FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 2003
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.)
5605 N. MacArthur Boulevard, 11th Floor
Irving, Texas 75038
(Address of Principal Executive Office) (Zip Code)
(972) 819-2035
(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 May 9, 2003 were 4,627,939 shares.
NATURAL HEALTH TRENDS CORP.
FORM 10-QSB
For Quarter Ended March 31, 2003
INDEX
Page
Number
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as of March 31, 2003
(unaudited) 1
Consolidated Statements of Operations (unaudited) for the three
months ended March 31, 2003 and 2002 2
Consolidated Statements of Comprehensive Income (unaudited)
for the three months ended March 31, 2003 and 2002 3
Consolidated Statements of Cash Flows (unaudited)
for the three months ended March 31, 2003 and 2002 4
Notes to the Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis or Plan of Operations 6
Item 3. Controls and Procedures 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities and Use of Proceeds 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signature 12
Certification 13
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
March 31,
2003
------------
ASSETS
Current Assets:
Cash $ 3,009,487
Accounts receivable 695,864
Inventories 2,953,398
Prepaid expenses and other current assets 360,431
------------
Total Current Assets 7,019,180
Restricted cash 377,668
Property and equipment, net 691,884
Deposits and other assets 471,704
Goodwill 207,765
Database 856,845
Website 44,333
------------
Total Assets $ 9,669,379
------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 3,365,726
Accrued expenses 356,904
Accrued bonus payable 868,714
Notes payable 369,529
Current portion of long term debt 162,644
Other current liabilities 348,541
------------
Total Current Liabilities 5,472,058
------------
Long term notes payable 59,497
------------
Total Liabilities 5,531,555
Minority interest 832,395
Stockholders' Equity:
Preferred stock ($1,000 par value; authorized 1,500,000 shares;
issued 16 shares) 16,330
Common stock ($.001 par value; authorized 500,000,000 shares;
issued and outstanding 4,627,939 shares) 4,628
Additional paid in capital 32,630,792
Accumulated deficit (29,282,845)
Deferred compensation (78,750)
Accumulated other comprehensive income 15,274
------------
Total Stockholders' Equity 3,305,429
------------
Total Liabilities and Stockholders' Equity $ 9,669,379
------------
See Notes to Consolidated Financial Statements.
1
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
March 31,
2003 2002
------------ ------------
Revenues $ 9,643,422 $ 6,154,144
Cost of sales 1,936,846 1,090,495
------------ ------------
Gross profit 7,706,576 5,063,649
Associate commissions 4,122,414 3,211,736
Selling, general and administrative expenses 2,822,956 1,981,838
------------ ------------
Operating income (loss) 761,206 (129,925)
Minority interest in subsidiary (105,648) (11,837)
Gain (loss) on foreign exchange 52,800 (90)
Other income 264,514 169,362
Interest, net (8,400) (17,629)
------------ ------------
Net income 964,472 9,881
Preferred stock dividends 402 22,285
------------ ------------
Net income (loss) to common shareholders $ 964,070 $ (12,404)
============ ============
Basic income per common share $ 0.21 $ 0.00
============ ============
Basic weighted common shares used 4,511,389 2,665,248
============ ============
Diluted income per common share $ 0.18 $ 0.00
============ ============
Diluted weighted common shares used 5,503,517 3,398,886
============ ============
See Notes to Consolidated Financial Statements.
2
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended
March 31,
2003 2002
------------ ------------
Net income $ 964,472 $ 9,881
Other comprehensive income (loss), net of tax
Foreign translation adjustment 24,838 5,842
------------ ------------
Comprehensive income $ 989,310 $ 15,723
============ ============
See Notes to Consolidated Financial Statements.
3
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
-----------------------------
2003 2002
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 964,472 $ 9,881
------------ ------------
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization 163,626 97,988
Stock issued for compensation 51,826 3,600
Gain on forgiveness of debt (200,000) (200,000)
Minority interest of subsidiary 105,648 147,551
Changes in assets and liabilities:
Accounts receivable (176,112) (504,090)
Inventories (32,274) (185,602)
Prepaid expenses 47,375 45,677
Deposits and other assets (140,098) 260,585
Accounts payable and accrued expenses (1,383,692) 1,216,921
Other current liabilities 168,068 178,689
------------ ------------
Total Adjustments (1,395,633) 1,061,319
------------ ------------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (431,161) 1,071,200
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (79,568) (241,722)
Database purchase (226,845) --
(Increase) decrease in restricted cash (49,783) 82,759
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (356,196) (158,963)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable and long-term debt -- 111,602
Payments of notes payable and long-term debt (91,940) --
------------ ------------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (91,940) 111,602
------------ ------------
Effect of Exchange Rate Changes 24,838 5,842
NET (DECREASE)INCREASE IN CASH (854,459) 1,029,681
CASH, BEGINNING OF PERIOD 3,863,946 324,315
------------ ------------
CASH, END OF PERIOD $ 3,009,947 $ 1,353,996
============ ============
See Notes to Consolidated Financial Statements.
4
NATURAL HEALTH TRENDS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2003
(UNAUDITED)
1. We are Natural Health Trends Corp. ("NHTC"), an international network
marketing organization. We operate through our subsidiaries that
distribute products to promote health, wellness and vitality. Lexxus
International, Inc., our majority-owned subsidiary and other Lexxus
subsidiaries (collectively, "Lexxus") sell certain cosmetic products as
well as "quality of life" products. eKaire.com, Inc. ("eKaire")
distributes nutritional supplements aimed at general health and
wellness.
2. The accompanying unaudited financial statements of Natural Health
Trends Corp. and its subsidiaries (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-B. 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 three month
period ended March 31, 2003 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2003. 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, 2002.
3. In January 2003, the Company issued 18,500 shares of Common Stock to a
law firm for legal services of approximately $34,000.
4. In January 2003, the Company issued 10,000 shares of Common Stock to a
consulting firm for consulting services of approximately $19,000.
5. On January 31, 2003, the Company entered into a Database Purchase
Agreement with NuEworld.com Commerce, Inc. ("NuEworld") and Lighthouse
Marketing Corporation, our wholly-owned subsidiary ("Lighthouse"),
pursuant to which Lighthouse purchased a database of distributors from
NuEworld in exchange for the issuance of 360,000 shares of our Common
Stock. NuEworld was in the business of marketing and selling a variety
of products and services through its multi-level marketing distribution
network. We believe that the NuEworld database will allow us to recruit
many new distributors for our Lexxus business.
6. SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment
of FASB Statement No. 13, and Technical Corrections was issued April
2002. This Statement rescinds FASB Statement No. 4, Reporting Gains and
Losses from Extinguishment of Debt, and an amendment of that Statement,
FASB Statement No. 64, Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements. This Statement also rescinds FASB Statement
No. 44, Accounting for Intangible Assets of Motor Carriers. This
Statement amends FASB Statement No. 13, Accounting for Leases, to
eliminate an inconsistency between the required accounting for
sale-leaseback transactions and the required accounting for certain
lease modifications that have economic effects that are similar to
sale-leaseback transactions.
5
This Statement also amends other existing authoritative pronouncements
to make various technical corrections, clarify meanings, or describe
their applicability under changed conditions. The provisions of this
Statement related to the rescission of Statement 4 shall be applied in
fiscal years beginning after May 15, 2002. The provisions in paragraph
8 and 9(c) of this Statement related to Statement 13 shall be effective
for transactions occurring after May 15, 2002. All other provisions of
this Statement shall be effective for financial statements issued on or
after May 15, 2002. The effects of implementation are not material.
SFAS No. 146 Accounting for Costs Associated with Exit or Disposal
Activities was issued June 2002. This Statement addresses financial
accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force (EITF) Issue No.
94-3, Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred
in a Restructuring). The provisions of this Statement are effective for
exit and disposal activities that are initiated after December 31,
2002.
In September 2002, the FASB issued SFAS No. 147, Acquisition of Certain
Financial Institutions. SFAS No. 147 changed the special accounting for
unidentifiable intangible assets recognized under SFAS No. 72.
Transition provisions for previously recognized unidentifiable
intangible assets were effective on October 1, 2002. The effects of
implementation had no impact on the Company's consolidated financial
statements.
In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation-Transition and Disclosure, which provides
alternative methods of transition for a voluntary change to fair value
based method of accounting for stock-based employee compensation as
prescribed in SFAS No. 123, Accounting for Stock-Based Compensation.
Additionally, SFAS No. 148 required more prominent and more frequent
disclosures in financial statements about the effects of stock-based
compensation. The provisions of this Statement are effective for fiscal
years ending after December 15, 2002, with early application permitted
in certain circumstances.
Item 2. Management's Discussion and Analysis or Plan of Operations
The following discussions should be read in conjunction with the
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
Natural Health Trends Corp. was incorporated on December 1, 1988 in the
state of Florida. NHTC is an international direct-selling company operating in
more than 29 markets throughout Asia, North America and Eastern Europe.
6
The Company markets premium quality personal care products under the
Lexxus brand and markets its nutritional supplement products under the Kaire
brand. NHTC's Common Stock, par value $0.001 per share (the "Common Stock"), is
listed on the OTC Bulletin Board (the "OTCBB"). In March 2003, NHTC effected a
1-for-100 reverse stock split with respect to our outstanding shares of Common
Stock. In addition, the trading symbol for the shares of our Common Stock
changed from "NHTC" to "NHLC".
NHTC is a holding company that operates two businesses, Lexxus and
eKaire, which distribute products that promote health, wellness and vitality
through two distinct multi-level marketing ("MLM") channels. The following
paragraphs will outline the progression of NHTC as it is organized today.
In February 1999, NHTC Holdings Inc. acquired certain assets (the
"Kaire Assets") of Kaire International, Inc., a Delaware corporation ("KII").
The assets included, but not limited to, the corporate name, all variations and
any other product name, registered and unregistered trademarks, tradenames,
servicemarks, patents, logos and copyrights of KII, and independent distributor
lists.
In January 2001, NHTC entered into a joint venture with Lexxus
International and formed a new majority-owned USA subsidiary, Lexxus
International, Inc., a Delaware corporation. The original founders of Lexxus
International received an aggregate of 100,000 shares of our Common Stock and
own 49% of the total number of shares of capital stock of Lexxus International,
Inc., a Delaware corporation.
In the second quarter of 2001, we incorporated Lexxus International (SW
Pacific) Pty. Ltd., an Australian corporation and our majority-owned subsidiary,
which does business in Australia ("Lexxus Australia"). In addition, we
incorporated Lexxus International (New Zealand) Limited, a New Zealand
corporation and majority-owned subsidiary of NHTC, which does business in New
Zealand ("Lexxus New Zealand").
In June 2001, we incorporated Lighthouse Marketing Corporation
("Lighthouse"), a Delaware Corporation and our wholly-owned subsidiary. As of
January 31, 2003, Lighthouse acquired certain assets from NuEworld. See Footnote
5 for more detail.
In June 2001, we sold all of the outstanding Common Stock in Kaire
Nutraceuticals, Inc., a Delaware corporation, to a South African firm.
On November 16, 2001, we incorporated Lexxus International Co., Ltd., a
corporation organized under the laws of the Republic of China and our
majority-owned subsidiary ("Lexxus Taiwan") which does business in Taiwan.
On January 28, 2002, we incorporated MyLexxus Europe AG, a corporation
organized under the laws of Switzerland and our majority-owned subsidiary
("MyLexxus Europe"). This company manages the sales of product into sixteen
eastern European countries, including Russia.
In March 2002, we incorporated Lexxus International Co., Ltd., a
corporation organized under the laws of Hong Kong and our wholly-owned
subsidiary ("Lexxus Hong Kong") which does business in Hong Kong.
In April 2002, we incorporated Personal Care International India Pvt.
Ltd., a corporation organized under the laws of India and our wholly-owned
subsidiary ("MyLexxus India") which does business in India.
In June 2002, we incorporated Lexxus International Marketing Ltd., a
corporation organized under the laws of Singapore and our majority-owned
subsidiary ("Lexxus Singapore") which does business in Singapore.
In November 2002, we incorporated Lexxus International (Philippines)
Inc., a corporation organized under the laws of the Philippines and our
majority-owned subsidiary ("Lexxus Philippines") which does business in the
Philippines.
7
Three Months Ended March 31, 2003 Compared To
The Three Months Ended March 31, 2002.
Revenues. Revenues were approximately $9,643,000 and $6,154,000 for the
three months ended March 31, 2003 and March 31, 2002, respectively; an increase
of $3,489,000 or 57%. The increased sales were primarily from additional sales
of Lexxus products and the expansion of Lexxus into new international markets,
offset by a slight decrease in the sales of eKaire products.
Cost of Sales. Cost of Sales for the three months ended March 31, 2003
was approximately $1,937,000 or 20% of net sales. Cost of sales for the three
months ended March 31, 2002 was approximately $1,090,000 or 18% of net sales.
The total cost of sales increased due to increased sales volume and increased
costs associated with the packaging of the Lexxus product line.
Gross Profit. Gross profit increased from approximately $5,064,000 in
the three months ended March 31, 2002 to approximately $7,707,000 in the three
months ended March 31, 2003, or an increase of 52%. The increase in gross profit
of approximately $2,643,000 was attributable to higher sales volumes by Lexxus.
Associate Commissions. Associate commissions were approximately
$4,122,000 or 43% of sales in the three months ended March 31, 2003 compared to
approximately $3,212,000 or 52% of sales for the three months ended March 31,
2002. The increase of commission expense is directly related to the increase in
gross sales and the terms of the compensation plans. The decrease in commission
expense as a percentage of sales is due to the normal fluctuations that occur in
the compensation plan and also due to the amount of revenues allocated to the
compensation plan.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses as a percentage of net sales decreased from
approximately $1,982,000 or 32% of sales in the three months ended March 31,
2002 to approximately $2,823,000 or 29% of sales in the three months ended March
31, 2003. These costs as a percentage of net sales decreased primarily due to
recent cost containment efforts and the leverage of Lexxus expansion into new
international markets.
Operating (loss) income. Operating (loss) income increased from an
operating loss of approximately $130,000 in the three months ended March 31,
2002 to operating income of approximately $761,000 in the three months ended
March 31, 2003. This is attributable to higher sales volume, increased selling,
general and administrative costs offset by decreased associate commissions.
Income Taxes. Income tax benefits were not reflected in either period.
The anticipated benefits of utilizing net operating losses against future
profits were not recognized in the three months ended March 31, 2003 or the
three months ended March 31, 2002 under the provisions of SFAS No. 109,
Accounting for Income Taxes, utilizing the Company's loss carry forward as a
component of income tax expense. A valuation allowance equal to the net deferred
tax asset has 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.
Other Income. As part of other income during the three months ended
March 31, 2003 and the three months ended March 31, 2002, NHTC realized a gain
of approximately $200,000 in other income due to forgiveness of debt.
Net Income. Net income was approximately $964,000 in the three months
ended March 31, 2003 as compared to approximately $10,000 in the three months
ended March 31, 2002. This is due to increased sales and efficient cost
containment efforts.
8
Liquidity and Capital Resources.
The Company has funded the working capital and capital expenditure
requirements primarily from cash provided through operations and through limited
borrowings from individuals.
At March 31, 2003, the ratio of current assets to current liabilities
was 1.28 to 1.0 and the Company had working capital of approximately $1,547,000.
Cash used in operations for the three months ended March 31, 2003 was
approximately $431,000 primarily due to the payment of accounts payable and
accrued expenses. Cash used in investing activities during the period was
approximately $356,000 primarily due to the purchase of a database. Cash used by
financing activities during the period was approximately $92,000. Total cash
decreased by approximately $854,000 during the period.
CRITICAL ACCOUNTING POLICIES
A summary of significant accounting policies is included in Note 2 to
the audited consolidated financial statements included in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 2002. Management believes
that the application of these policies on a consistent basis enables the Company
to provide useful and reliable financial information about the Company's
operating results and financial condition.
EFFECT OF NEW ACCOUNTING STANDARDS
SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment
of FASB Statement No. 13, and Technical Corrections was issued April 2002. This
Statement rescinds FASB Statement No. 4, Reporting Gains and Losses from
Extinguishment of Debt, and an amendment of that Statement, FASB Statement No.
64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. This
Statement also rescinds FASB Statement No. 44, Accounting for Intangible Assets
of Motor Carriers. This Statement amends FASB Statement No. 13, Accounting for
Leases, to eliminate an inconsistency between the required accounting for
sale-leaseback transactions and the required accounting for certain lease
modifications that have economic effects that are similar to sale-leaseback
transactions. This Statement also amends other existing authoritative
pronouncements to make various technical corrections, clarify meanings, or
describe their applicability under changed conditions. The provisions of this
Statement related to the rescission of Statement 4 shall be applied in fiscal
years beginning after May 15, 2002. The provisions in paragraph 8 and 9(c) of
this Statement related to Statement 13 shall be effective for transactions
occurring after May 15, 2002. All other provisions of this Statement shall be
effective for financial statements issued on or after May 15, 2002. The effects
of implementation are not material.
SFAS No. 146 Accounting for Costs Associated with Exit or Disposal
Activities was issued June 2002. This Statement addresses financial accounting
and reporting for costs associated with exit or disposal activities and
nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring). The provisions
of this Statement are effective for exit and disposal activities that are
initiated after December 31, 2002.
In September 2002, the FASB issued SFAS No. 147, Acquisition of Certain
Financial Institutions. SFAS No. 147 changed the special accounting for
unidentifiable intangible assets recognized under SFAS No. 72. Transition
provisions for previously recognized unidentifiable intangible assets were
effective on October 1, 2002. The effects of implementation had no impact on the
Company's consolidated financial statements.
9
In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation-Transition and Disclosure, which provides alternative
methods of transition for a voluntary change to fair value based method of
accounting for stock-based employee compensation as prescribed in SFAS No. 123,
Accounting for Stock-Based Compensation. Additionally, SFAS No. 148 required
more prominent and more frequent disclosures in financial statements about the
effects of stock-based compensation. The provisions of this Statement are
effective for fiscal years ending after December 15, 2002, with early
application permitted in certain circumstances.
ITEM 3. CONTROLS AND PROCEDURES
Within the 90 days prior to the date of this report, the Company carried
out an evaluation, under the supervision and with the participation of the
Company's management, including the Company's President and Chief Financial
Officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures, as defined in Exchange Act Rules 13a-14(c)
and 15d-14(c).
Based upon that evaluation, the Company's President and Chief Financial
Officer concluded that the Company's disclosure controls and procedures are
effective in enabling the Company to record, process, summarize and report
information required to be included in the Company's periodic SEC filings within
the required time period.
There have been no significant changes in the Company's internal
controls or in other factors that could significantly affect internal controls
subsequent to the date the Company carried out its evaluation.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
In the three months ended March 31, 2003, NHTC issued 360,000 shares of
our Common Stock to NuEworld.com Commerce, Inc. pursuant to a database purchase
agreement.
In January 2003, the Company issued 18,500 shares of Common Stock to a
law firm for legal services of approximately $34,000.
In January 2003, the Company issued 10,000 shares of Common Stock to a
consulting firm for consulting services of approximately $19,000.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
On March 11, 2003, the Company held its Annual Meeting of Stockholders
where the stockholders of the Company approved the following proposals:
(a) Election of Directors. Mark D. Woodburn and Terry LaCore were
elected to the Board of Directors of the Company for a term of one (1) year,
receiving 415,838,786 votes and 416,038,786 votes respectively in favor of his
election (89.8% of the shares outstanding).
(b) Reverse Stock Split. The reverse stock split of the Company's
issued common stock, par value $.001 per share, on the basis of one (1) new
share of common stock for each one hundred (100) shares of common stock
outstanding was approved by the stockholders of the Company (409,797,841 votes
for (88.5% of the shares outstanding); 4,177,119 shares against; and 3,418,759
shares abstained).
(c) 2002 Stock Plan. The adoption of the Company's 2002 Stock Plan
was approved by the stockholders of the Company (412,733,533 votes for (89.2% of
the shares outstanding); 4,349,569 shares against; and 310,615 shares
abstained).
10
(d) Ratification of the Appointment of Independent Accountants. The
ratification of the appointment of Sherb & Co., LLP as independent accountants
of the Company for fiscal year ending December 31, 2002 was approved by the
stockholders of the Company (416,097,978 votes for (89.9% of the shares
outstanding); 1,134,816 votes against; and 160,925 shares abstained).
(e) Ratification of the Amendment to the Company's Articles of
Incorporation. The ratification of the amendment to the Company's Articles of
Incorporation pursuant to which the Company increased the number of authorized
shares of common stock from 50,000,000 shares to 500,000,000 shares was approved
by the stockholders of the Company (414,491,065 votes for (89.5% of the shares
outstanding); 2,531,104 votes against; and 371,550 shares abstained).
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
99.1 Certification of President and Chief Financial Officer.
(b) Reports on Form 8-K
Current Report on Form 8-K filed with the Commission on February
13, 2003 with respect to Item 5.
Current Report on Form 8-K filed with the Commission on March 19,
2003 with respect to Items 5, 7 and 9.
11
SIGNATURE
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
President
Date: May 14, 2003
12