KAHI news:
(COMTEX) Management's Discussions: 10QSB, KAIRE HOLDINGS INC
Management's Discussions: 10QSB, KAIRE HOLDINGS INC
(Edgar Online via COMTEX)
Company Name: KAIRE HOLDINGS INC
Management's Discussion and Analysis or Plan of Operation The
Company's base business is engaged in the manufacturing and marketing
diagnostic imaging products and services relating to blood flow
research in animals and the research and development of propriety
diagnostic imaging products and procedures for human applications that
use existing imaging equipment such as x-ray, CAT scan, MRI and ultra
sound. The Company markets three products, two of which are designed
for animal blood flow studies, the E-Z Trac Ultraspheres and the NuFlow
fluorescent microspheres. The third product is a service the Company
provides for its clients which counts NuFlow fluorescent microspheres
used in the blood flow studies and measures regional blood flow under
laboratory conditions.
The E-Z Trac Ultraspheres are microspheres designed for small
research studies measuring regional blood flow. The NuFlow fluorescent
microspheres are designed to measure regional blood flow for both small
or large regional blood flow research studies using E-Z Trac's
Investigative Partner Service ("IPS") to analyze the studies samples.
The Company markets microsphere products to pharmaceutical companies,
universities, hospitals and other academic centers engaged in regional
blood flow studies on experimental drugs or surgical procedures.
On or about April 19, 1999, the Company introduced its internet
e-commerce site www.vitaplanet.com, which provides five categories of
nutritional products. The five categories are: 1) sport nutrition, 2)
executive nutritional - nutritional products for people in high stress
positions, 3) specialty nutrition - nutritional assistance for people
with special physical needs, 4) ayueveda nutrition - products that
focus on the bodies main organs, and 5) aphrodisiac products.
The next phase of the Company's plan to enhance its web site has
centered around the developing of an e-commerce on-line pharmacy to
serve the late baby boomer and senior health care market segments. When
fully implemented, Vitaplanet will provide prescription medication
products, real-time interactive, cognitive pharmacy services and a wide
range of health care resources that target specific conditions arising
from the complex interrelationships between prescription medications,
age, disease states, nutrition, personal care and other variables
related to senior health care. The grand reopening of the Company's
e-commerce on-line pharmacy has been announced to occur on November 15,
1999.
In 1996 and 1997, the Company attempted to enter into the Personal
Care Products area with Pastels International, Inc. ("Pastels"), and
the Nutritional Supplements area with Nutra Quest Incorporated ("NQI")
through acquisitions. Pastels manufactured several beauty and skin care
formulations sold commercially under the names AloeBare, a depilatory,
and Skinnergy, an anti-aging skin treatment. The Company ended its
involvement with Pastels in early 1997 as a result of Pastels not
meeting certain key criteria necessary for the acquisition to be
successful. The company had advanced $302,856 to Pastels, all of which
has been expensed in full.
NQI was a start up operation that the Company attempted to acquire in
1996 and 1997. NQI had a broad line of products with specific emphasis
on nutritional alternatives to coffee, tea and soda, herbal supplements
to more efficiently process calories, mineral and enzyme supplements
for use as digestive aids, athletic performance products containing a
blend of amino acids and rice protein as well as a
personalized profile to evaluate the health and nutritional needs
of each individual. Due to difficulties with NQI's CEO and management,
the anticipated business growth expected by NQI never materialized and
by December 1997 NQI operations were terminated. The total amount
advanced Nutra Quest was $2,003,728 of which $502,728 was written off
in 1996 with the remainder of $1,501,000 being written off in 1997.
In December 1997 the Company entered into an agreement (the
"Agreement") to acquire 80% of Kaire International, Inc. ("KII"), a
network marketing firm based in Longmont Colorado with 1997 annual
sales of approximately thirty one million dollars ($31,000,000). In
exchange for KII's Common Stock, the Agreement called for the Company
to invest an initial $1,000,000 plus Company Common Stock, and to
subsequently provide additional capital totaling two million dollars
($2,000,000) by the latter of February 15, 1998 or when their
independent accountants signed off on KII's year-end audit. Determining
that the Company was not going to raise the additional capital needed,
the Company and KII entered into a third party agreement whereby the
Company assigned two thirds of its position in KII to a third party and
the third party was to fund KII two million dollars ($2,000,000). For
consideration, the Company received an option from KII to purchase back
the same number of KII shares that it had assigned to the third party,
for two million dollars ($2,000,000). The Company was unable to raise
the funds and the option expired on August 5, 1998. The Company
currently owns 24% of KII and therefore is reported on the equity
basis. A write down of $2,632.003 in the KII investment was reflected
in the Company's financial statements based on the Company's assignment
of approximately two thirds of its equity position to a third party for
a release of $2,000,000 funding obligation. On December 10, 1998,
Natural Health Trends Corp., ("NHTC") (NASDAQ: Symbol NHTCC), announced
it had signed an agreement as of November 24, 1998 to purchase certain
assets of KII for a combination of Series E and Series F Preferred
stock, Acquisition Warrants and a percentage of NHTC's net income for a
period of five years. It is not known what effect the NHTC agreement
will have on Kaire Holding's investment in KII, thus due to the
uncertainty in Kaire Holding's ability to recover this investment, the
Company wrote off its investment in KII of $4,694,038 for the year
ending December 1997.
On February 19, 1998, Kaire Holdings, Incorporated changed its name
from Interactive Medical Technologies, Ltd., changed its NASDAQ OTC: BB
symbol to "KAHI" from "NONI" and reverse split its Common Stock at a
ratio of one (1) to seventy-five (75).
In March 1998, the Company attempted to enter into an agreement to
acquire 35% of Potomac Worldwide, Ltd. ("Potomac"), a BVI company, and
its primary subsidiary, Nanjing Potomak Beauty & Care Co. Ltd.
("Nanjing") located in Mainland China. Nanjing retails and wholesales
health foods, household chemicals, cosmetics and shape forming
underwear. The basis for this agreement was to cross license products
between Potomac and KII. Due to Kaire Holdings, Inc.'s reduced equity
position in Kaire International, Inc., the Potomac agreement was not
performed and is considered terminated.
Results of Operations
Three and Nine Months Ended September 30, 1998 Compared to September
30, 1999.
For the
For the
Three Months Ended
Nine Months Ended
September 30,
September 30,
---------------------
------------------------
1998 1999 1998
1999
---- ---- ----
----
($ Thousands)
Revenues - Products and Services
Microspheres & Lab Services $ 80 $ 62 $ 305
$ 198
Vitaplanet.com - -
-
---- ----- -----
-----
80 62 305
198
Cost of Revenues
Microspheres & Lab Services 36 34 138
55
Fat Sequestration - License Fees
And Royalties - - -
-
---- ----- -----
-----
36 34 138
55
Gross Margin Product & Services 44 28
167 144
---- ----- -----
-----
The three and nine months ended September 30, 1999, revenues from
products and services were approximately $61,928 and $198,374, a
decrease of 22% and 35% from the same periods in 1998. The Decrease was
due to a combination of workforce reduction, decreased testing activity
by the Company's current clients and a change in focus of the Company's
resources towards the e-commerce on-line pharmacy.
Gross profit for products and services was $28,130 and $143,870 for
three and nine months ended September 30, 1999, an decrease of $15,893
and 23,740 or 36% and 14% over the same periods prior year. The
decrease in gross margins are a direct result of the decrease in
revenue.
Research and development expense for the three and nine month period
ended September 30, 1999 was $153, a decrease of approximately $953
from the comparable 1998 periods. The decrease was due to no new
R&D projects entered into in 1999.
SG&A expense increased to $158,080 from $68,077 for the three
month period ended September 30, 1999 and decreased to $479,074 from
$691,317 for the nine month period ended September 30, 1999. The three
month increase is related to the cost of obtaining outside consultants
to assist in the programming and design of the e-commerce web site. The
decrease in the nine month figure is due to large consulting expense
incurred during the failed attempt to acquire Kaire International
during the first quarter of 1998.
Interest expense for operations for the three and nine month period
ended September 30, 1999 was $16,183 compared to $68,257 for the
comparable three month period prior year and $63,384 compared to
$84,710 for the comparable nine month period prior year. The decrease
is a result of converting a significant amount of convertible notes
into common stock during the first three quarters of 1999.
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