NATURAL HEALTH TRENDS CORP. CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In Thousands, Except Share Data) March 31, June 30, 2008 2008 ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 4,657 $ 5,209 Restricted cash 196 201 Accounts receivable 357 314 Inventories, net 2,827 2,875 Other current assets 1,740 1,103 ----------- ----------- Total current assets 9,777 9,702 Property and equipment, net 1,363 1,343 Goodwill 1,764 1,764 Intangible assets, net 2,400 2,200 Restricted cash 4,356 3,766 Deferred tax assets 196 187 Other assets 2,204 2,002 ----------- ----------- Total assets $ 22,060 $ 20,964 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,879 $ 1,472 Income taxes payable 412 391 Accrued distributor commissions 1,646 1,512 Other accrued expenses 3,276 2,980 Deferred revenue 2,570 2,598 Current portion of convertible debentures, net of discount of $382 and $541 at March 31, 2008 and June 30, 2008, respectively 503 876 Other current liabilities 3,147 3,362 ----------- ----------- Total current liabilities 13,433 13,191 Convertible debentures, net of discount of $3,365 and $2,833 at March 31, 2008 and June 30, 2008, respectively - - ----------- ----------- Total liabilities 13,433 13,191 Commitments and contingencies Minority interest 37 37 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 March 31, 2008 and June 30, 2008, aggregate liquidation value of $254 124 124 Common stock, $0.001 par value; 50,000,000 shares authorized; 10,347,126 and 10,359,626 shares issued and outstanding at March 31, 2008 and June 30, 2008, respectively 10 10 Additional paid-in capital 79,322 79,451 Accumulated deficit (71,697) (72,766) Accumulated other comprehensive income: Foreign currency translation adjustments 831 917 ----------- ----------- Total stockholders' equity 8,590 7,736 ----------- ----------- Total liabilities and stockholders' equity $ 22,060 $ 20,964 =========== =========== NATURAL HEALTH TRENDS CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In Thousands, Except Per Share Data) Three Months Ended ------------------------ March 31, June 30, 2008 2008 ----------- ----------- Net sales $ 11,395 $ 12,323 Cost of sales 3,090 3,445 ----------- ----------- Gross profit 8,305 8,878 Operating expenses: Distributor commissions 3,997 4,600 Selling, general and administrative expenses (including stock-based compensation expense of $164 and $129 during the three months ended March 31, 2008 and June 30, 2008, respectively) 4,596 4,272 Depreciation and amortization 386 366 Impairment of long-lived assets 24 4 ----------- ----------- Total operating expenses 9,003 9,242 ----------- ----------- Loss from operations (698) (364) Other income: Gain (loss) on foreign exchange 371 (118) Interest income 35 33 Interest expense (including amortization of debt issuance costs and accretion of debt discount of $362 and $449 during the three months ended March 31, 2008 and June 30, 2008, respectively) (387) (556) Other 8 (22) ----------- ----------- Total other income (expense), net 27 (663) ----------- ----------- Loss before income taxes and minority interest (671) (1,027) Income tax provision (37) (42) ----------- ----------- Net loss (708) (1,069) Preferred stock dividends (4) (4) ----------- ----------- Net loss attributable to common stockholders $ (712) $ (1,073) =========== =========== Loss per share - basic and diluted $ (0.07) $ (0.11) =========== =========== Weighted-average number of shares outstanding 9,567 9,619 =========== =========== NATURAL HEALTH TRENDS CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In Thousands) Three Months Ended ------------------------ March 31, June 30, 2008 2008 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (708) $ (1,069) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization of property and equipment 186 166 Amortization of intangibles 200 200 Amortization of debt issuance costs 62 76 Accretion of debt discount 300 373 Stock-based compensation 164 129 Impairment of long-lived assets 24 4 Changes in assets and liabilities: Accounts receivable 50 36 Inventories, net 781 (69) Other current assets (399) 638 Other assets 59 83 Accounts payable (293) (410) Income taxes payable 18 (16) Accrued distributor commissions (374) (121) Other accrued expenses (389) (294) Deferred revenue (938) 46 Other current liabilities (127) 84 ----------- ----------- Net cash used in operating activities (1,384) (144) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (6) (140) Decrease in restricted cash 93 614 ----------- ----------- Net cash provided by investing activities 87 474 ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from debt - 145 ----------- ----------- Net cash provided by financing activities - 145 ----------- ----------- Effect of exchange rates on cash and cash equivalents (328) 77 ----------- ----------- Net (decrease) increase in cash and cash equivalents (1,625) 552 CASH AND CASH EQUIVALENTS, beginning of period 6,282 4,657 ----------- ----------- CASH AND CASH EQUIVALENTS, end of period $ 4,657 $ 5,209 =========== ===========
Contact Information: Contact: Jean Bono Natural Health Trends Corp.