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[MCGabriel]

17-May-2004

Quarterly Report


ITEM 2. MANAGEMENT`S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
This quarterly report on Form 10-QSB contains forward-looking statements. Anystatements that are not statements of historical fact should be regarded asforward-looking statements. For example, the words "intends," "believes,""anticipates," "plans," and "expects" are intended to identify forward-lookingstatements. There are a number of important factors that could cause our actualresults to differ materially from those indicated by such forward-lookingstatements. These factors include without limitation those factors contained inour Form 10-KSB filed with the Securities and Exchange Commission. We do notundertake any obligation to update any such factors or to publicly announce theresult of any revision to any of the forward looking statements contained hereinto reflect future events or developments.

The following discussion of our results of operations and financial conditionshould be read together with our unaudited Financial Statements contained inPart I, Item 1 and the related Notes in this Form 10-QSB and our auditedFinancial Statements and the related Notes contained in our Form 10-KSB filedwith the Securities and Exchange Commission.


CRITICAL ACCOUNTING ESTIMATES


Financial Reporting Release No. 60, which was released by the U.S. Securitiesand Exchange Commission, encourages all companies to include a discussion ofcritical accounting policies or methods used in the preparation of financialstatements. Our financial statements include a summary of the significantaccounting policies and methods used in the preparation of our financialstatements.

Management believes the following critical accounting policies affect theprobable returns, significant judgments and estimates used in the preparation ofthe financial statements.


REVENUE RECOGNITION


We recognize revenue when


o Persuasive evidence of an arrangement exists o Shipment has occurred o Price is fixed or determinable, and o Collectability is reasonably assured
Subject to these criteria, except with respect to customers that buy ourproducts on "pay on scan terms," we recognize revenue at the time of shipment ofthe relevant merchandise. "Pay on scan" sales are treated as consignment salesby us. In the case of these consignment sales, we record revenues, and removethe items from inventory when the customer reports the sales to us. Normally weare notified of the customer`s sales through periodic sales reports, payments orwhen the customer reorders the relevant product.
On March 31, 2004, we had approximately $232,000 of inventory on consignmentrelating to its "pay on scan" sales. At March 31, 2003, we had no inventory onconsignment.

Included in the net revenue in the accompanying financial statements for thethree months ended March 31, 2004 and 2003 are reductions for returns andallowances, sales discounts, new store opening discounts and co-op advertisingand promotions in the aggregate amounts of $595,769 and $551,237 , respectively.The larger reductions in the first quarter of 2004 were primarily due toincreases in sales returns and allowances, including the deduction of $168,000as a reserve against a single product, which one of our major customersindicated that they would stop selling.



USE OF ESTIMATES


Management`s discussion and analysis of financial condition and results ofoperations is based upon our financial statements, which have been prepared inaccordance with accounting principles generally accepted in the United States ofAmerica. The preparation of these financial statements requires management tomake estimates and judgments that affect the reported amounts of assets,liabilities, revenues, and expenses, and related disclosure of contingent assetsand liabilities. On an ongoing basis, management evaluates these estimates,including those related to valuation allowance for the deferred tax asset,estimated useful life of fixed assets and the carrying value of long-livedassets, intangible assets and allowances for sales returns, doubtful accounts,and obsolete and slow moving inventory and reserve for customer liabilities.Management bases these estimates on historical experience and on various otherassumptions that are believed to be reasonable under the circumstances, theresults of which form the basis for making judgments about the carrying value ofassets and liabilities that are not readily apparent from other sources. Actualresults may differ from these estimates under different assumptions orconditions.


CUSTOMER LIABILITY ESTIMATES


The Company estimates and accrues expenses and liabilities for co-op advertisingand promotions and expenses for discontinued products as a reduction of sales.The liability is maintained until the customer takes the deduction againstpayments due. This liability is netted against the accounts receivable accounton the balance sheet. The amount at March 31, 2004 was $875,255.

We may incur a liability to a customer in three ways:


o We and the customer may agree that if the customer includes an advertisement for our products in the customer`s advertising circulars, we will discount our products to the customer during the period of time surrounding the use of the circulars;
o Some of our customers have a policy that require us to fund cooperative advertising and promotions in an amount equal to 10% to 15% of the gross revenue generated within the year; and
o In some cases, if the dating of our product in inventory at the customer`s location expires, the customer may seek a credit from us.
We record the liability when we determine that the customer is taking an actionthat will result in an expense to the Company in the future. For example, whenwe agree to fund an advertising promotion in a given month, we create aliability for that promotion. We also establish reserves for returns we believelikely. The actual payments to the customer are made when the customer makes adeduction on its remittances for outstanding invoices. Typically, theseliabilities remain outstanding for three to six months.

RECENT DEVELOPMENTS


In July of 2003, the Board of Directions determined to consider strategicalternatives to either enhance or replace our neutraceutical business. The Boardintends to continue to assess what steps can be taken to realize greater valuefor our shareholders. These include the possibility of acquiring additionalbusinesses for stock and/or the sale of the Company or substantially all of itsassets, including the ongoing possibility of such a sale to our Chief ExecutiveOfficer and President, Christopher Tisi, or an entity controlled by him.


On November 26, 2003, we entered into an agreement with TeeZee, Inc., a companywholly owned by Mr. Tisi, our chief executive officer and president, to sellTeeZee, Inc. substantially all of our assets, subject to approval by ourshareholders, for $411,000 in cash and notes and the assumption of substantiallyall of our liabilities. Prior to entering into the definitive agreement, theBoard of Directors considered strategic alternatives with particular attentionto the risks associated with our diet-related nutraceuticals business and theincreasingly challenging regulatory, legal and insurance environment for thenutraceuticals industry, and weighed them against the offer from TeeZee, Inc.and determined that, at that time, the proposed sale was in the best interestsof our shareholders. The Board also hired an investment advisory firm,Capitalink, to render an opinion as to the fairness of the transaction, from afinancial point of view. Mr. Tisi subsequently informed us that based upon theexpiration of his employment agreement on December 31, 2003, if the sale was notapproved by our shareholders, he would terminate his employment with us. InFebruary 2004, we restated our earnings for the third quarter of 2003, whichlowered our reported earnings for the period. At that time, Mr. Tisi also toldthe Board he was willing to continue to serve as our chief executive officer -subject to the execution of a definitive agreement - even if the Board decidednot to accept his offer. Capitalink thereafter rescinded its fairness opinionwhich was based in part on the third quarter results. As a result, on February23, 2003, we terminated the agreement with Tee Zee, Inc. Tee Zee, Inc. has leftopen its offer to purchase substantially all of our assets. The Board ofDirectors continued to review TeeZee`s offer in light of developments subsequentto the termination of the agreement. On April 22, 2004, the Board rejected theoffer. The Board primarily based its decision as not in the current bestinterest of the shareholders, the current market value of the Company`s shares,current operations, and Mr. Tisi`s recent agreement to stay with the companythrough December 31, 2005. In addition, the Board chose to afford itself moretime to consider strategic alternatives. The Board intends to continue toconsider strategic alternatives to increase shareholder value, whichalternatives may include the sale of our current business, a merger or othercombination with another enterprise, or both.

On April 9, 2004, Mr. Tisi entered into a new two-year employment contract,effective as of January 1, 2004. The contract


o increases his base salary from $147,000 to $164,000;
o provides for a quarterly bonus of the sum of 5% of the increase in net revenues compared to the comparable quarter for the prior year and 10% of net income. One third of the bonus is payable at the conclusion of the applicable quarter; one third is payable on the conclusion of the following quarter based on cumulative results for the year through the end of such quarter compared to the prior year`s year-to-date results, and one third is payable at year-end based on a comparison to the prior years results. Amounts paid in any quarter are not subject to refund;
o provides for the payment of the unpaid portion of his 2003 bonus ($162,271) and the incremental increase in his annual salary in 12 equal monthly installments beginning April 1, 2004;
o provides for an annual grant of options to purchase 50,000 shares of our common stock under the 1998 Stock Option Plan;
o provides for the payment of $275,000 in severance upon a change in control of the Company if we terminate the agreement other than for cause, unless we enter into an agreement regarding his continued employment;
o provides that he will not compete with us for a one-year period after the termination of the contract (other than termination without cause) in the wholesale distribution of sale in the United States to retailers or intermediaries of products which directly or otherwise significantly compete with products sold or distributed by the Company.
Mr. Tisi has developed relationships with our customers, vendors and otherindustry participants that have enabled us to maintain our operations and, inthe last year, grow our business. The loss of his services would severely impairour ability to function as we currently do. In addition to being our CEO, Mr.Tisi is responsible for our product development, marketing, operations andfinance. We have reviewed, and continue to review, supplementing Mr. Tisi`sactivities with additional executive capacity, but working capital limitationslimit our ability to identify and recruit appropriate candidates.

To partially mitigate our sole reliance on Mr. Tisi, the Board has expanded therole of our Chairman, James Brown. Mr. Brown, who has to-date focused primarilyon opportunities that might strategically enhance shareholder value, will havemore day-to-day interaction in areas such as financial management and strategicdirection. For these services, Mr. Brown`s compensation was increased inFebruary 2004 from $3,000 per month to $8,000 per month through July 31, 2004.


OVERVIEW


We believe that industry trends as well as factors specific to us will impactour future results. Following are some key points that we believe are importantin understanding our position today, and our outlook for the future.

Trends in our industry

According to the Nutrition Business Journal, revenues from the sale of dietarysupplements in year 2003 were up approximately two percent (2%) from thosereported in year 2002. No reliable statistics are yet available for the firstquarter of 2004. Particularly, because of their popularity, increased consumeruse of low carbohydrate diets will benefit products like ours. Our productformulae are not proprietary. Similar formulations to our flagship product, CarbCutter(R), have been developed and have achieved full distribution at all of ourcustomers. Substantially all of our competitors have greater resources and namerecognition than we do. Many of our competitors sell, in addition to dietproducts, a broad range of health and nutrition products. Many of ourcompetitors sell to the same customers as we do. In addition to our existingcompetitors, we believe some of these potential competitors will begin to marketcarbohydrate diet assisting products. In this respect, the very popularity ofthe low carbohydrate diets may encourage additional stronger competitors tocompete with us. In addition, GSN, our sole manufacturer, sells similar productsto our competitors, often with similar formulations.

We try to differentiate our products through the mixture of ingredients in ourproducts and the amounts of such ingredients contained in our products. We alsotrademark our proprietary brand names. We believe that this helps us to maintainconsumer loyalty to our brand rather than to a specific ingredient orcombination of ingredients. We also strive to differentiate our products byproviding distinctive packaging. None of our efforts in differentiatingourselves, however, will insure that existing or potential competitors will noterode our market share.

Until and unless we develop additional products that are accepted by the market,we remain largely dependent on the sales of one product, Carb Cutter(R). Thisstrategy is intended to minimize the impact of a shift in consumer preferenceswith regard to any one of our products, a change in retailer attitude withrespect to any of our products, or any other cause of reduced sales either for aparticular product or in a particular geographical area.


The most significant barrier to entry within our industry is the difficulty ofestablishing a new product. This involves significant commitment to advertisethe product, participate in trade shows, build inventory, and pay the cost ofentry with slotting fees and or free merchandise. Test marketing also requires asignificant commitment of time and capital. Those factors effect us as well asour competition. Many of our competitors are significantly better capitalizedand have significantly more human resources than us.


NET REVENUE AND INCOME


In the first three months of 2004, we have been able to increase net revenuesand maintain control over our administrative costs and cost of sales. The netrevenues for the three months ended March 31, 2004 were $1,489,377 compared to$1,065,548 for the same period in 2003, an increase of $423,829, or 40%. Generaland administrative expenses for the three months ended March 31, 2004 were$450,471 compared to $341,194 for the same period in 2003, an increase of$109,277, or 32%. While administrative costs rose, their rate of increase wasless than the rate of our rise in revenue. The cost of sales, as a percentage ofnet sales, increased by only 0.6% for the three months ended March 31, 2004compared to March 31, 2003. The gross profit for the three months ended March31, 2004 was $849,441, or 57.0% of net revenue compared to the same period in2003 of $614,130, or 58.6%, an increase of $235,311. The increase in net revenueis largely attributable to sales of Carb Cutter(R) and Carb Cutter(R) Phase 2,to two major customers. However, more competitors are introducing very similarproducts and the higher level of competitor may adversely affect the sale ofthese products.

We believe that increasing advertising expenditures by $311,403 during the threemonths ended March 31, 2004 was a significant factor in the increase in netrevenues during the period. A substantial portion of the advertisingexpenditures came from a temporary increase in payment terms granted to us byour product supplier, Garden State Nutritional, and the profits generated in thethird and fourth quarter of 2003. We do not know whether Garden State willcontinue to extend our payment terms. If they do not, we may have to curtailadvertising in subsequent periods.

We had a loss of ($90,740) for the three months ended March 31, 2004 compared tonet income of $92,253 in the first quarter of 2003, a decrease of $182,993. Thisdecrease was primarily because of


o a reserve of $168,000 for one of our products, which one of our customers discontinued selling;
o increased advertising expenses; and
o increased insurance costs.
During the three months ended March 31, 2004, six companies accounted forapproximately 90% of our net revenues compared to 82% in the first quarter of2003. Further, our two largest customers accounted for 81% of the net revenue inthe first quarter 2004 compared to 58% in the first quarter of 2003. Although weare encouraged by the increase in net revenues generally, the increasedconcentration of our business in fewer customers makes us more vulnerable tochanges in their purchasing practices or, in some cases, the customers`reluctance to do business with a supplier where that customer`s volume with thatsupplier represents too large a part of the supplier`s total sales.

INSURANCE
-

Insurance for the products we sell has become significantly more expensive. Thepolicy became effective in March 2004 and carried a premium of $157,000, whichis over twenty times higher than our prior policy. Because it is written on a"claims made" rather than an "occurrence" basis, it does not provide as muchcontinuity of coverage as we historically have enjoyed. We purchased $5,000,000worth of coverage for 2004, as opposed to the $6,000,000 we had in 2003. Whilewe believe the level of coverage is adequate to meet the needs of our customersand provide us with appropriate risk protection, there is no assurance that wewill be able to obtain coverage in the future. We do not believe that we will beable to secure "claims made" coverage in the foreseeable future.



INCREASED COSTS
-

The increasing oversight mandated by the Sarbanes-Oxley Act coupled with changeswe have made in response to the occurrences, giving rise to the earningsrestatement for the third quarter of 2003, have led to the following.


o Our auditor, Daszkal Bolton, is spending more time in assessing our internal controls and assisting us in implementing other provisions of the Sarbanes-Oxley Act.
o The audit committee has expanded their review and interaction with management.
o Our costs for legal and other professional services, including the retention of professionals to consult on areas related to Sarbanes-Oxley, have and will rise significantly.

ADEQUATE WORKING CAPITAL

Our working capital situation improved in 2003, but deteriorated byapproximately $222,800 in the first quarter of 2004. At March 31, 2004, we had aworking capital deficit of ($55,701). Cash constraints continue to limit ourability to grow. In addition, a change in our sole manufacturer`s informalfinancing arrangements with us, which occasionally enable us to exceed ourpayment terms, could make it difficult or impossible to support our currentlevel of sales. The loss or reduction in sales to any of our key customers wouldalso negatively impact our working capital. Management and the Board ofDirectors continue to explore alternative sources of capital to fund operationsand support potential growth, but we have not identified any financing sourcessuperior to or as good as that provided to us by our sole manufacturer.


DIVERSIFICATION
-

We intend to continue to implement our strategic plan of diversifying ourproduct line by developing and promoting new products. For example, in 2003, wereceived initial orders for our new Carb Cutter(R) Phase 2 product, and, byyear`s end, introduced Zoom(R). We will introduce two new products in the secondquarter of 2004. There is no assurance that these products will experiencewidespread consumer acceptance. It is too early to determine whether customerswill accept Carb Cutter(R) Phase 2 on a long term basis, or whether our Zoom(R)product or our other new products will be successful. Our strategy is intendedto minimize the impact of a shift in consumer preferences with regard to any oneof our products, a change in retailer attitude with respect to any of ourproducts, or any other cause of reduced sales either for a particular product orin a particular geographical area. Despite the introduction of new products, weremain significantly dependent on a single brand, the original Carb Cutter(R).


RESULTS OF OPERATIONS


We report our net revenue after deducting:


o co-op advertising and promotions given to the customers to promote the product and improve sales;


o cash discounts; o slotting fees and new store discounts; and o returns and allowances.
In the first quarter of 2004, the aggregate amount of the deductions was$595,769 compared to $551,237 in the first quarter 2003, an increase of 8%compared to an increase in net revenue of 40%. The increase was less than theamount of increase in net revenues despite the $168,000 reserve that we createdfor the potential return of product from a key customer. Some of our new majorcustomers do not ask us to participate in co-op-advertising and otherpromotions.

NET REVENUES


Net revenues, for the three months ended March 31, 2004 were $1,489,377 anincrease of $423,829, or 40%, compared to net revenues of $1,065,548 for thethree months ended March 31, 2003. Net revenues from two of our major customersincreased by $591,590 and accounted for 81% of our net revenue in 2004 comparedto 58% of our net revenue in 2003. We believe the increase was primarily drivenby increased sales of our Carb Cutter(R) products. Increases in our in-houseadvertising by $311,403 significantly contributed to the increase in netrevenue. During the three months ended March 31, 2004, six customers accountedfor 90% of net revenue, compared to 82% in the same period of 2003.


NET INCOME (LOSS)


Our net loss for the three months ended March 31, 2004, was ($90,740), comparedto a profit of $92,253 for the three months ended March 31, 2003, a decrease of$182,993. Net loss per share was ($0.02) for the three months ended March 31,2004, as compared to a net profit of $0.03 per share for the three months endedMarch 31, 2003. This decrease was primarily because of


o a reserve of $168,000 for one of our products, which one of our customers discontinued selling;
o increased advertising expenses; and
o increased insurance costs.

COST OF SALES

Cost of sales for the three months ended March 31, 2004 was $639,936, or 43% ofnet revenues, as compared to $451,418, or 42% of net revenues for thecorresponding period in 2003. The dollar amount is higher because of increasedsales during the period. While our cost of sales will always grow as an absolutenumber as sales volume increases, we believe that our cost of sales willmaintain its current ratio to sales in the immediate future.


GROSS PROFIT


Gross profit for the three months ended March 31, 2004 was $849,411 an increaseof $235,311 or 38% compared to gross profit of $614,130 for the three monthsended March 31, 2003. As a percent of net sales, gross profit was 57% for thethree months ended March 31, 2004, compared to 58% for the three months endedMarch 31, 2003. The increase in gross profit of $235,311 was primarily due to anincrease in net revenue, primarily from increased sales of Carb Cutter(R) andCarb Cutter(R) Phase 2 products.



OPERATING EXPENSES


Operating expenses are made up of three expense classifications:


o Advertising;
o General and Administration; and
o Depreciation and Amortization.
Operating expenses were $930,182 for the three months ended March 31, 2004,representing an increase of $419,134 compared to $511,048 for the three monthsended March 31, 2003. As a percent of net revenues, operating expenses were 62%for the three months ended March 31, 2004, compared to 48% for the three monthsended March 31, 2003.
Advertising and promotion expenses for the three months ended March 31, 2004were $473,814, representing an increase of $311,403, compared to $162,411 forthe three months ended March 31, 2003. The increase in advertising expenditureshas, in our opinion, been a significant factor in increasing sales.

General and administrative expenses were $450,471 for the three months endedMarch 31, 2004, compared to $341,194 for the three months ended March 31, 2003,an increase of $109,277; however as a percentage of net revenue, general andadministrative expenses were 30% in the first quarter of 2004 compared to 32% inthe first quarter of 2003, reflecting our continued efforts to control generaland administrative expenses.


INVENTORY


The inventory at December 31, 2003 was $1,159,470 compared to March 31, 2004 at$1,001,160, a decrease of $158,310, or 14%. The decrease reflects normalfluctuations in ordering new inventory. The reduction in depreciationamortization expense from $7,443 in the three months ended March 31, 2003 to$5,897 in the three months ended March 31, 2004, is primarily attributable tothe sale of the Acutrim(R) brand.


LIQUIDITY & CAPITAL RESOURCES


At March 31, 2004, the Company had a working capital deficit of $55,701,compared to a $693,965 working capital deficit at March 31, 2003. At the end of2003, the Company had positive working capital of $167,140.

Net cash provided by operating activities for the three months ended March 31,2004 was $184,505 compared to $189,106 for the three months ended March 31,2003. The primary activities providing the cash was the decrease in the accountsreceivables and a decrease in the inventory.


Net cash used in financing activities for the three months ended March 31, 2004was $133,326 compared to net cash used by financing activities of $102,214 thethree months ended March 31, 2003. This is primarily attributable to therepayment of a portion of the note to Garden State Nutritionals.

Mr. Tisi`s bonus is based on a formula contained in his employment agreementdated April 7, 2004, as follows:


o 5% of the increase in net revenues for the period as measured against the corresponding period the year before, plus
o 10% of net income for the period.
With respect to actual payment of the bonus, 33.3% of it is paid when we fileour first quarter 10-QSB. The second 33.3% will be paid after the secondquarter, and is contingent upon operating performance. The final third ispayable after filing our 2004 annual report (Form 10-KSB), and is alsocontingent on operating performance. Mr. Tisi is not required to return anyamounts paid to him in prior quarters. We accrued the full amount of the bonusin the first quarter.
In early April 2002, we entered into an agreement with GSN, our solemanufacturer, pursuant to which we agreed to repay to GSN amounts owed to themas of the date of the agreement. The amount was represented by a promissory noteof approximately $700,000. Our repayment schedule required equal monthlypayments over the next twenty-four months, without interest. In connection withthis agreement, we granted a blanket lien on our assets to GSN. The occurrenceof any of the following events constitute a default under this promissory note:


o the failure of the Company to pay when due any payment of principal and such failure continues for fifteen (15) days after Lender notifies the Company in writing;
o the Company files for or is granted certain relief pursuant to or within the meaning of the United States Bankruptcy Code, or any other federal or state law relating to insolvency or relief of debtors; and
o Christopher Tisi ceases to be the President and Chief Executive Officer of the Company (unless a replacement reasonably acceptable to Lender is obtained within thirty days).
In July 2003, the Company issued an amended promissory note to Garden StateNutrition in the principal amount of $1,300,000.
The new note provided for $300,000 to be paid before December 31, 2003, with thebalance due in quarterly installments of $131,410 commencing November 1, 2003 at4.5% per annum. At March 31, 2004, the balance owed to GSN for the note is$645,687.

In early April 2002, we entered into an exclusive manufacturing agreement withGSN that provided us with a $450,000 line of credit on current invoices, with60-day terms. GSN has allowed us to have as much as $1,000,000 outstanding atcertain times under the line of credit. At March 31, 2003, the balance owed toGSN under this line of credit was $746,130. Under our line of credit, thebalance owed on March 31, 2004 was $467,397. GSN allows us to periodicallyexceed our payment terms. There is no assurance that GSN will continue to allowus to exceed its payment terms in the future.


Our working capital constraints make it difficult to grow our business, and anyreduction in informal arrangements allowing us to exceed our credit limits or toincrease our payment terms with Garden State Nutritional would have a materiallyadverse impact on us. Management and the Board are seeking additional sources tofinance our business. While our cash flow from operations continues to bepositive, we believe that greater capital availability is required to facilitatefuture growth and to cover additional expenses.


COMMITMENTS AND CONTINGENCIES



GOVERNMENT REGULATIONS


The processing, formulation, packaging, labeling and advertising of our productsare subject to regulation by one or more federal agencies, including the FDA,the FTC, the Consumer Product Safety Commission, the United States Department ofAgriculture and the United States Environmental Protection Agency. Theseactivities are also regulated by various agencies of the states, localities, andcountries in which its products are sold.

Although we cannot predict what new legislation or regulations governing ouractivities will be enacted by legislative bodies or promulgated by agenciesregulating our activities. We do know that our industry has come under increasedscrutiny principally due to the FDA`s investigation of the use of ephedra. Webelieve we will become subject to additional laws or regulations administered bythe FDA or other federal, state, or foreign regulatory authorities. We alsobelieve the laws or regulations which we consider favorable may be repealed ormore stringent interpretations of current laws or regulations will beimplemented in the future. Any or all of such requirements could be a burden andcostly, to us. Future regulations could:


o require us to change the way we conduct business;
o require us to change the contents of our products;
o make us keep additional records;
o make us increase the available documentation of the properties of our products; or
o make us increase or use different labeling and scientific proof of product ingredients, safety or usefulness.

PRODUCT LIABILITY
-
The Company, like other marketers of products that are intended to be ingested,faces the inherent risk of exposure to product liability claims in the eventthat the use of our products results in injury. The Company maintains productliability insurance coverage of $5,000,000. Because of the increased scrutiny ofour industry, it has become increasingly difficult to obtain and maintainproduct liability insurance coverage for products. We applied for coverage withover 40 different companies, and very few provided us a quote. The cost forcoverage rose in excess of 2,500%, and we procured 16% less coverage than oneyear ago.



GOING CONCERN QUALIFICATION


The Company`s accountants have issued a going concern opinion due to the lack ofcapital. Because of the uncertainties in our ability to satisfy its futurecapital needs, our independent auditors` report on our financial statements forthe year ended December 31, 2003 contains an explanatory paragraph about ourability to continue as a going concern.

If Garden State Nutritionals, our sole manufacturer, fails to supply ourproducts in sufficient quantities and in a timely fashion, our business maysuffer. We currently obtain 100% of our manufactured product from a singlesource of supply, Garden State Nutritionals. In 2002, we entered into a two yearcontract with GSN to manufacture all of our products. In the event that GSN isunable or unwilling to provide us with the products in accordance with the termsof our contract, delays in securing alternative sources of supply would resultin a material adverse effect upon our operations.

The Company`s continuation is dependent upon its ability to control costs andattain a satisfactory level of profitability with sufficient financingcapabilities or equity investment.

There is substantial doubt about the Company`s ability to continue as a goingconcern. The financial statements do not include any adjustments to reflect thepossible effects on the recoverability and classification of assets or theamounts and classification of liabilities that may result from the outcome ofthis uncertainty.

[MCGabriel]

Wollte eigentlich nur 1 Thread eröffnen aber der kam nicht - so dachte ich, daß ich etwas falsch gemacht habe.

Kann jemand mal die Zahlen deuten - für mich ist es nach 1-stündigem Durchackern eher sehr schlecht.

[MCGabriel]

Langsam sind wir auf einem Niveau, bei dem man wohl nichts falsch machen kann.

Muß zunächst mal schauen, warum HNNS jetzt so abgestürzt ist

[admetos]

@McGabriel

Hast Du eine Ahnung warum diese Aktie zwischen 0,17 und 0,30 USD pendelt?

MFG