. The Company has subsequently reopened it's
warehouse operations.
Cost of Goods Sold. Cost of goods sold for the six months ended
June 30, 2000 was approximately $1,146,000 or 23.1% of net sales. Cost of
goods sold for the six months ended June 30, 1999 was approximately
$1,498,000 or 20.3% of net sales. The total cost of goods sold decreased
by approximately $352,000 or 30.7%. The Company believes that the
decrease in total dollars and increase as a percentage of net sales was
primarily attributable to KNI and higher fulfillment and shipping costs
and its acquisition of Life Dynamics, whose product line yields a lower
gross profit.
6
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Gross Profit. Gross profit decreased from approximately
$5,868,000 in the six months ended June 30, 1999 to approximately
$3,809,000 in the six months ended June 30, 2000. The decrease was
approximately $2,059,000 or 54.1%. The decrease is attributable to the
decline in sales from both GHA and KNI and higher shipping costs
associated with KNI's outsourced fullfillment.
Commissions. Associate commissions were approximately $2,119,000
or 42.8% of net sales in the six months ended June 30, 2000 compared with
$3,531,000 or 47.9% of net sales in the six months ended June 30, 1999.
The decline of approximately $1,412,000 is a result of lower sales
attributable to KNI's direct marketing system. The decline as a
percentage of net sales is primarily due to the change in KNI's
commission structure in late 1999.
Selling, General and Administrative Expenses. Selling, general
and administrative costs decreased from approximately $3,503,000 or 47.6%
of sales in the six months ended June 30, 1999 to approximately
$2,560,000 or 51.7% of sales in the six months ended June 30, 2000, an
decrease of approximately $944,000 or 36.9%. The decrease in dollars and
corresponding increase as a percentage of sales is primarily attributable
to KNI's operations. KNI reduced staff at the end of April 2000 and
closed it's Colorado facility, which resulted in one time costs of
approximately $146,000 related to accrued vacation payouts, disposal of
fixed assets, and moving expenses.
Loss from Operations. Operating losses decreased from
approximately $1,167,000 in the six months ended June 30, 1999 to
approximately $870,000 in the six months ended June 30, 1999 representing
a 34.1% decrease in the loss or approximately $297,000 between comparable
periods. This decrease is due to minimal losses being incurred by GHA as
a result of lower overhead.
Minority Interest. The loss offset of approximately $65,000 in
the six months ended June 30, 2000 compared to approximately $11,000 for
the six months ended June 30, 1999, the minority interest is a reflection
of the losses of the Australia and New Zealand subsidiaries. KNI owns 51%
of such subsidiaries.
Gain(loss) on Foreign Exchange. During the six months ended June
30, 1999, the net gain realized on foreign exchange adjustments was
approximately $3,000 compared to a net loss of approximately $16,000 for
the six months ended June 30, 2000 reflecting a stronger U.S. dollar than
KNI's subsidiaries in Australia, New Zealand and Trinidad and Tobaggo.
Interest Expense (net). Interest expenses of approximately
$38,000 or 0.5% of sales in the six months ended June 30, 1999 declined
to approximately $18,000 or 0.4% of sales in the six months ended June
30, 2000, a change of approximately $20,000. This decrease is due
primarily to a decline in interest bearing debt.
Income Taxes. Income tax benefits were not reflected in either
period. The anticipated benefits of utilizing net operating losses
against future profits was not recognized in the six months ended June
30, 2000 or the six months ended June 30, 1999 under the provisions of
Financial Standards Board Statement of Financial Accounting Standards No.
109 (Accounting for Income Taxes), utilizing its loss carryforwards as a
component of income tax expense. A valuation allowance equal to the net
deferred tax asset has not been recorded, as management of the Company
has not been able to determine that it is more likely than not that the
deferred tax assets will be realized.
Net Loss from Continuing Operations. Net loss from continuing
operations was approximately $840,000 in the six months ended June 30,
2000 or 17.0% of net sales as compared to approximately $1,192,000 or
16.2 % of net sales in the six months ended June 30, 1999. Of the net
loss from continuing operations, approximately $200,000 was attributable
to GHA's legal expenses and approximately $640,000 was attributable to
KNI's operations.
Discontinued Operations. In April 2000, the Company closed its
United Kingdom subsidiary.
7
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Gain on Forgiveness of Debt. During the six months ended June
30, 1999, the Company realized a $1,000 gain on the workout of various
debt and payables of GHA.
Net Loss. Net loss was approximately $845,000 in the six months
ended June 30, 2000 or 16.6% of net sales as compared to approximately
$1,213,000 net loss or 65.6% of net sales in the six months ended June
30, 1999. The decrease as a percentage of net sales is primarily related
to KNI's sales volume and a greater gross margin on KNI related sales.
Liquidity and Capital Resources:
We have funded our working capital and capital expenditure requirements
primarily from cash provided through borrowings from institutions and
individuals, and from the sale of our securities in private placements. Our
other ongoing source of cash receipts has been from the sale of Global Health's
and Kaire Nutraceuticals' products.
In February 1998, we issued $300,000 face amount of Series B Preferred
Stock, net of expenses of $38,500. The Series B Preferred Stock has been
converted into 541,330 shares of common stock.
In April 1998, we issued $4,000,000 face amount of Series C Preferred
Stock, net of expenses of $492,500 from the proceeds raised, we paid $2,500,000
to retire $1,568,407 face value of Series A Preferred Stock outstanding. The
Series C Preferred Stock has been converted into 3,608,296 shares of common
stock.
In July 1998, we issued $75,000 face amount of Series D Preferred Stock,
which was redeemed in August 1998 for $91,291.
In August 1998, we issued $1,650,000 face amount of Series E Preferred
Stock, net of expenses of $210,500. The Series E Preferred Stock pays dividends
of 10% per annum and is convertible into shares of common stock at the lower of
the closing bid price on the date of issue or 75% of the market value of the
common stock. In September 1999, $610,000 of face amount of Series E Preferred
Stock was converted into 603,130 shares of common stock.
In August 1998, we sold our three vocational schools and certain related
businesses for $1,778,333 and other consideration. From the proceeds from the
sale of the schools, we paid $1,030,309 to retire the remaining $631,593 face
value of Series A Preferred Stock then outstanding, and $91,291 to redeem all of
the Series D Preferred Stock outstanding. The remaining proceeds were used to
pay down payables.
In March and April 1999, we issued $1,400,000 of Series H Preferred Stock.
The Series H Preferred Stock pays dividends of 10% per annum and is convertible
into shares of common stock at the lower of the closing bid price on the date of
issue or 75% of the market value of the common stock. In the first quarter of
2000, 359.154 shares of Series H Preferred Stock were converted into 434,660
shares of the Company's common stock.
In June 1999, we borrowed $100,000 from Domain Investments, Inc. The loan
bears interest at 10% per annum and is payable on demand. The note is
convertible into shares of common stock at a discount equal to 60% of the
average closing bid price of the common stock on the three days preceding notice
of conversion.
8
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In July and August 1999 we borrowed $150,000 from Filin Corporation, and
issued a secured promissory note due on the earlier of 60 days from the date of
issuance or upon the sale of its securities resulting in gross proceeds of at
least $5,000,000 and bearing interest at the rate of 10% per annum, but in no
event less than $12,000. In October 1999 we amended the promissory note to
provide that the note is payable upon demand and is convertible into shares of
common stock at a discount equal to 60% of the average closing bid price of the
common stock on the three days preceding notice of conversion.
In October 1999, we borrowed $100,000 from Domain Investments, Inc. The
loan bears interest at 10% per annum and is payable on demand. The note is
convertible into shares of common stock at a discount equal to 60% of the
average closing bid price of the common stock on the three days preceding notice
of conversion.
In November 1999, we borrowed $70,000 from Domain Investments, Inc. The
loan bears interest at 10% per annum and is payable on demand. The note is
convertible into shares of common stock at a discount equal to 60% of the
average closing bid price of the common stock on the three days preceding notice
of conversion. This note was repaid with interest in March 2000.
During 1999, the Company has not made its payroll tax deposits with the
Internal Revenue Service ("IRS") and the various state taxing authorities on a
timely basis. The Company has filed all required payroll tax returns and current
quarter payments and is currently negotiating a payment plan with the IRS. As of
June 30, 2000, the Company owes approximately $599,000 of delinquent payroll tax
liabilities including interest and penalties. The Company's failure to pay its
delinquent payroll tax liabilities could result in tax liens being filed by
various taxing authorities.
During 1999, the Company did not make its sales tax deposits with the
various sales tax authorities on a timely basis. The Company has filed all
required sales tax returns. As of June 30, 2000, the Company owed approximately
$204,000 in current and delinquent sales taxes which is included in other
current liabilities. The Company's failure to pay its delinquent sales taxes
could result in tax liens being filed by various taxing authorities.
In March 2000, we sold 1,000 shares of Series J Preferred Stock with a
stated value of $1,000 per share realizing net proceeds of $1,000,000. The
preferred stock pays a dividend at the rate of 10% per annum. The preferred
stock and the accrued dividends thereon are convertible into shares of the
Company's common stock at a conversion price equal to the lower of the closing
bid price on the date of issuance or 70% of the average closing bid price of the
common stock for the lowest three trading days during the twenty day period
immediately preceding the date on which the Company receives notice of
conversion from a holder. In connection with the offering of the Series J
Preferred Stock, the Company issued warrants to purchase 141,907 shares of
common stock at an exercise price of $1.41 per share.
At June 30, 2000, our ratio of current assets to current liabilities was
.80 to 1.0 and we had a working capital deficit of approximately $6,260,000.
Cash used in operations for the six months ended June 30, 2000 was
approximately $338,000. Cash used by investing activities during the period
was approximately $122,000, which primarily relates to the acquisition of Life
Dynamics, Inc. offset by a return of restricted cash in connection with credit
card agreements at Kaire. Cash provided by financing activities during the
period was approximately $445,000, primarily from the issuance of preferred
stock of approximately $1,000,000 and partially offset by the redemption of
Series H preferred stock of approximately $359,000 and the repayment of certain
notes payable of approximately $235,000. Total cash decreased by approximately
$15,000 during the period.
9
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Our independent auditors' report on our consolidated financial statements
stated as of December 31, 1999 due to net losses and a working capital deficit,
there is substantial doubt about the company's ability to continue as a going
concern. The Company requires additional financing to continue operations of
which there can be no assurance. Management has revised its business plan of
marketing development and support for Global Health's products, licensing rights
to sell its products. We believe that the Company will require approximately
$1,500,000, primarily to finance operations for the next 12 months assuming that
we do not have to satisfy certain existing obligations. The Company intends to
raise such additional financing through additional debt and equity financings,
of which there can be no assurance and for which there are no commitments or
definitive agreements. We have not reached satisfactory settlements with Global
Health's creditors and we have ceased the operations of Global Health and may
file for protection from creditors under the bankruptcy laws. There can be no
assurance that we will be able to achieve satisfactory settlements with our
creditors or secure such additional financing. The failure of Natural Health
Trends to achieve satisfactory settlements with our creditors and secure
additional financing would have a material adverse effect on our business,
prospects, financial conditions and results of operations and we may have to
curtail or cease operations.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
Pursuant to the exemption from the registration requirement under
Section 4(2) of the Securities Act of 1933, as amended, and/or Regulation S
promulgated thereunder, on March 2,2000 the Company sold an aggregate of 1,000
shares of Series J Convertible Preferred Stock at a purchase price of $1,000 per
share to one accredited investor.
The Company received four notices of conversion on its Series H
Preferred Stock during the three months ended March 31, 2000 and redeemed
$359.154, face value in exchange for 434,600 shares of the Company's common
stock.
The Company received five notices of conversion on its Convertible
Notes Payable during the six months ended June 30, 2000 and redeemed $350,000
Notes Payable in exchange for 1,958,505 shares of the Company's common stock.
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
10
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NATURAL HEALTH TRENDS CORP.
By: /S/ Mark D. Woodburn
-----------------------
Mark D. Woodburn
Chief Financial Officer
Date: August 21, 2000
11
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