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Naturade Inc – ‘10-Q’ for 6/30/99

On: Monday, 8/16/99 · For: 6/30/99 · Accession #: 1047469-99-32378 · File #: 33-07106-A

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 8/16/99  Naturade Inc                      10-Q        6/30/99    5:99K                                    Merrill Corp/New/FA

Quarterly Report — Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                      14     65K 
 2: EX-10.1     Material Contract                                      7     20K 
 3: EX-10.2     Material Contract                                     19     55K 
 4: EX-10.3     Material Contract                                     12     32K 
 5: EX-27       Financial Data Schedule (Pre-XBRL)                     2      6K

10-Q — Quarterly Report
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Changes in Securities Defaults upon Senior Securities Exhibits & Reports on Form 8-K Financial Statements Legal Proceedings Management's Discussion and Analysis of Financial Condition and Results of Operations Other Information Submission of Matters to a Vote of Security Holders
1	1st Page - Filing Submission
2	Item 1. Financial Statements
9	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
12	Item 1. Legal Proceedings
"	Item 2. Changes in Securities
"	Item 3. Defaults upon Senior Securities
"	Item 4. Submission of Matters to a Vote of Security Holders
"	Item 5. Other Information
"	Item 6. Exhibits & Reports on Form 8-K

10-Q 1st Page of 14 TOC ↑Top Previous Next ↓Bottom Just 1st
 
 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 FORM 10-Q

(Mark One)                                                                      

[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES       
EXCHANGE ACT OF 1934.                                                           

For the quarterly period ended June 30, 1999
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 33-7106-A

NATURADE, INC.
(Exact name of registrant as specified in its charter)

DELAWARE                               23-2442709       
--------                               ----------       
(State or other jurisdiction of                (I. R. S. Employer             
incorporation or organization)                Identification No.)           

 14370 Myford Rd. Irvine, California 92606
 -----------------------------------------
  (Address of principal executive offices)

(714) 573-4800
--------------
(Registrant's telephone number, including area code)

   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                          
                       ---     ---

 APPLICABLE ONLY TO CORPORATE ISSUERS:

    Indicate by number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. 5,349,084 shares as of July 
31, 1999.                                                                       

Exhibit Index on Page 14    

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 FORM 10-Q
QUARTERLY REPORT
 Quarter Ended June 30, 1999

 TABLE OF CONTENTS

                                                        [Enlarge/Download Table]

                                                                              PAGE NO.
                                                                              --------
                                                                                      
PART I:      FINANCIAL INFORMATION                                                    

     Item 1.      Financial Statements                                                

                  Balance Sheets  at June 30, 1999                                 3  
                  (unaudited) and December 31, 1998 (unaudited)                       

                  Statements of Operations for the three and six month periods     5  
                  ended June 30, 1999 (unaudited) and June 30,                        
                  1998 (unaudited)                                                    

                  Statements of Cash Flows for the six month periods ended         6  
                  June 30, 1999 (unaudited) and June 30, 1998 (unaudited)             

                  Notes to Financial Statements                                    7  

     Item 2.      Management's Discussion and Analysis of Financial Condition      9  
                  and Results of Operations                                           

PART II:     OTHER INFORMATION                                                        

      Item 1.     Legal Proceedings                                               12  

      Item 2.     Changes in Securities                                           12  

      Item 3.     Defaults upon Senior Securities                                 12  

      Item 4.     Submission of Matters to a Vote of Security Holders             12  

      Item 5.     Other Information                                               12  

      Item 6.     Exhibits and Reports on Form 8-K                                12  

SIGNATURES                                                                        13  

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 PART I: FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS                                                   

NATURADE, INC.
Balance Sheets

ASSETS

                                                                [Download Table]

                                                    June 30, 1999  December 31, 1998
                                                     (Unaudited)      (Unaudited)   
                                                                                    
Current assets:                                                                     
         Cash and cash equivalents                   $  158,960      $  842,029     
         Accounts receivable                          1,051,056       1,294,612     
         Related party receivable                             0         600,000     
         Inventories                                  2,375,007       2,093,981     
         Refundable income taxes                        163,416         163,416     
         Prepaid expenses and other current assets      303,969         325,853     
         Property available for sale                    428,989                     
                                                    -----------     -----------     
                 Total current assets                 4,481,397       5,319,891     

Property and equipment, net                             321,290       1,981,326     
Intangible assets, net                                1,077,899       1,106,358     
Other assets                                            105,572         116,014     
                                                    -----------     -----------     
                 Total assets                         5,986,158       8,523,589     
                                                    -----------     -----------     
                                                    -----------     -----------     

 See accompanying notes to financial statements.

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 PART I: FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS                                                   

             LIABILITIES AND STOCKHOLDERS' (DEFICIENCY) EQUITY

                                                        [Enlarge/Download Table]

                                                                   June 30, 1999  December 31, 1998
                                                                    (Unaudited)       (Unaudited)  
                                                                                                   
Current liabilities:                                                                               
         Accounts payable                                           $ 1,768,846       $   891,069  
         Lawsuit judgment payable                                     2,774,000                 -  
         Accrued expenses                                               281,460           565,794  
         Notes payable                                                2,435,719         1,450,000  
         Current portion of long-term debt                               32,397           193,383  
                                                                    -----------       -----------  
                 Total current liabilities                            7,292,422         3,100,246  
                                                                    -----------       -----------  
Long-term debt, less current maturities                                 152,223         1,964,324  
                                                                    -----------       -----------  

Commitments and contingencies                                                 -                 -  

Stockholders' (deficiency) equity:                                                                 

         Common stock, par value $0.0001 per share;                                                
         authorized, 50,000,000 shares; issued and outstanding,                                    
         5,349,084  (5,273,731 at December 31, 1998)                        533               527  

         Preferred stock, par value $0.0001 per share;                                             
         authorized, 2,000,000 shares; issued and                                                  
         outstanding, 1,250,024                                             125               125  

         Additional paid-in capital                                   7,493,054         7,453,201  
         Retained earnings (accumulated deficit)                     (8,952,199)       (3,994,834) 
                                                                    -----------       -----------  
                 Total stockholders' (deficiency) equity             (1,458,487)        3,459,019  
                                                                    -----------       -----------  
                 Total liabilities and stockholders' (deficiency)                                  
                   equity                                           $ 5,986,158       $ 8,523,589  
                                                                    -----------       -----------  
                                                                    -----------       -----------  

 See accompanying notes to financial statements.

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NATURADE, INC.  
STATEMENTS OF OPERATIONS

                                                        [Enlarge/Download Table]

                                                        Three Months       Three Months       Six Months       Six Months  
                                                            Ended             Ended             Ended             Ended    
                                                        June 30, 1999     June 30, 1998     June 30, 1999     June 30, 1998
                                                         (Unaudited)       (Unaudited)       (Unaudited)       (Unaudited) 
                                                                                                                           
Net sales                                                 2,781,116       $ 3,945,620       $ 5,133,924       $ 7,084,718  

Cost of sales                                             1,841,297         1,992,893         3,225,926         4,191,844  
                                                        ------------------------------------------------------------------ 

Gross profit                                                939,819         1,952,727         1,907,998         2,892,874  
                                                        ------------------------------------------------------------------ 

Costs and expenses:                                                                                                        
         Selling, general and  administrative expenses    1,971,435         2,559,364         3,813,688         4,849,614  
         Special legal expenses                              75,228                             127,260                    
         Lawsuit judgment expense                                 -                           2,774,000                    
         Depreciation  & amortization                        44,665            46,910            91,445            93,706  
         Other (income) expense:                                                                                           
             Interest expense                               134,236            94,696           223,487           204,024  
            Miscellaneous, net                             (110,651)          (46,777)         (166,916)           49,235  
                                                        ------------------------------------------------------------------ 
                Total costs and expenses                  2,114,913         2,654,193         6,862,964         5,196,579  
                                                        ------------------------------------------------------------------ 

Loss before income taxes                                 (1,175,094)         (701,466)       (4,954,966)       (2,303,705) 

Provision for income taxes                                        -                 -             2,400           (57,454) 

Net Loss                                                $(1,175,094)      $  (701,466)      $(4,957,366)      $(2,246,251) 
                                                        ------------------------------------------------------------------ 
                                                        ------------------------------------------------------------------ 

Basic and diluted (loss) earnings per share             $     (0.22)      $     (0.13)      $     (0.93)      $     (0.42) 

Weighted average number of shares                                                                                          
    used in computation of basic and diluted (loss)                                                                        
    earnings per share                                    5,349,084         5,301,697         5,342,942         5,299,428  

See accompanying notes to financial statements

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NATURADE, INC.

Statements of Cash Flows

                                                        [Enlarge/Download Table]

                                                                             Six Months Ended       Six Months Ended
                                                                               June 30, 1999          June 30, 1998 
                                                                                (Unaudited)            (Unaudited)  
                                                                                                                    
Cash flows from operating activities:                                                                               
       Net loss                                                                  (4,957,366)          (2,246,252)   
       Adjustments to reconcile net loss to net cash used in                                                        
            operating activities:                                                                                   
            Depreciation and amortization                                            91,445               93,706    
            Gain on disposition of property and equipment                          (331,473)                   -    
            Changes in assets and liabilities:                                                                      
               Accounts receivable                                                  243,556                3,468    
               Inventories                                                         (281,026)             107,096    
               Prepaid expenses and other current assets                            192,896             (657,123)   
               Other assets                                                          10,441              (88,494)   
               Lawsuit judgment payable                                           2,774,000                    -    
               Accounts payable and accrued expenses                                593,443               15,433    
                                                                                --------------------------------    
                       Net cash used in operating activities:                    (1,664,084)          (2,772,166)   

Cash flows from investing activities:                                                                               
       Purchase of property and equipment                                          (186,479)             (17,489)   
       Proceeds from sale of property and equipment                               2,113,950                         
                                                                                --------------------------------    
                       Net cash (used in) provided by investing activities:       1,927,471              (17,489)   

Cash flows from financing activities:                                                                               
       Net borrowings under note payable                                            985,719              (49,809)   
       Payments of long-term debt, including capital lease                       (1,973,087)            (109,424)   
       Proceeds from sale of stock                                                   39,853              115,931    
       Proceeds from exercise of warrants                                             1,059                    -    
                                                                                --------------------------------    
                       Net cash used in financing activities:                      (946,456)             (43,302)   

Net decrease in cash and cash equivalents                                          (683,069)          (2,832,957)   
Cash and cash equivalents, beginning of period                                      842,029            5,744,067    
                                                                                --------------------------------    
Cash and cash equivalents, end of period                                            158,960            2,911,110    
                                                                                ================================    
Supplemental disclosures of cash flow information-                                                                  
       Cash paid during the period for:                                                                             
            Interest                                                                186,457              205,432    

See accompanying notes to financial statements

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NATURADE, INC.

 Notes to Financial Statements

1.    The results of operations for the interim periods shown in this report are
     not necessarily indicative of results to be expected for the fiscal year.
   In the opinion of management, the information contained herein includes
all adjustments necessary for fair presentation of the financial    
    statements. All such adjustments are of a normal recurring nature. These
   financial statements do not include all disclosures associated with the
    Company's annual financial statements and accordingly, should be read in
conjunction with such statements.                                   

2.    In April 1999, in accordance with the terms of the Employment Agreement   
dated March 2, 1998, between the Company and Bill D. Stewart, the   
   Company's Chief Executive Officer, (the "Stewart Employment Agreement),
the Company acquired Mr. Stewart's former residence in Tennessee and
    cancelled the related party advance of $600,000 which was secured by the
residence. In July 1999, the Company had the property appraised for 
$585,000. However, due to the softness in the Tennessee real estate 
market, the Company has reduced the asking of this property price to
  $499,500. Due to a potential impairment of this asset, the Company has
established a $175,000 reserve against the value of this asset. The 
Company is actively pursuing the sale of this residence.            

3.    Inventories are stated at the lower of weighted average cost or market.   
Weighted average cost is determined on a first-in, first-out basis. 
Inventories at December 31, 1998 and June 30, 1999 consisted of the 
following:                                                          

                                                                [Download Table]

                            June 30, 1999           December 31, 1998
                             (Unaudited)               (Unaudited)   
                             -----------               -----------   
                                                                     
Raw Materials                 $   281,872              $  880,660    
Finished Goods                  2,093,135               1,213,321    
                              -----------              ----------    
                              $ 2,375,007              $2,093,981    

The June 30, 1999 inventory amounts reflect a write-off of $291,518 
   consisting of $183,300 of Raw Materials and $108,218 of Finished Goods.
This write-off was based on an analysis of the Company's new product
  introduction strategy and the effect of this strategy on Raw Materials
      used in the processing of Finished Goods and the current value of existing
Finished Goods inventory.                                           

4.    In June 1999, the Company sold its interest in its former headquarters    
 facility in Paramount, California and recorded a gain of $275,634. In
connection with this sale, the Company paid off approximately $1.9  
  million of bank and other debt obligations. As previously reported, in
mid-April 1999, the Company relocated to Irvine, California. See    
Footnote 7.                                                         

5.    Commencing January 1, 1999, the Company changed its fiscal year to end on 
      December 31st. The Company's Annual Report on Form 10-K will cover the new
fiscal year of January 1, 1999 to December 31, 1999.                

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6.    On March 11, 1999, a civil judgment (the "PNI Judgment") was entered      
   against the Company and a co-defendant for a total of $2,774,000 by the
United States Bankruptcy Court for the Northern District of Texas   
following trial in a proceeding initiated by the Trustee (the "PNI  
Trustee") in the Chapter 7 bankruptcy case of Performance Nutrition,
Inc. ("PNI"). On July 7, 1999, the PNI Trustee filed an application 
   seeking Bankruptcy Court approval of a settlement agreement between the
  Company and the PNI Trustee (the "Settlement Agreement"). On August 5,
1999, the Bankruptcy Court approved the Settlement Agreement. The   
Settlement Agreement provides the Company with a full release of the
Judgment and the costs and interest thereon, as well as any and all 
other claims which the PNI Trustee has or might have against the    
  Company (including a preference claim for approximately $130,000 filed
 in January 1999 by the PNI Trustee. The Settlement Agreement requires
the Company to deliver to the PNI Trustee (1) a cash payment of     
 $1,350,000, (2) a promissory note in the amount of $424,000 amortized
  over 12 months at 5% interest, and (3) a contingent promissory note in
the amount of $226,000, which will become payable only to the extent
 that the Company's sales for the second, third and fourth quarters of
1999 exceed specified targets. The total cost to the Company of the 
settlement is expected to range between $1,774,000 and $2,000,000,  
exclusive of interest on the promissory notes. The terms of the     
 Settlement Agreement are expected to be consummated before the end of
August, 1999.                                                       

7.    In early February 1999, the Company signed a 7-1/2 year lease agreement   
 for new executive offices, sales & marketing and warehouse operations
  located in Irvine, Ca. The total minimum rental commitments under this
lease for the respective years ending December 31 are:              

                                                                [Download Table]

Year                          Amount 
----                          ------ 
                                     
1999                       $  246,681
2000                          328,908
2001                          351,327
2002                          358,800
2003                          381,228
Thereafter                  1,122,756
                           ----------
Total                      $2,789,700

8.    In March 1999, the Company entered into a Financing Agreement (the        
     "Financing Agreement") with Health Holdings and Botanicals, Inc. ("Health
    Holdings"). The Financing Agreement provides that the Company may borrow
up to $1.0 Million at a per annum interest rate of 8%. The Financing
 Agreement further provides that for each dollar borrowed, the Company
shall issue a warrant ("Warrant") to Health Holdings to purchase    
three-tenths (0.3) of a share of common stock of the Company at an  
     exercise price of $2.125 per share, subject to adjustment. As of June 30,
1999, the Company had issued 300,000 Warrants under the Financing   
Agreement (prior to the Amendment referred to below).               

  In June 1999, the Financing Agreement was amended (the "Amendment") to
  increase the amount of available borrowings to $1.6 Million also at an
  interest rate of 8% per annum. The Amendment further provides that for
     each dollar borrowed over $1.0 Million, the Company shall issue a Warrant
to Health Holdings to purchase one-half (0.5) of                    

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    a share of common stock of the Company at an exercise price of $1.00 per
    share, subject to adjustment. Further, the exercise price of the 300,000
 Warrants previously issued under the Financing Agreement prior to the
Amendment was reset to $1.00 per share, subject to adjustment. As of
June 30, 1999, the Company had issued 300,000 Warrants under the    
  Amendment. All borrowings under the Financing Agreement are secured by
    the assets of the Company. All borrowings made prior to June 1, 1999 are
     due on March 7, 2000; those made after May 31, 1999 are due May 31, 2000.
   As of June 30,1999, the Company borrowed $1,600,000 under the Financing
 Agreement and the Amendment and issued a total of 600,000 Warrants to
Health Holdings.                                                    

9.    In August 1999, the Company entered into a Credit Agreement (the "Credit  
Agreement") with Health Holdings. The Credit Agreement provides for 
      advances (the "Advances") of $4 Million at a per annum interest rate of 8%
   with a due date of July 31, 2004. The Credit Agreement further provides
      that any time upon written notice, Health Holdings may convert any portion
     of the Advances into shares of the Company's common stock at a conversion
    price equal to the lower of $.75 per share or the then fair market value
of the Company's common stock.                                      

ITEM 2. Management's Discussion and Analysis of Financial Condition and         
Results of Operations                   

    This discussion contains "forward looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Although Naturade, Inc. (the       
"Company" or the "Registrant") believes that the expectations reflected in such 
forward looking statements are reasonable, such statements are inherently       
subject to risk and the Company can give no assurances that such expectations   
will prove to be correct. Such forward looking statements involve risks and     
uncertainties and actual results could differ from those described herein and   
future results may be subject to numerous factors, many of which are beyond the 
control of the Company. Such risk factors include, without limitation, the risk 
of changes or developments in the regulatory framework or product liability     
principles applicable to the Company and its products, and the risk of          
consolidation in the distribution channels expected to be used by the Company to
distribute its products. The Company undertakes no obligation to publicly       
release the result of any revisions to these forward-looking statements that may
be made to reflect events or circumstances after the date hereof or to reflect  
the occurrence of unexpected events.                                            

All comparisons below are to the three and six-month periods ended June 30,     
1998.                                                                           

LIQUIDITY AND CAPITAL RESOURCES                                                 

  The Company used cash of $1,664,084 in operating activities in the six
months ended June 30, 1999.                                                     

   The Company's working capital decreased from $2,219,645 at December 31,
1998 to $(2,811,025) at June 30, 1999. This decrease was largely due to a       
judgment against the Company of $2,774,000 (see "Legal Proceedings" below) and  
an increase in Accounts Payable of $877,777 and Notes Payable of $985,719       
required to fund the Company's operating losses for the six month period ended  
June 30, 1999.                                                                  

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   Cash provided by investing activities during the six month period ended
June 30, 1999 total $1,927,471. The primary source of this cash was the sale    
of the Company's interest in its former headquarters facility as set forth in   
Note 4 to the Financial Statements above. The Company anticipates its capital   
expenditures for the three-month period ended September 30, 1999 to be          
approximately $50,000.                                                          

   The Company's cash used by financing activities of $946,456 for the six
month period ended June 30, 1999 was the net result of borrowings from a new    
financing agreement with Health Holdings and Botanicals, Inc. ("Health          
Holdings") as set forth in Note 8 to the Financial Statements above and the     
repayment of bank and other debt obligations related to the sale of the         
Company's interest in its former headquarters facility as set forth in Note 4 to
the Financial Statements above.                                                 

As more fully explained in Note 9 to the Financial Statements above,
effective August 9, 1999, the Company entered into a Credit Agreement with      
Health Holdings and Botanicals which provides for advances (the "Advances") of  
$4 Million at a per annum interest rate of 8% with a due date of July 31, 2004. 
The Credit Agreement further provides that any time upon written notice, Health 
Holdings may convert any portion of the Advances into shares of the Company's   
common stock at a conversion price equal to the lower of $.75 per share or the  
then fair market value of the Company's common stock.                           

    The Company is currently in discussions with several asset-based lenders
for an expanded line of credit to support the Company's working capital         
requirements as it expands sales into the mass market. The Company has extended 
its current $985,000 line of credit agreement with South Bay Bank to September  
1, 1999.                                                                        

RESULTS OF OPERATIONS                                                           

Total net sales for the second quarter ended June 30, 1999 decreased
$1,164,505 or 29.5% compared to the same period last year and decreased         
$1,950,794 or 27.5% for the six month period ended June 30, 1999 compared to the
same period last year. Of this amount, domestic sales decreased $153,411 or 5.8%
and decreased $466,815 or 9.4% for the second quarter and first six months      
respectively while Kids Plex-tm sales decreased $509,636 or 106.3% and $859,291 
or 95% for these same periods. International sales decreased $422,862 or 61.2%  
for the June 30, 1999 quarter and decreased $652,000 or 69.3% for the first six 
months compared to the same period last year. Partially offsetting this sales   
decline in the six months ended June 30, 1999 was the sale of $148,163 of raw   
materials to copackers as the Company continues its strategy of complete        
production outsourcing. Total net sales were also adversely impacted by a recall
of certain Aloe Vera products creating returns of over $160,000 in March 1999,  
which was partially offset by replacement orders in the same month.             

    Decreases in net sales for the six month period ended June 30, 1999 were
primarily the result of the Company's decision to not sell product to a major   
health food retailer, significant international sales volume in the six         
months ended June 30, 1998 and a softness in industry sales to the Health       
Food category in 1999 compared to the same period last year. In January 1999,   
the Company stopped selling to a major health food retailer due to their        
large Accounts Receivable balance outstanding and their unwillingness to pay    
Naturade invoices in a timely manner. The Company has fully reserved for        
these receivables. In the six month period ended June 30, 1998, sales to this   
major health food retailer were $909,064, for which there were no comparable    
sales in the same period of 1999. During the six month period ended June 30,    
1998,                                                                           

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the Company's international sales of $941,030 included $416,377 of              
non-recurring, low margin private label business from a Chinese customer for    
which there was no comparable sales in the same period of 1999. As part of      
its new global marketing strategy, management has decided to emphasize          
branded products and reduce its dependence on international private label       
business due to its low margin and unpredictability. During 1998, industry      
sales to the Health Food Category were expanding at low double-digit rates.     
However, in late 1998, industry sales to this category started to soften and    
have been flat to slightly down for 1999. While the Company has maintained      
its market share in this category, the Company's overall dollar sales are       
affected by the softness in the overall category.                               

   Gross profit as a percentage of sales decreased 15.7% to 33.8% of sales
for the second quarter ended June 30, 1999 from 49.5% for the same period       
last year and decreased 3.6% to 37.2% of sales for the six months ended June    
30, 1999 from 40.8% of sales for the same period last year. The gross profit    
percentage for the June 30, 1999 quarter was adversely impacted by the          
inventory write-off of $291,518 as explained in Footnote 3. This inventory      
write-off accounted for 10.5% of the 15.7% gross profit decline. A major        
portion of the remaining gross profit decline is attributable to the            
Company's decision to outsource production and the higher startup costs         
charged by the Company's suppliers. The Company made the decision to            
outsource production in order to add capacity so as to address the              
anticipated mass market demand. The gross profit percentage for the six         
months ended June 30, 1998 was adversely impacted by an inventory write-off     
of $666,000 which occurred in the March 1998 quarter.                           

Selling, general and administrative expenses decreased $587,929 to  
$1,971,435 or 70.9% of sales for the three months ended June 30, 1999, from     
$2,559,364 or 64.9% for the same period last year, and also decreased           
$1,035,926 to $3,813,688 or 74.3% of sales for the six months ended June 30,    
1999 from $4,849,614 or 69.9% of sales for the same period last year. These     
decreases were primarily the result of lower selling and marketing expenses     
which decreased $1,068,464 to $1,746,850 or 34.0% of sales for the six months   
ended June 30, 1999 from $2,815,314 or 39.7% of sales for the same period       
last year which was partially offset by higher general and administrative       
expenses, which increased $60,594 to $1,357,992 or 26.5% of sales for the six   
months ended June 30, 1999, from $1,297,398 or 18.3% of sales for the same      
period last year. Shipping and receiving expenses decreased $53,424 to          
$542,484, but increased as a percentage of sales to 10.6% for the six months    
ended June 30, 1999, from $595,908 or 8.4% for the same period last year.       

     Interest expense for the second quarter increased $39,540 and $19,462 for
the six-month period ended June 30, 1999 compared to the same periods last year.

   Miscellaneous expenses for the six months ended June 30, 1999 decreased
$216,151 compared to the same period last year due to the absence of            
non-recurring charges in 1999 which in the six months ended June 30, 1998       
amounted to $157,500. No such amounts were incurred in the six months ended     
June 30, 1999. The six month period ended June 30, 1999 also reflects total     
gains of $331,473 due to a $49,580 gain on sale of equipment that the Company   
no longer needs due to its strategy to completely outsource its production      
activities, a $275,634 gain on sale of the Company's interest in its former     
headquarters facility and a $175,000 reserve established against the Tennessee  
real estate as set forth in Note 4 to the Financial Statements above.           

      Income tax expense was $2,400 for the six month period ended June 30, 1999
compared to $ (57,454) for the same period last year due to losses for the      
periods and the carryback benefits of such losses.                              

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PART II. Other Information                                                      

ITEM 1. Legal Proceedings                                           

     As previously reported in its 8-K filing on July 7, 1999, the Company has
entered into a settlement agreement of a civil judgment entered against the     
Company and a co-defendant for a total of $2,774,000 by the United States       
Bankruptcy Court for the Northern District of Texas following a bench trial last
year in a proceeding initiated by the Trustee in the Chapter 7 bankruptcy case  
of Performance Nutrition, Inc. ("PNI") on October 3, 1997. See Note 6 to the    
Financial Statements.                                                           

ITEM 2. Changes in Securities                                                   

NONE                                                  

ITEM 3. Defaults upon Senior Securities                                         

NONE                                                  

ITEM 4. Submission of Matters to a Vote of Security Holders           

NONE                                                  

ITEM 5. Other Information                                             

NONE                                                

ITEM 6. Exhibits & Reports on Form 8-K                                

                                                                [Download Table]

Exhibits                                                                      
 Number    Description                                                    Page
--------   -----------                                                    ----
                                                                              
  10.1     Financing Agreement Amendment between Naturade, Inc. and           
           Health Holdings and Botanicals, Inc.                               

  10.2     Credit Agreement between Naturade, Inc. and Health Holdings        
           and Botanicals, Inc.                                               

  10.3     Settlement Agreement between Naturade, Inc. And the PNI            
           Trustee                                                            

  27       Financial Data Schedule                                            

Reports on Form 8-K                                                             

NONE                                                                            

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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 hereunto duly authorized.                                           

                                                                [Download Table]
                                                                
                                        NATURADE, INC.          
                                        --------------          
                                         (Registrant)           

DATE:    August 16, 1999                By /s/ Bill D.Stewart   
      ---------------------             ---------------------   
                                        Bill D. Stewart         
                                        Chief Executive Officer 

DATE:    August 16, 1999                By /s/Lawrence J. Batina
      ---------------------             ------------------------
                                        Lawrence J. Batina      
                                        Chief Financial Officer 

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EXHIBIT INDEX                                                                   

                                                                [Download Table]

Number           Description                                       Page
                                                                       
     10.1  Financing Agreement Amendment between                    15 
           Naturade, Inc. and Health Holdings and Botanicals, Inc.     

     10.2  Credit Agreement between Naturade, Inc. and              16 
           Health Holdings and Botanicals, Inc.                        

     10.3  Settlement Agreement between Naturade, Inc.              17 
           and the PNI Trustee                                         

       27  Financial Data Schedule                                  18 

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10-Q’ Filing	Date	First	Last	Other Filings

	7/31/04	9	10
	5/31/00	9
	3/7/00	9
	12/31/99	7		10-K405, NT 10-K
	9/30/99	10		10-Q, NT 10-Q
	9/1/99	10
Filed on:	8/16/99	13
	8/9/99	10
	8/5/99	8		8-K
	7/31/99	1
	7/7/99	8	12	8-K
For Period End:	6/30/99	1	11
	6/1/99	9
	5/31/99	9
	3/11/99	8		8-K
	1/1/99	7
	12/31/98	2	9	10-Q
	6/30/98	2	11	10-Q
	3/2/98	7
	10/3/97	12
				List all Filings

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Filing Submission 0001047469-99-032378 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Naturade Inc – ‘10-Q’ for 6/30/99

On: Monday, 8/16/99 · For: 6/30/99 · Accession #: 1047469-99-32378 · File #: 33-07106-A

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Quarterly Report — Form 10-QFiling Table of Contents

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Dates Referenced Herein and Documents Incorporated by Reference

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10-Q — Quarterly Report
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