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 September 30, 2002
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 November 11, 2002 were 345,072,201 shares.
NATURAL HEALTH TRENDS CORP.
INDEX
Page
Number
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as of September 30, 2002 1
(unaudited)
Consolidated Statements of Operations (unaudited)
for the three and nine months ended September 30, 2002 and 2001 2
Consolidated Statements of Comprehensive Income (unaudited)
for the three and nine months ended September 30, 2002 and 2001 3
Consolidated Statements of Cash Flows (unaudited)
for the nine months ended September 30, 2002 and 2001 4
Notes to the Consolidated Financial Statements 5-6
Item 2. Management's Discussion and Analysis or Plan of
Operation 6-9
Item 3. Controls and Procedures 9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities and Use of Proceeds 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 9
PART III - OTHER
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 10
Certification Pursuant to Section 302 of the Sarbanes Oxley Act of 2002 11
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
September 30,
2002
-------------
ASSETS
Current Assets:
Cash $ 4,423,983
Accounts receivable 459,228
Inventories 1,834,489
Prepaid expenses and other current assets 33,067
------------
Total Current Assets 6,750,767
Restricted Cash 248,727
Property and Equipment, net 424,574
Deposits and Other Assets 794,475
Goodwill 207,149
Website 99,750
------------
Total Assets $ 8,525,442
============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable $ 3,169,074
Accrued expenses 457,981
Accrued bonus payable 1,692,274
Reserve for contingent liabilities 1,800,000
Current portion of long term debt 352,036
Deferred revenue 3,740
Other current liabilities 430,238
------------
Total Current Liabilities 7,905,343
------------
Minority interest 191,474
Long term debt 429,494
------------
Total Liabilities 8,526,311
------------
Stockholders' Deficit:
Preferred stock ($1,000 par value;
authorized 1,500,000 767,588
shares; issued 768 shares)
Common Stock ($.001 par value; authorized
500,000,000 shares; issued and outstanding
345,072,201 shares) 345,072
Additional paid-in capital 30,997,644
Accumulated deficit (32,051,167)
Deferred compensation (213,750)
Accumulated other comprehensive income 153,744
------------
Total Stockholders' Deficit (869)
------------
Total Liabilities and Stockholders' Deficit $ 8,525,442
============
See Notes to Consolidated Financial Statements.
1
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- --------------------------
2002 2001 2002 2001
----------- --------- ------------ ------------
Net Sales $ 11,084,269 $7,548,925 $ 26,354,605 $ 20,558,976
Cost of Sales 2,128,143 1,462,251 4,792,264 4,870,551
----------- --------- ----------- -----------
Gross Profit 8,956,126 6,086,674 21,562,341 15,688,425
Associate commissions 4,665,502 2,879,856 12,412,739 9,333,493
Selling, general and
administrative expenses 2,878,838 2,496,411 7,216,289 4,290,066
----------- --------- ----------- ----------
Operating income 1,411,786 710,407 1,933,313 2,064,866
Minority interest in
income of subsidiary (35,161) - (95,539) -
Gain (loss) on foreign
exchange 45,113 231 (33,758) (13)
Other (expense) income 5,222 20,137 (71,247) 55,146
Interest, net (11,729) 4,088 (44,338) (11,446)
----------- --------- ----------- ----------
Income before extraordinary
items 1,415,231 734,863 1,688,431 2,108,553
Extraordinary gain -
forgiveness of debt 200,000 - 600,000 -
----------- --------- ----------- ----------
Net income 1,615,231 734,863 2,288,431 2,108,553
Preferred stock dividends 19,313 50,875 60,773 281,804
----------- --------- ----------- ----------
Net income to common
shareholders $ 1,595,918 $ 683,988 $ 2,227,658 $ 1,826,749
=========== ========= =========== ==========
Basic income per common share:
Continuing operations $ 0.01 $ 0.00 $ 0.01 $ 0.02
Extraordinary gain 0.00 0.00 0.00 0.00
----------- --------- ----------- ----------
Basic income per common share $ 0.01 $ 0.00 $ 0.01 $ 0.02
=========== ========= =========== ==========
Basic weighted common
shares used 304,924,593 186,708,148 289,714,241 107,385,224
=========== =========== =========== ===========
Diluted income per common
share:
Continuing operations $ 0.01 $ 0.00 $ 0.01 $ 0.01
Extraordinary gain 0.00 0.00 0.00 0.00
----------- --------- ----------- -----------
Diluted income per common
share $ 0.01 $ 0.00 $ 0.01 $ 0.01
=========== ========= =========== ==========
Diluted weighted common
shares used 305,867,907 353,877,190 290,657,555 274,125,695
=========== =========== =========== ===========
See Notes to Consolidated Financial Statements.
2
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- ------------------------
2002 2001 2002 2001
---------- -------- ---------- ----------
Net income $ 1,615,231 $ 734,863 $ 2,288,431 $ 2,108,553
Other comprehensive
income, net of tax
Foreign translation
adjustment 94,086 (57,665) 153,744 (20,462)
---------- -------- ---------- ----------
Comprehensive income $ 1,709,317 $ 677,198 $ 2,442,175 $ 2,088,091
========== ======== ========== ==========
See Notes to Consolidated Financial Statements.
3
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
---------------------------------
2002 2001
--------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,288,431 $ 2,108,553
--------------- --------------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 289,878 72,707
Issuance of stock for services rendered and
settlement of interest 290,089 243,826
Gain on forgiveness of debt (600,000) -
Minority interest of subsidiary 191,474 -
Changes in assets and liabilities:
Accounts receivable (339,411) (114,406)
Inventories (909,728) (663,162)
Prepaid expenses 214,124 (134,227)
Deposits and other assets (451,783) (108,771)
Accounts payable and accrued expenses 3,417,754 555,745
Deferred revenue 3,740 (105,570)
Other current liabilities 323,015 (200,785)
--------------- --------------
Total Adjustments 2,429,152 (454,643)
--------------- --------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,717,583 1,653,910
--------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (364,032) (171,708)
--------------- --------------
NET CASH USED IN INVESTING ACTIVITIES (364,032) (171,708)
--------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Restricted cash (147,917) (7,918)
Proceeds from preferred stock - 50,000
Proceeds from notes payable and long-term debt 260,000 50,000
Payments of notes payable and long-term debt (521,950) (33,187)
--------------- --------------
NET CASH (USED IN) PROVIDED BY FINANCING
ACTIVITIES (409,867) 58,895
--------------- --------------
Effect of Exchange Rate Changes 155,984 16,741
--------------- --------------
NET INCREASE IN CASH 4,099,668 1,557,838
CASH, BEGINNING OF PERIOD 324,315 108,419
--------------- --------------
CASH, END OF PERIOD $ 4,423,983 $ 1,666,257
--------------- --------------
See Notes to Consolidated Financial Statements.
4
NATURAL HEALTH TRENDS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2002
(UNAUDITED)
1. BASIS OF PRESENTATION
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 SB. 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 nine month
period ended September 30, 2002 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2002. 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, 2001.
The Company had a working capital deficiency of approximately
$1,155,000 at September 30, 2002 and $3,522,000 at December 31, 2001.
This raises substantial doubt about the Company's ability to continue
as a going concern. The Company's continued existence is dependent on
its ability to generate profits from operations. While management is
unable to predict profitability and can make no assurances, management
believes the Company will generate sufficient profits to ease its
dependency on debt and equity financing in the foreseeable future.
2. FUTURE EFFECTS OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In July 2001, FASB issued Statement of Financial Accounting Standards
No. 142, "Goodwill and Other Intangible Assets", ("SFAS No. 142"),
which is effective for fiscal years beginning after December 15, 2001.
SFAS No. 142 requires, among other things, the discontinuance of
goodwill amortization. In addition, the standard includes provisions
upon adoption for the reclassification of certain existing recognized
intangibles as goodwill, reassessment of the useful lives of existing
recognized intangibles, reclassification of certain intangibles out of
previously reported goodwill and the testing for the impairment of
existing goodwill and other intangibles. Application of the
non-amortization provisions of the Statement did not have an effect on
the Company's financial position or operations.
5
In August 2001, the FASB issued Statement of Financial Accounting
Standards No. 143, "Accounting for Asset Retirement Obligations",
("SFAS No. 143"), which is effective for all fiscal years beginning
after June 15, 2002; however, early adoption is encouraged.
In October 2001, the FASB issued Statement of Financial Accounting
Standards No. 144 ("SFAS No. 144"), "Accounting for the Impairment or
Disposal of Long-Lived Assets," which supercedes Statement of Financial
Accounting Standards No. 121 ("SFAS No. 121"), "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of" and certain provisions of APB Opinion No. 30, "Reporting Results of
Operations - Reporting the Effects of Disposal of a Segment of a
Business and Extraordinary, Unusual and Infrequently Occurring Events
and Transactions." SFAS No. 144 requires that long-lived assets to be
disposed of by sale, including discontinued operations, be measured at
the lower of carrying amount or fair value, less cost to sell, whether
reported in continuing operations or in discontinued operations. SFAS
No. 144 also broadens the reporting requirements of discontinued
operations to include all components of an entity that have operations
and cash flows that can be clearly distinguished, operationally and for
financial reporting purposes, from the rest of the entity. The
provisions of SFAS No. 144 are effective for fiscal years beginning
after December 15, 2001. The Company implemented SFAS No. 144 and SFAS
No. 143 beginning January 1, 2002.
3. During the first nine months of 2002, the Company received notice of
conversion on $1,556,710 of Series F, H and J Preferred Stock. The
Company issued 98,538,149 shares of Common Stock upon conversion of the
shares of Preferred Stock and the accrued dividends thereon.
4. The Company issued 1,930,000 shares of Common Stock to a law firm
in the first nine months of 2002 for legal services of approximately
$57,100.
5. The Company issued 23,666,333 shares of Common Stock in the first
nine months of 2002 for payments of notes payable and accrued interest
of approximately $279,000.
Item 2. Management's Discussion and Analysis or Plan of Operation
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. ("NHTC") is a Florida corporation.
NHTC was incorporated on December 1, 1988 as "Florida Institute of Massage
Therapy, Inc." and changed its name to "Natural Health Trends Corp." on June
24, 1993. NHTC's Common Stock, par value $0.001 per share (the "Common Stock")
is listed on the Over-the-Counter Bulletin Board (the "OTCBB") under the symbol
"NHTC".
NHTC is a holding company that operates two businesses, both of which
distribute products that promote health, wellness and sexual vitality through
the multi-level marketing ("MLM") channel.
6
NHTC's largest operation is Lexxus International, Inc. ("Lexxus"), a
Delaware corporation and a majority-owned subsidiary of NHTC. Lexxus sells
products that heighten mental and sexual arousal, particularly in women.
NHTC's other business, eKaire.com, Inc. ("eKaire"), distributes nutritional
supplements aimed at general health and wellness through the Internet and other
channels. eKaire consists of companies operating in the U.S., in Canada as
Kaire International Canada Ltd. ("Kaire Canada"), in Australia as Kaire
Nutraceuticals Australia Pty. Ltd. ("Kaire Australia"), in New Zealand as
Kaire Nutraceuticals New Zealand Limited ("Kaire New Zealand"), and in
Trinidad as Kaire Trinidad, Ltd. ("Kaire Trinidad").
In January 2001, NHTC entered into a joint venture with Lexxus
International and formed a new majority-owned subsidiary, Lexxus International,
Inc., a Delaware corporation. The original founders of Lexxus International
received an aggregate of 10,000,000 shares of Common Stock.
In March 2001, Global Health Alternatives, Inc., a Delaware corporation
and wholly-owned subsidiary of NHTC ("GHA"), and Ellon, Inc., a Delaware
corporation and wholly-owned subsidiary of GHA ("Ellon"), filed for Chapter 7
bankruptcy liquidation in the United States Bankruptcy Court of the Northern
District of Texas. Neither GHA nor Ellon had operations during the years 2000 or
2001. Both GHA and Ellon were dissolved in June 2001.
In the second quarter of 2001, NHTC incorporated Lexxus International
(SW Pacific) Pty. Ltd., an Australian corporation and majority-owned subsidiary
of NHTC, which does business in Australia ("Lexxus Australia"). In addition,
NHTC 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, NHTC incorporated Lighthouse Marketing Corporation
("LMC"), a Delaware Corporation and a wholly owned subsidiary of NHTC. As of
June 30, 2002, LMC had not conducted any business, but intends to conduct
business in the future.
On November 16, 2001, NHTC incorporated Lexxus International Co.
Ltd., a corporation organized under the laws of the Republic of China and a
majority-owned subsidiary of NHTC ("Lexxus Taiwan").
On January 28, 2002, NHTC incorporated MyLexxus Europe AG, a
corporation organized under the laws of Switzerland and a majority-owned
subsidiary of NHTC ("Lexxus Europe"). This company manages the sales of product
into sixteen eastern European countries, including Russia.
In March 2002, NHTC incorporated Lexxus International Co. Ltd., a
corporation organized under the laws of Hong Kong and a majority-owned
subsidiary of NHTC ("Lexxus Hong Kong").
In April 2002, NHTC incorporated Personal Care International India Pvt.
Ltd., a corporation organized under the laws of India and a majority-owned
subsidiary of NHTC ("MyLexxus India").
In June 2002, NHTC incorporated Lexxus Marketing Pte. Ltd., a
corporation organized under the laws of Singapore and a majority-owned
subsidiary of NHTC ("Lexxus Singapore").
Nine Months Ended September 30, 2002 Compared To The Nine Months Ended September
30, 2001.
Net Sales. Net sales were approximately $26,355,000 and $20,559,000 for
the nine months ended September 30, 2002 and September 30, 2001, respectively;
an increase of approximately $5,796,000 or 28%. The increased sales were
primarily from the sales of Lexxus products at varying prices in different
markets and the expansion of Lexxus into international markets offset by a
slight decrease in the sales of eKaire products.
Cost of Goods Sold. Cost of goods sold for the nine months ended
September 30, 2002 was approximately $4,792,000 or 18% of net sales. Cost of
goods sold for the nine months ended September 30, 2001 was approximately
$4,871,000 or 24% of net sales. Cost of goods sold decreased as a percentage of
net sales due to increased sales volume of higher margin inventory, the lower
costs associated with the packaging of the Lexxus product line, and increased
efficiencies gained from global distribution channels.
7
Gross Profit. Gross profit increased from approximately $15,688,000 for
the nine months ended September 30, 2001 to approximately $21,562,000 for the
nine months ended September 30, 2002. The increase of approximately $5,874,000
or 37% is attributable to higher sales volumes by Lexxus and the international
expansion of Lexxus.
Commissions. Associate commissions were approximately $12,413,000 in
the nine months ended September 30, 2002 compared to approximately $9,333,000
for the nine months ended September 30, 2001, an increase of approximately
$3,080,000. This increase is directly attributable to the higher sales volume
generated in 2002.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses as a percentage of net sales increased from
approximately $4,290,000 or 21% of net sales in the nine months ended September
30, 2001 to approximately $7,216,000 or 27% of net sales in the nine months
ended September 30, 2002. These expenses as a percentage of net sales increased
primarily due to the expansion of Lexxus into international markets and the
development of a strong global infrastructure, including increased personnel and
facility costs.
Income from Operations. Operating income decreased from approximately
$2,065,000 for the nine months ended September 30, 2001 to approximately
$1,933,000 for the nine months ended September 30, 2002. The decrease of
approximately 6% is due to the initial costs incurred in opening international
offices and developing a marketing strategy in international markets.
Income Taxes. Income tax benefits were not reflected in either
period due to the utilization of net operating loss carry forwards.
Income before Extraordinary Items. As of September 30, 2002 the Company
had income before extraordinary times of approximately $1,688,000 as compared to
approximately $2,109,000 as of September 30, 2001.
Gain on Forgiveness of Debt. During the nine months ended September 30,
2002, NHTC realized a gain of $600,000 on the various debt and payables related
to the sale of Kaire Nutraceuticals, Inc.
Net Income. Net income was approximately $2,288,000 in the nine months
ended September 30, 2002 as compared to approximately $2,109,000 in the nine
months ended September 30, 2001.
Liquidity and Capital Resources
The Company has funded working capital and capital expenditure
requirements primarily from cash receipts, which are directly from the sale of
Lexxus and eKaire products.
In the nine months ended September 30, 2002, NHTC issued 50,988,189
shares of Common Stock to an accredited investor upon conversion of $1,096,710,
face amount of Series F Preferred Stock pursuant to Section 4(2) of the
Securities Act of 1933, as amended (the "Act").
In the nine months ended September 30, 2002, NHTC issued 6,082,671
shares of Common Stock to an accredited investor upon conversion of $75,000,
face amount of Series H Preferred Stock pursuant to Section 4(2) of the Act.
In the nine months ended September 30, 2002, NHTC issued 41,467,289
shares of Common Stock to an accredited investor upon conversion of $385,000,
face amount of Series J Preferred Stock pursuant to Section 4(2) of the Act.
At September 30, 2002, the ratio of current assets to current
liabilities was 0.85 to 1.0 and the Company had a working capital deficit of
approximately $1,155,000.
Cash provided by operations for the nine months ended September 30,
2002 was approximately $4,718,000. Cash used in investing activities during the
period was approximately $364,000. Cash used in financing activities during the
period was approximately $410,000. Total cash increased by approximately
$4,100,000 during the period.
8
Our independent auditors' report on the consolidated financial
statements stated as of December 31, 2001, that due to a working capital
deficit, there is substantial doubt about the company's ability to continue as a
going concern. While there can be no assurances, management believes that the
profitability achieved during the nine months ended September 30, 2002 will
continue for the foreseeable future.
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
On November 22, 2001, Pfizer, Inc. filed an action in the United States
District Court, Southern District of New York, against Lexxus alleging
that Lexxus' distribution and marketing of Viacreme TM infringes on
Pfizer's federally registered trademark, Viagra (R). Pfizer's complaint
alleges federal false designation of origin and unfair competition,
federal trademark dilution, federal false advertising and unfair
competition, common law trademark infringement, trademark dilution and
deceptive acts and practices. NHTC settled the Pfizer lawsuit amicably
in July 2002.
Item 2. Changes in Securities and Use of Proceeds
In the three months ended September 30, 2002, NHTC issued 2,308,722
shares of Common Stock to an accredited investor upon conversion of
$25,000, face amount of Series H Preferred Stock pursuant to Section
4(2) of the Act.
In the three months ended September 30, 2002, NHTC issued 22,939,747
shares of Common Stock to an accredited investor upon conversion of
$110,000, face amount of Series J Preferred Stock pursuant to Section
4(2) of the Act.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to Vote of Security Holders
None.
Item 5. Other Information
None.
PART III - OTHER
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
8-K with date of report of May 11, 2002 filed September 30, 2002
9
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
President
Date: November 14, 2002
10
CERTIFICATION
Pursuant to Section 302 of the Sarbanes Oxley Act of 2002
I, Mark Woodburn, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Natural
Health Trends, Corp.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and I have:
a) designed such internal controls to ensure that material
information relating to the registrant and its
subsidiaries (collectively, the "Company") is made known
to me by others within the Company, particularly during
the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's internal
controls as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report my conclusions about
the effectiveness of the disclosure controls and
procedures based on my evaluation as of the Evaluation
Date;
5. I have disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of the registrant's
board of directors:
a) all significant deficiencies (if any) in the design or
operation of internal controls which could adversely
affect the registrant's ability to record, process,
summarize and report financial data and have identified
for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal controls; and
6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: November 14, 2002
By: /s/ Mark D. Woodburn
Mark Woodburn
President and Chief Financial Officer
11