NATURAL HEALTH TRENDS CORP. CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In Thousands, Except Share Data) June 30, September 2008 30, 2008 ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 5,209 $ 3,969 Restricted cash 201 227 Accounts receivable 314 222 Inventories, net 2,875 1,974 Other current assets 1,103 894 ----------- ----------- Total current assets 9,702 7,286 Property and equipment, net 1,343 1,321 Goodwill 1,764 1,764 Intangible assets, net 2,200 2,000 Restricted cash 3,766 3,678 Deferred tax assets 187 164 Other assets 2,002 1,657 ----------- ----------- Total assets $ 20,964 $ 17,870 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,472 $ 1,387 Income taxes payable 391 376 Accrued distributor commissions 1,512 1,063 Other accrued expenses 2,980 2,806 Deferred revenue 2,598 2,116 Current portion of convertible debentures, net of discount of $541 and $609 at June 30, 2008 and September 30, 2008, respectively 876 1,339 Other current liabilities 3,362 3,192 ----------- ----------- Total current liabilities 13,191 12,279 Convertible debentures, net of discount of $2,833 and $2,302 at June 30, 2008 and September 30, 2008, respectively - - ----------- ----------- Total liabilities 13,191 12,279 Commitments and contingencies Minority interest 37 34 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 June 30, 2008 and September 30, 2008, aggregate liquidation value of $259 124 124 Common stock, $0.001 par value; 50,000,000 shares authorized; 10,359,626 and 10,343,582 shares issued and outstanding at June 30, 2008 and September 30, 2008, respectively 10 10 Additional paid-in capital 79,451 79,579 Accumulated deficit (72,766) (75,082) Accumulated other comprehensive income: Foreign currency translation adjustments 917 926 ----------- ----------- Total stockholders' equity 7,736 5,557 ----------- ----------- Total liabilities and stockholders' equity $ 20,964 $ 17,870 =========== =========== NATURAL HEALTH TRENDS CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In Thousands, Except Per Share Data) Three Months Ended ------------------------ June 30, September 2008 30, 2008 ----------- ----------- Net sales $ 12,323 $ 11,016 Cost of sales 3,445 3,050 ----------- ----------- Gross profit 8,878 7,966 Operating expenses: Distributor commissions 4,600 4,573 Selling, general and administrative expenses (including stock-based compensation expense of $129 and $128 during the three months ended June 30, 2008 and September 30, 2008, respectively) 4,272 4,358 Depreciation and amortization 366 338 Impairment of long-lived assets 4 2 ----------- ----------- Total operating expenses 9,242 9,271 ----------- ----------- Loss from operations (364) (1,305) Other expense: Loss on foreign exchange (118) (345) Interest income 33 18 Interest expense (including amortization of debt issuance costs and accretion of debt discount of $449 and $559 during the three months ended June 30, 2008 and September 30, 2008, respectively) (556) (666) Other (22) 19 ----------- ----------- Total other expense, net (663) (974) ----------- ----------- Loss before income taxes and minority interest (1,027) (2,279) Income tax provision (42) (37) ----------- ----------- Net loss (1,069) (2,316) Preferred stock dividends (4) (4) ----------- ----------- Net loss attributable to common stockholders $ (1,073) $ (2,320) =========== =========== Loss per share - basic and diluted $ (0.11) $ (0.24) =========== =========== Weighted-average number of shares outstanding 9,619 9,719 =========== =========== NATURAL HEALTH TRENDS CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In Thousands) Three Months Ended ------------------------ June 30, September 2008 30, 2008 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (1,069) $ (2,316) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization of property and equipment 166 138 Amortization of intangibles 200 200 Amortization of debt issuance costs 76 96 Accretion of debt discount 373 463 Stock-based compensation 129 128 Impairment of long-lived assets 4 2 Changes in assets and liabilities: Accounts receivable 36 73 Inventories, net (69) 828 Other current assets 638 193 Other assets 83 143 Accounts payable (410) (70) Income taxes payable (16) 7 Accrued distributor commissions (121) (406) Other accrued expenses (294) (143) Deferred revenue 46 (471) Other current liabilities 84 (157) ----------- ----------- Net cash used in operating activities (144) (1,292) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (140) (130) Decrease in restricted cash 614 (42) ----------- ----------- Net cash provided by (used in) investing activities 474 (172) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from debt 145 - Payments on debt (145) ----------- ----------- Net cash provided by (used in) financing activities 145 (145) ----------- ----------- Effect of exchange rates on cash and cash equivalents 77 369 ----------- ----------- Net increase (decrease) in cash and cash equivalents 552 (1,240) CASH AND CASH EQUIVALENTS, beginning of period 4,657 5,209 ----------- ----------- CASH AND CASH EQUIVALENTS, end of period $ 5,209 $ 3,969 =========== ===========
Contact Information: Contact: Jean Bono Natural Health Trends Corp.