NATURAL HEALTH TRENDS CORP. CONSOLIDATED BALANCE SHEETS (In Thousands, Except Share Data) December June 30, 31, 2008 2009 ----------- ----------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 3,491 $ 5,031 Restricted cash 340 377 Accounts receivable 71 99 Inventories, net 2,141 1,607 Other current assets 735 578 ----------- ----------- Total current assets 6,778 7,692 Property and equipment, net 1,173 1,006 Goodwill 1,764 1,764 Intangible assets, net 1,800 1,400 Restricted cash 3,646 369 Other assets 1,464 1,082 ----------- ----------- Total assets $ 16,625 $ 13,313 =========== =========== LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities: Accounts payable $ 1,746 $ 2,585 Income taxes payable 187 211 Accrued distributor commissions 554 1,030 Other accrued expenses 2,456 3,007 Deferred revenue 2,841 1,065 Current portion of convertible debentures, net of discount of $2,320 and $970 at December 31, 2008 and June 30, 2009, respectively 1,534 1,863 Deferred tax liability 351 351 Other current liabilities 1,170 1,188 ----------- ----------- Total liabilities 10,839 11,300 Commitments and contingencies Stockholders equity: Preferred stock, $0.001 par value; 5,000,000 shares authorized; 1,761,900 shares designated Series A convertible preferred stock, 138,400 shares issued and outstanding at December 31, 2008 and June 30, 2009, aggregate liquidation value of $271 124 124 Common stock, $0.001 par value; 50,000,000 shares authorized; 10,691,582 and 10,788,714 shares issued and outstanding at December 31, 2008 and June 30, 2009, respectively 11 11 Additional paid-in capital 79,711 80,077 Accumulated deficit (74,853) (78,946) Accumulated other comprehensive income: Foreign currency translation adjustments 759 734 ----------- ----------- Total Natural Health Trends stockholders equity 5,752 2,000 Noncontrolling interest 34 13 ----------- ----------- Total stockholders equity 5,786 2,013 ----------- ----------- Total liabilities and stockholders equity $ 16,625 $ 13,313 =========== =========== NATURAL HEALTH TRENDS CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In Thousands, Except Per Share Data) Three Months Ended Six Months Ended June 30, June 30, ---------------------- ---------------------- 2008 2009 2008 2009 ---------- ---------- ---------- ---------- Net sales $ 12,323 $ 8,472 $ 23,718 $ 18,341 Cost of sales 3,445 2,505 6,535 5,302 ---------- ---------- ---------- ---------- Gross profit 8,878 5,967 17,183 13,039 Operating expenses: Distributor commissions 4,600 3,322 8,597 7,101 Selling, general and administrative expenses (including stock-based compensation expense of $129 and $255 during the three months ended June 30, 2008 and 2009, respectively, and $293 and $366 during the six months ended June 30, 2008 and 2009, respectively) 4,272 3,718 8,868 7,489 Depreciation and amortization 366 338 752 668 Impairment of long-lived assets 4 - 28 - ---------- ---------- ---------- ---------- Total operating expenses 9,242 7,378 18,245 15,258 ---------- ---------- ---------- ---------- Loss from operations (364) (1,411) (1,062) (2,219) Other income (expense), net: Gain (loss) on foreign exchange (118) (41) 253 (43) Interest income 33 10 68 24 Interest expense (including amortization of debt issuance costs and accretion of debt discount of $449 and $853 during the three months ended June 30, 2008 and 2009, respectively, and $811 and $1,628 during the six months ended June 30, 2008 and 2009, respectively) (556) (989) (943) (1,855) Other (22) 3 (14) 14 ---------- ---------- ---------- ---------- Total other income (expense), net (663) (1,017) (636) (1,860) ---------- ---------- ---------- ---------- Loss before income taxes (1,027) (2,428) (1,698) (4,079) Income tax provision (42) 79 (79) (35) ---------- ---------- ---------- ---------- Net loss (1,069) (2,349) (1,777) (4,114) Plus: Net loss attributable to the noncontrolling interest - - - 21 ---------- ---------- ---------- ---------- Net loss attributable to Natural Health Trends (1,069) (2,349) (1,777) (4,093) Preferred stock dividends (4) (4) (8) (8) ---------- ---------- ---------- ---------- Net loss attributable to common stockholders of Natural Health Trends $ (1,073) $ (2,353) $ (1,785) $ (4,101) ========== ========== ========== ========== Loss per share of Natural Health Trends - basic and diluted $ (0.11) $ (0.23) $ (0.19) $ (0.41) ========== ========== ========== ========== Weighted-average number of shares outstanding 9,619 10,068 9,610 9,986 ========== ========== ========== ========== NATURAL HEALTH TRENDS CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In Thousands) Six Three Three Months Months Months Ended Ended Ended June 30, March June 30, 2008 31, 2009 2009 -------- -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (1,777) $ (1,765) $ (2,349) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization of property and equipment 352 130 138 Amortization of intangibles 400 200 200 Amortization of debt issuance costs 138 132 146 Accretion of debt discount 673 643 707 Stock-based compensation 293 111 255 Impairment of long-lived assets 28 - - Changes in assets and liabilities: Accounts receivable 86 (34) 6 Inventories, net 712 31 482 Other current assets 239 (61) 216 Other assets 142 96 (9) Accounts payable (703) 977 (136) Income taxes payable 2 114 (83) Accrued distributor commissions (495) 362 114 Other accrued expenses (683) 396 158 Deferred revenue (892) (1,723) (52) Other current liabilities (43) (95) 115 -------- -------- -------- Net cash used in operating activities (1,528) (486) (92) -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (146) (58) (41) Decrease in restricted cash 707 266 2,954 -------- -------- -------- Net cash provided by investing activities 561 208 2,913 -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from debt 145 - - Payments on debt - (490) (531) -------- -------- -------- Net cash provided by (used in) financing activities 145 (490) (531) -------- -------- -------- Effect of exchange rates on cash and cash equivalents (251) (87) 105 -------- -------- -------- Net increase (decrease) in cash and cash equivalents (1,073) (855) 2,395 CASH AND CASH EQUIVALENTS, beginning of period 6,282 3,491 2,636 -------- -------- -------- CASH AND CASH EQUIVALENTS, end of period $ 5,209 $ 2,636 $ 5,031 ======== ======== ========
Contact Information: Contact: Jean Bono Natural Health Trends Corp.