UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(x) QUARTERLY REPORT UNDER SECTION 13 OR 15 OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
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Commission file number 0-30351
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TRUE HEALTH, INC.
(Exact name of small business issuer as specified in its charter)
Utah 75-2263732
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
5 Tansey Circle, Mesquite, Texas 75149
(Address of principal executive offices)
(972) 644-1200
(Issuer's telephone number)
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $0.01 Per Share
Indicate by check mark whether the Registrant (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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No______
As of June 30, 2002, there were outstanding 6,471,048 shares of True
Health, Inc., Common Stock, par value $.01.
Transitional Small Business Disclosure Format (Check one): Yes No x
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FORM 10-QSB
TRUE HEALTH, INC.
Index to Form 10-QSB
PART I
FINANCIAL INFORMATION (UNAUDITED)
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets as of June 30, 2002 and December 31, 2001
Statements of Income (Loss) for the Six Months Ended June 30, 2002 and 2001
Statements of Income (Loss) for the Quarters Ended June 30, 2002 and 2001
Statements of Cash flows for the Six Months Ended June 30, 2002 and 2001
Statements of Cash flows for the Quarters Ended June 30, 2002 and 2001
Notes to Financial Statements
TRUE HEALTH, INC.
BALANCE SHEETS
JUNE 30, 2002 (UNAUDITED) AND DECEMBER 31, 2001
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JUNE 30,
2002 DECEMBER 31,
ASSETS (UNAUDITED) 2001
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Current assets:
Cash $ 254 $ 478
Accounts receivable, trade 209 120
Inventory 10,846 10,523
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Total current assets 11,309 11,121
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Office and computer equipment, net of
accumulated depreciation of $1,890 and $1,766 245 369
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Total assets $ 11,554 $ 11,490
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LIABILITIES
Current liabilities:
Accounts payable and accrued expenses $ 39,111 $ 28,560
Due to related parties 84,676 84,463
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Total current liabilities 123,787 113,023
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Total liabilities 123,787 113,023
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Commitments and contingencies - -
STOCKHOLDERS' DEFICIT
Common stock, $.01 par value, 100,000,000 shares authorized,
6,471,048 and 6,071,048 shares issued and outstanding 64,710 60,710
Capital in excess of par value 830,009 824,009
Accumulated deficit (1,006,952) (986,252)
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Total stockholders' deficit (112,233) (101,533)
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Total liabilities and stockholders' deficit $ 11,554 $ 11,490
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The accompanying notes are an integral part of these statements.
TRUE HEALTH, INC.
STATEMENTS OF LOSS FOR THE SIX MONTHS ENDED
JUNE 30, 2002 AND 2001
(UNAUDITED)
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2002 2001
(UNAUDITED) (UNAUDITED)
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Sales $ 12,685 $ 17,737
Cost of sales 2,634 3,342
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Gross profit 10,051 14,395
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Selling, general, and administrative expenses:
Salaries and sales commissions 4,031 5,722
Research and development 335 29
Depreciation 124 124
Advertising and promotion 218 368
Professional fees 19,408 6,626
Other 6,635 9,847
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Total selling, general, and administrative expenses 30,751 22,716
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Loss from operations (20,700) (8,321)
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Other income (expense):
Interest expense - -
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Total other income (expense) - -
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Income (loss) before taxes on income (20,700) (8,321)
Provision (credit) for taxes on income - -
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Net income (loss) $ (20,700) $ (8,321)
============ ============
Income (Loss) per common share, basic $ - $ -
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Weighted average number of shares outstanding 6,292,043 6,071,048
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The accompanying notes are an integral part of these statements.
TRUE HEALTH, INC.
STATEMENTS OF LOSS FOR THE QUARTERS ENDED
JUNE 30, 2002 AND 2001
(UNAUDITED)
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2002 2001
(UNAUDITED) (UNAUDITED)
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Sales $ 6,349 $ 7,723
Cost of sales 1,367 1,377
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Gross profit 4,982 6,346
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Selling, general, and administrative expenses:
Salaries and sales commissions 1,662 2,707
Research and development 274 -
Depreciation 62 62
Advertising and promotion 132 51
Professional fees 16,828 4,820
Other 3,421 5,887
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Total selling, general, and administrative expenses 22,379 13,527
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Loss from operations (17,397) (7,181)
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Other income (expense):
Interest expense - -
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Total other income (expense) - -
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Income (loss) before taxes on income (17,397) (7,181)
Provision (credit) for taxes on income - -
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Net income (loss) $ (17,397) $ (7,181)
============ ============
Income (Loss) per common share, basic $ - $ -
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Weighted average number of shares outstanding 6,471,048 6,071,048
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The accompanying notes are an integral part of these statements.
TRUE HEALTH, INC.
STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED
JUNE 30, 2002 AND 2001
(UNAUDITED)
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2002 2001
(UNAUDITED) (UNAUDITED)
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Cash flows from operating activities:
Net income (loss) $ (20,700) $ (8,321)
Adjustments to reconcile net income to cash provided (used)
by operating activities:
Depreciation 124 124
Changes in operating assets and liabilities:
Accounts receivable, trade (89) (294)
Inventory (323) (2,988)
Accounts payable and accrued expenses 10,551 6,262
Stock issued for services 10,000 -
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Net cash flows from by operating activities (437) (5,217)
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Cash flows from investing activities: - -
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Net cash flows from investing activities - -
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Cash flows from financing activities:
Stock issued for services 10,000 -
Less, Amount recognized as operating expenses (10,000) -
Advances from related parties 213 4,809
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Net cash flows from financing activities 213 4,809
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Net increase (decrease) in cash and cash equivalents (224) (408)
Cash and cash equivalents:
Beginning of period 478 1,280
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End of period $ 254 $ 872
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Supplemental cash flow disclosures:
Cash paid for interest $ - $ -
Noncash investing and financing activities:
Stock issued for services 10,000 -
The accompanying notes are an integral part of these statements.
TRUE HEALTH, INC.
STATEMENTS OF CASH FLOWS FOR THE QUARTERS ENDED
JUNE 30, 2002 AND 2001
(UNAUDITED)
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2002 2001
(UNAUDITED) (UNAUDITED)
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Cash flows from operating activities:
Net income (loss) $ (17,397) $(7,181)
Adjustments to reconcile net income to cash provided (used)
by operating activities:
Depreciation 62 62
Changes in operating assets and liabilities:
Accounts receivable, trade (89) (294)
Inventory 51 (883)
Accounts payable and accrued expenses 6,878 7,363
Stock issued for services 10,000 -
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Net cash flows from by operating activities (495) (933)
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Cash flows from investing activities: - -
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Net cash flows from investing activities - -
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Cash flows from financing activities:
Stock issued for services - -
Less, Amount recognized as operating expenses - -
Advances from related parties 649 1,226
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Net cash flows from financing activities 649 1,226
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Net increase (decrease) in cash and cash equivalents 154 293
Cash and cash equivalents:
Beginning of period 100 579
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End of period $ 254 $ 872
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Supplemental cash flow disclosures:
Cash paid for interest $ - $ -
Noncash investing and financing activities:
Stock issued for services - -
The accompanying notes are an integral part of these statements.
TRUE HEALTH, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION:
The financial statements include the accounts of True Health, Inc. The Balance
Sheets as of June 30, 2002 and December 31, 2001, the Statements of Loss for the
six months quarters ended June 30, 2002 and 2001, and the Statements of Cash
Flows for the six months and quarters ended June 30, 2002 and 2001 have been
prepared by the Company without audit. In the opinion of management, these
financial statements include all adjustments necessary to present fairly the
financial position, results of operations and cash flows as of June 30, 2002 and
2001 and for the six months and quarters then ended. All adjustments made have
been of a normal recurring nature. Certain information and footnote disclosures
normally included in the financial statements prepared in accordance with U.S.
generally accepted accounting principles have been condensed or omitted. The
Company believes that the disclosures included are adequate and provide a fair
presentation of interim period results. Interim financial statements are not
necessarily indicative of financial position of operating results for an entire
year. It is suggested that these interim financial statements be read in
conjunction with the audited financial statements and the notes thereto included
in the Company's Form 10-KSB for the year ended December 31, 2001 filed with the
United States Securities and Exchange Commission (SEC) on or about April 15,
2002.
NOTE 2 - THE COMPANY, NATURE OF OPERATIONS:
True Health, Inc. (the Company) is a Utah corporation engaged in the marketing
of nutrition supplement/meal replacement products under the brand name True
Health. Substantially all of its revenues are derived from these products. The
products are distributed from the Company's facilities in Texas to customers
throughout the world. The accompanying financial statements have been prepared
on the basis of U.S. generally accepted accounting principles.
NOTE 3 - AGREEMENT WITH BURKSHIRE:
In March, 2002, the Company issued 400,000 shares to stock to Burkshire Capital
Group, a financial consulting firm, for services in connection with management,
marketing, consulting, strategic planning, corporate organization and structure,
expansion of services, acquisitions and business opportunities, and arranging
equity financing. The consultant was expected to assist the Company in making
private placements of its stock. The services were valued at $10,000, or $0.025
per share. Burkshire's efforts were unsuccessful. Therefore, amount of
$10,000, which was originally recorded as prepaid expenses during the quarter
ended March 31, 2002, was charged to expense during the quarter ended June 30,
2002.
NOTE 4 - GOING CONCERN:
The Company has experienced losses in eight of the previous ten years. Losses
amount to more than $1,000,000 on a cumulative basis. At June 30, 2002, current
liabilities exceeded current assets by approximately $112,000, resulting in a
working capital deficiency; there is also a capital deficit of the same
approximate amount. Management is currently investigating alternative marketing
strategies, methods, and markets, and is seeking additional outside financing
and/or equity investors, but there is no assurance that management's efforts in
this regard will be successful. Moreover, substantially all revenues are
derived from a single product or line of products, creating a concentration of
business; should the Company be unable for any reason to continue sales of the
products, it would have a severe impact on the Company's business. All of the
above factors create substantial doubt about the Company's ability to continue
as a going concern.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The Company had year-to-date sales of $12,685 for 2002, versus $17,737for the
same period of 2001. During the quarter ended June 30, 2002, sales were down
$1,374 from the preceding year. The decrease in sales resulted primarily from
Company management's focus on raising additional equity capital and in
negotiating agreements with a financial consulting firm (see below).
Year-to-date selling, general, and administrative expenses increased to $30,751
from $22,716, primarily due to consulting fees paid to Burkshire Capital Group.
Year-to-date net loss increased to $20,700 from $8,321, and the loss for the
quarter ended June 30, 2002 increased to $17,397 from $7,181.
The Company had total assets of $11,554 at June 30, 2002, compared to $11,490 at
December 31, 2001, an insignificant change.
In October 2001, the Company completed a reverse stock split whereby each ten
(10) shares of the Corporation's $0.01 par value common stock outstanding were
converted into one (1) share of the Corporation's $0.01 par value common stock.
Concurrently therewith, the Company's ticker symbol changed from TEHI to TRHH.
In March, 2002, the Company issued 400,000 shares to stock to Burkshire Capital
Group, a financial consulting firm, for services in connection with management,
marketing, consulting, strategic planning, corporate organization and structure,
expansion of services, acquisitions and business opportunities, and arranging
equity financing. The consultant was expected to assist the Company in making
private placements of its stock. The services were valued at $10,000, or $0.025
per share. Burkshire's efforts were unsuccessful. Therefore, amount of
$10,000, which was originally recorded as prepaid expenses during the quarter
ended March 31, 2002, was charged to expense during the quarter ended June 30,
2002.
PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings:
None.
ITEM 2 - Changes in Securities:
In March, 2002, the Company issued 400,000 shares to stock to Burkshire Capital
Group, a financial consulting firm, for services in connection with management,
marketing, consulting, strategic planning, corporate organization and structure,
expansion of services, acquisitions and business opportunities, and arranging
equity financing. The consultant was expected to assist the Company in making
private placements of its stock. The services were valued at $10,000, or $0.025
per share. Burkshire's efforts were unsuccessful. Therefore, amount of
$10,000, which was originally recorded as prepaid expenses during the quarter
ended March 31, 2002, was charged to expense during the quarter ended June 30,
2002.
ITEM 3 - Defaults Upon Senior Securities:
None.
ITEM 4 - Submission of Matters to a Vote of Security Holders:
The Company had an annual shareholders meeting on August 1, 2001. A slate of
officers was elected for the next year and a reverse stock split was approved.
ITEM 5 - Other Information:
This form 10-QSB includes or may include certain forward-looking statements
concerning the Company's financial position, business strategy, budgets,
projected costs and plans and objectives of management for future operations as
well as other statements including words such as "anticipate," "believe,"
"plan," "estimate," "expect," "intend," and other similar expressions. Although
the Company believes its expectations reflected in such forward-looking
statements are based on reasonable assumptions, readers are cautioned that no
assurance can be given that such expectations will prove correct and that actual
results and developments may differ materially from those conveyed in such
forward-looking statements. Important factors that could cause actual results
to differ materially from the expectations reflected in the forward-looking
statements in the Form 10-SB include, among others, the pace of technological
change, the Company's ability to manage growth, general business and economic
conditions in the Company's operating regions, and competitive and other
factors, all as more fully described in the Company's Report on Form 10-SB for
the period ended December 31, 2001, under Management's Discussion and Analysis
of Financial Condition and Results of Operations. "Assumptions Underlying
Certain Forward-Looking Statements and Factors that May Affect Future Results"
and elsewhere from time to time in the Company's other SEC reports. Such
forward-looking statements speak only as of the date on which they are made and
the Company does not undertake any obligation to update any forward-looking
statement to reflect events or circumstances after the date of this Form 10-QSB.
If the Company does update or correct one or more forward-looking statements,
investors and others should not conclude that the Company would make additional
updates or corrections with respect thereto or with respect to other
forward-looking statements. Actual results may vary materially.
ITEM 6. Exhibits And Reports On Form 8-K:
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
TRUE HEALTH, INC.
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(Registrant)
Date: _________________ By:___________________________________________
(Signature)
Richard M. Stokley
President