SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                  -------------
                                   FORM 10-KSB


(Mark one)
X    ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934.

                   For the fiscal year ended December 31, 1999
                                       OR
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934.

          For the transition period from ________ to ________.

                         Commission file number 0-011228

                           NATURAL HEALTH TRENDS CORP.
                 (Name of Small Business Issuer in Its Charter)

            Florida                                           59-2705336
     (State or Other Jurisdiction of                        (I.R.S. Employer
      Incorporation or Organization)                        Identification No.)

                               380 Lashley Street
                            Longmont, Colorado 80501
                     (Address of principal executive office)

                                 (303) 682-4236
                (Issuer's Telephone Number, Including Area Code)

         Securities registered under Section 12(b) of the Exchange Act:

            Title of Each Class                         Name of Each Exchange
                                                         On Which Registered
                None                                            None

      Securities registered pursuant to Section 12(g) of the Exchange Act:

                          Common Stock, par value $.001
                                (Title of Class)

                                Class A Warrants
                                (Title of Class)

                                Class B Warrants
                                (Title of Class)

                                      Units
                                (Title of Class)

         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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 ____



<PAGE>

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of  Regulation  S-B contained in this Form,  and no disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB or any amendment to this Form 10-KSB.

         Issuer's revenues for its most recent fiscal year:  $15,269,631

         The  number  of shares of Common  Stock  held by  nonaffiliates  of the
registrant  (as determined for the purpose of this Form 10-KSB only) as of March
31,  2000  was  8,263,995  with  an  approximate   aggregate   market  value  of
$10,072,157,  (based upon the closing price of such shares as of such date). The
number of shares of the Common Stock of the issuer  outstanding  as of March 31,
2000 was 8,292,270.







<PAGE>



                           Natural Health Trends Corp.
                         1999 Form 10-KSB Annual Report


                                Table of Contents

                                                                       Page
                                     Part I

Item 1    Description of Business                                        2
Item 2    Description of Property                                       17
Item 3    Legal Proceedings                                             17
Item 4    Submission of Matters to a
          Vote of Security Holders                                      18

                                     Part II

Item 5    Market for Common Equity and
          Related Stockholder Matters                                   18
Item 6    Management's Discussion and
          Analysis or Plan of Operation                                 19
Item 7    Financial Statements                                          25
Item 8    Changes in and Disagreements
          with Accountants on Accounting
          and Financial Disclosure                                      25

                                    Part III

Item 9    Directors, Executive Officers,
          Promoters and Control Persons;
          Compliance With Section 16(a)
          of the Exchange Act                                           25
Item 10   Executive Compensation                                        26
Item 11   Security Ownership of Certain
          Beneficial Owners and Management                              29
Item 12   Certain Relationships and Related
          Transactions                                                  30
Item 13   Exhibits, Financial Statement
          Schedules, and Reports on Form 8-K                            31



                                      -1-
<PAGE>

                                     Part I


ITEM  1.          DESCRIPTION OF BUSINESS

Corporate History

     Natural  Health Trends Corp. is a corporation  which  develops and operates
businesses,  in one business segment, to promote human wellness.  Through Global
Health Alternatives,  Inc., the Company's wholly-owned  subsidiary,  the Company
markets a line of natural, over-the-counter homeopathic pharmaceutical products.
Through Kaire Nutraceuticals,  Inc., the Company's wholly-owned subsidiary,  the
Company  utilizes  a  network  of  independent  associates  to  offer  a line of
approximately 50 products.

     In February  1999,  the Company's  newly-formed,  wholly-owned  subsidiary,
Kaire Nutraceuticals, Inc., acquired substantially all of the assets (the "Kaire
Assets") of Kaire International,  Inc. including,  but not limited to, the names
"Kaire,"  "Kaire  International,  Inc." and all variations and any other product
name and all other registered or unregistered  trademarks,  tradenames,  service
marks, patents, logos, and copyrights of Kaire International, Inc., all accounts
receivable,  contractual rights and product formulations to any and all products
of Kaire  International,  Inc., product  inventory,  "800" and other "toll-free"
telephone numbers, product supply contracts (including,  but not limited to, its
Enzogenol  product),  independent  associate  lists, and shares of capital stock
owned by Kaire International,  Inc. in each of its wholly-owned and/or partially
owned subsidiaries including,  but not limited to, Kaire New Zealand Ltd., Kaire
Australia Pty Ltd.,  Kaire  Trinidad,  Ltd. and Kaire Europe Ltd. (but excluding
Kaire Korea Ltd.).

         In  exchange  for the Kaire  Assets,  the  Company  issued (i) to Kaire
International,  Inc.,  $2,800,000  aggregate  stated value of Series F preferred
stock; (ii) to two creditors of Kaire  International,  Inc.,  $350,000 aggregate
stated  value of Series G  preferred  stock;  and (iii) to Kaire  International,
Inc.,  five-year  warrants to purchase  200,000  shares of the Company's  common
stock  exercisable at $4.06 per share.  In addition,  Kaire  Nutraceuticals  has
agreed to make certain  payments to Kaire  International,  Inc.  each year for a
period of five years (the "Kaire Nutraceuticals Net Income Payments") commencing
with the year ending December 31, 1999, to be determined as follows:

(i)  25% of the net  income  of Kaire  Nutraceuticals  if the net sales of Kaire
     Nutraceuticals in any such year are between $1 and $10,000,000;

(ii) 33% of Kaire  Nutraceuticals'  net  income  if its net  sales  are  between
     $10,000,000 and $15,000,000;

(iii)40% of Kaire  Nutraceuticals'  net  income  if its net  sales  are  between
     $15,000,000 and $40,000,000; and

(iv) 50% of Kaire  Nutraceuticals'  net income if its net sales are in excess of
     $40,000,000.


                                      -2-
<PAGE>

     The  Kaire  Nutraceuticals  Net  Income  Payments  shall  be  reduced  on a
dollar-for-dollar  basis  to  the  extent  of  (a)  all  indebtedness  of  Kaire
International, Inc. assumed by Kaire Nutraceuticals; (b) all other direct and/or
indirect costs or expenses assumed and/or otherwise  incurred by the Company of,
or resulting from,  Kaire  International,  Inc.  including,  but not limited to,
litigation  costs,  payments  of sales or other  taxes,  expenses of officers of
Kaire  International,  Inc., and other payments or expenses  resulting  directly
and/or  indirectly  from  the  acquisition  of the  Kaire  Assets;  and  (c) any
reasonable  inter-company  obligations of the Company resulting from third party
payments  made by the  Company on behalf of (or  allocable  proportionately  to)
Kaire  Nutraceuticals  by the Company that resulted from the  acquisition of the
Kaire Assets. In addition,  all amounts set-off against Kaire Nutraceuticals Net
Income Payments are cumulative and, if not set-off in the year they are paid (or
incurred) because Kaire  Nutraceuticals  did not have a sufficient amount of Net
Income (or for any reason),  such set-off  amounts shall accrue and be used as a
set-off in the earliest possible year or years.

     In connection  with the Kaire  Acquisition,  Kaire  Nutraceuticals  assumed
certain  specified  liabilities  of Kaire  International,  Inc.  including:  (i)
approximately $475,000 owed to MW International Inc.; (ii) approximately $50,000
owed to Manhattan Drug Company;  (iii)  approximately  $120,000 in the aggregate
owed to Robert L.  Richards and Mark  Woodburn  (both  officers and directors of
Kaire International,  Inc.); (iv) up to approximately $120,000 in unpaid payroll
taxes  of  Kaire  International,  Inc.;  and  (v) up to  $180,000  owed  to STAR
Financial Bank.

     In addition,  Kaire Nutraceuticals has agreed to indemnify certain officers
of Kaire International,  Inc. against all amounts paid following the acquisition
of the Kaire Assets by such persons resulting from unpaid sales taxes accrued by
Kaire International, Inc. prior to the closing date of the Kaire Acquisition.

     In connection with the Kaire Acquisition, the Company retained BLH, Inc. as
a consultant.  In accordance  with the terms of the consulting  agreement,  BLH,
Inc.  was to  identify  companies  which the  Company  could  effect a  business
combination.  BLH, Inc.  introduced  Kaire  International,  Inc. to the Company.
Pursuant to the terms of the  consulting  agreement,  BLH, Inc.  earned a fee of
approximately  $430,000 in connection with the Kaire  Acquisition which was paid
in February,  1999 by issuing 516 shares of Series I preferred stock. The Series
I preferred  stock was converted into 160,104 shares of common stock during July
1999.

Industry Overview

         Natural Health Products

                                      -3-

<PAGE>

     The Company  believes that the market for natural  products and supplements
is being driven by  information  in the mass media which  continues to highlight
problems with the American diet;  the fact that American  consumers are becoming
increasingly  disenchanted  with and skeptical about many  conventional  medical
approaches to disease treatment;  growing consumer interest in and acceptance of
natural  and  alternative   therapies  and  products;   and,   finally,   recent
clarifications  and changes of food and drug laws that have eased  significantly
the regulatory  burdens  associated  with the  introduction  and sale of dietary
supplements.

     The Company  believes  that public  awareness  of the  positive  effects of
nutritional  supplements  and natural  remedies on health has been heightened by
widely publicized reports and medical research findings indicating a correlation
between  the  consumption  and use of a wide  variety of  nutrients  and natural
remedies and the reduced incidence of certain diseases.

     The Company believes, although there can be no assurance, that the aging of
the United States  population,  together with an increased focus on preventative
and alternative health care measures, will continue to fuel increased demand for
certain nutritional  supplement  products and natural remedies.  Management also
believes that the continuing shift to managed  healthcare  delivery systems will
place greater emphasis on disease prevention and health maintenance,  areas with
which natural health products are most identified.

     With  respect  to  the  distribution  of  natural  health  products,  while
distribution through small to large sized natural and health food stores remains
significant,  the bulk of the  growth  is found  in the mass  merchandisers  and
health food chains such as General  Nutrition  Centers  which now  represent the
majority of sales, and represent the fastest growing channels of distribution.

         Direct Selling

     According to The Direct Selling  Association,  network  marketing is one of
the fastest  growing  segments  for the  distribution  of  products.  The Direct
Selling  Association  reports that worldwide,  over 17.5 million individuals are
now involved in direct  selling (of which network  marketing is a major segment)
and that those involved in direct  selling  generate $80 billion in annual sales
around the world.  Network marketing sales in the United States are estimated to
be approximately $22 billion annually.

     Currently,  the Company has associates in all fifty states, the District of
Columbia, Puerto Rico, Guam, Canada, Australia, New Zealand, Trinidad and Tobago
and the United Kingdom.  Management  believes that significant  market potential
exists  for its  products  in  international  markets,  and it is the  company's
intention to explore expansion into Japan,  Europe, Hong Kong, Taiwan, India and
the  Philippines.  Statistics  from  the  World  Federation  of  Direct  Selling
Associations  as reported in May 1998  indicate  that the direct sales market in
the  foregoing   countries  amounted  to  over  $37  billion  with  6.4  million
individuals  being involved in some form of direct  marketing.  This compares to
$28.6  billion in sales and 7.2  million  individuals  involved  in the  markets
currently serviced by the Company.


                                      -4-

<PAGE>

Product Licensing Agreements

     We have  developed  four products under the Natural Relief 1222 brand name.
Our initial mass market-oriented  product,  Natural Relief 1222 Arthritis Relief
is a topical, natural,  homeopathic medicine. The active ingredients are Bryonia
6X and Rhus  Toxicodendron 6X, in a patented base of natural  ingredients.  This
product is intended to be utilized for the  temporary  relief of minor pains and
stiffness  of  muscles  and joints  associated  with  arthritis;  subject to FDA
compliance.  Arthritis  Relief was  introduced in July 1997 through a nationwide
television direct response advertising campaign. In December 1997, we introduced
three  extensions  to the Natural  Relief 1222  product  line-Sports  Rub,  Wart
Remover,  and Dermatitis & Eczema Relief. We also introduced Arthritis Relief to
the mass consumer  distribution  channels through a broker network.  We obtained
distribution  of Arthritis  Relief in several drug chains.  However,  due to the
capital  intensive  nature of mass  market  distribution,  we have  revised  our
business plan of marketing and support for our products, decreasing its emphasis
on mass  market  advertising.  Instead,  we plan  to use our  resources  for the
development of other less capital-intensive distribution channels (e.g., network
marketing which will be facilitated through Kaire Nutraceuticals).

     In January 2000, we entered into a licensing  agreement  with GLI, Inc., of
which our former  president,  Joseph Grace,  is a principal.  We licensed to GLI
certain rights to manufacture,  distribute and sell the four Natural Relief 1222
products  through various  distribution  channels and the exclusive right to the
trademark "Natural Relief 1222". The licensing  agreement is for a percentage of
GLI's net sales for five years  with a minimum  royalty  guaranteed.  After five
years, the royalty is reduced to a lower percentage of net sales with no minimum
royalty guaranteed.  As part of the licensing agreement,  GLI agreed to purchase
any unused inventory of the product.

     We marketed a line of  homeopathic  flower  remedies  under the Ellon trade
name, which consists of 38 individual flower remedies and one combination flower
remedy, sold as Calming Essence?. These products are regulated  over-the-counter
pharmaceuticals  which are  intended to be utilized for the relief of a range of
emotional and psychological stresses.  Calming Essence has been sold principally
to natural and health food retailers subject to FDA compliance and distributors,
and to alternative health care  practitioners.  We compete in this category with
several other  established lines of homeopathic  flower remedies,  including the
Bach and Flower Essence Services product lines.

     In  February  2000,  we  entered  into a  licensing  agreement  with  Ellon
Botanicals,  Inc. in which we granted to Ellon Botanicals the exclusive  license
to market and use all patents,  service marks and trademarks associated with the
Ellon,  Calming Essence and ContentMints brand names. The licensing agreement is
for a percentage of Ellon Botanicals net sales for a period of four years with a
minimum royalty guaranteed. As part of the licensing agreement, Ellon Botanicals
agreed to purchase any unused inventory of the product.



                                      -5-
<PAGE>

Products

Energize

     This line is primarily natural stimulants  designed to enhance and increase
energy  levels and  endurance  both  mentally and  physically.  Products in this
category  include  Ginko  Shield,  which  assists  in mental  alertness  and the
circulatory  system,  Momentum,  and RF5, that helps increase and balance energy
levels and gives one an overall sense of well-being.

Enhance

     The Enhance  product  line is designed to support an  individual's  overall
health and includes such  products as Immunol,  Colloidal  Silver  Kaire,  Colon
Complex,  Synerzyme,  Kavatu,  Arthrokaire,  Osteo Formula, CPM9, Royal Hawaiian
Noni, Slimkaire, and SinusKaire.

     Immunol is a shark liver based  capsule  which we believe aids in the human
immune system. This product is imported exclusively by Kaire Nutraceuticals.

     Colloidal Silverkaire, a solution of silver particles  electro-magnetically
suspended in deionized water and provides dietary support for the immune system.
It is used by  individuals  for a number of  purposes  including  eye  drops,  a
topical solution, nose drops and a drink.

     A colon-cleansing  product,  Colon Complex, is for periodic use in cleaning
the lower digestive system and Synerzyme,  a combination of naturally  occurring
enzymes and trace  minerals to enhance the  efficacy of the  enzymes,  which may
assist the body with the breakdown and assimilation of various foods and fats.

     CPM9  includes  cetyl-myristoleate,  which  has been  cited  as a  critical
nutrient for chronic pain due to  connective  tissue  disorders.  It assists the
body in  modulating  inflammatory  response and adding  flexibility  to affected
tissues.

     Noni is derived  from a fruit grown only in the Central and South  Pacific,
and  contains  high levels of  naturally  occurring  vitamins,  minerals,  trace
elements,  enzymes, and phytochemicals.  The processing method of flash freezing
the  fruit  and then  processing  it into  capsules  retains  the high  level of
nutrients that may be lost through the pasteurization of liquid presentations of
this product.

     Slimkaire is a new time-release, thermogenic weight management program with
five herbal blends;  including a thyroid support blend, that is designed to work
as a system to assist  weight loss safely while giving the dieter a higher level
of energy and  maintaining a healthy body.  This system  concept is based upon a
complete  program  including  Kaire  Nutraceuticals  products,  walking or other
sensible exercise  available to virtually all individuals and sensible permanent
eating habits. We believe that our proprietary  formula,  which has no synthetic
stimulant, is superior to competitor blends for the health conscious individual.

     In  addition,  Kaire  Nutraceuticals  offers  a second  thermogenic  weight
management  program,  SK II, for individuals seeking a product without Ma huang,
(ephedrine).

     Developed  exclusively for the Canadian  market,  Sinuskaire,  is a similar
formulation to the United States  product  Slimkaire that also aids in a healthy
sinus function.

                                      -6-
<PAGE>

Optimize

     This category provides for many of the basic vitamins and nutrients,  which
are missing in the typical adult or child's diet such as Vita/Minkaire,  Prokids
and MSM Complex.

     In addition,  Kaire Nutraceuticals  acquired the right to distribute Bio10,
an organic live source of all 12 lactobacillus  bacteria  designed to supplement
and maintain optimum health.

Renew

     Renew is a complete  line of skin care,  hair care and topical  analgesic's
designed  to assist in  maintaning  a youthful  and  healthy  appearance.  Kaire
Nutraceutical's products include Isomer (TM) Personal Solutions, Aloe Gel, Kobi,
Dermakaire with Pycnogenol (TM), and Dermunol.

     Isomer  (TM) is our line of skin and hair care  products  and  includes  20
different items to appeal to a wide range of consumers, both male and female.

         Kobi combines  Australian  Aboriginal healing traditions and scientific
research with a patented Emu oil to provide  temporary relief of minor aches and
pains associated with simple strains, sprains and arthritis.

     DermaKaire  with  Pycnogenol  is a  mosturizing,  whole-leaf  Aloe  product
combined with a powerful antioxidant to maintain healthy-looking skin.

Restore

     Products  in this  category  serve two  primary  purposes.  The first is to
provide adaptogens in an efficient medium and the second is to provide a natural
relaxant for rest and sleep.  Arctic Root is an  adaptogen,  an herb which works
with the body to allow  energy to be used by the body as needed  as  opposed  to
stimulants  and  depressants  which affect the body's energy as a whole,  over a
certain period of time.  Kavatu  combines the extract from the Pacific  KavaKava
plant with other  nutrients to form a product  allowing for a more complete rest
and sleep without the "hangover" effects of many artificial  relaxants and sleep
aids. We also market St. John's Wort.

     In addition, Aloe has been studied for a number of years as everything from
a topical for skin  irritations  and sunburn to a supplement  for  improving the
general  health of the body.  Fruit-N-Aloe  is a more palatable form of the Aloe
juice as it is mixed  with fruit  juices to get the Aloe  benefits  without  the
strong taste of AloElite, a more concentrated form of the Aloe juice.

Revive

     This  line is  primarily  nutritional  supplements  based  on  antioxidants
including Maritime Prime and EnzoKaire Complete.  Most of the products are based
on exclusive  formulations in several  combinations  containing natural products
including  Pycnogenol,  Enzogenol(TM) and Arctic Root(TM).  Products  containing
Pycnogenol  have  not been  approved  for  direct  importation  into  Australia.
Maritime  Plus is not  available  in Canada due to Canadian  regulations  on the
ascorbate that is contained in this product.

                                      -7-
<PAGE>

     Pycnogenol,  is believed to be highly bioavailable and retained in the body
for several days.  Antioxidants  have been shown to be effective in fighting the
effects of  oxidation  on the body.  Oxidation  is the same  process that causes
metals to rust and apples to turn  brown.  Free  radicals,  which are  molecules
damaged by oxidation,  are being studied as the causes of various infirmities in
humans. A free radical is an unstable oxygen molecule seeking,  at the molecular
level,  to pair up  with  an  electron.  Free  radicals  can be  created  in the
atmosphere  by the exposure of oxygen to sunlight and  pollution.  Free radicals
can also be created by natural metabolic  processes.  Antioxidants are molecules
which can combine with and, as a result, neutralize free radicals.

     DHEA is a hormonal  product  which  replaces  the same hormone in the body.
Research shows that as a person matures their body generates diminishing amounts
of DHEA.  According to a number of research  studies,  DHEA is the hormone which
allows the body to know its energy level.

     In December  1999,  we  acquired  the  distribution  rights to HIM and HER,
gender-specific,  anti-aging  formulas designed to compliment the complete Kaire
Nutraceuticals product line.

         New Product Development

     Additional   products  being  considered  in  these  areas  are  additional
antioxidants, anti-aging, weight management, and energy products. In addition to
the introduction of single products,  Kaire  Nutraceuticals  is also focusing on
promoting  groups of  products  to be taken in  conjunction  with each  other to
address specific needs (such as weight loss, stress, daily wellness,  etc.) that
an individual may have.

     Kaire  Nutraceuticals  intends to seek to identify,  develop and  introduce
innovative, effective and safe products. Management believes that its ability to
introduce new products increases its associates'  visibility and competitiveness
in the marketplace.

     Kaire Nutraceuticals  maintains its own product review and evaluation staff
but relies upon  independent  research,  vendor research  departments,  research
consultants  and  others  for  product  research,  development  and  formulation
services.

         Product Warranties and Returns

     Kaire  Nutraceuticals'  product  warranties and policy regarding returns of
products are similar to those of other companies in its industry.  If a consumer
who  enrolled  with  Kaire  subsequent  to  July  1,  1999,  for  any  of  Kaire
Nutraceuticals' products is not satisfied with the product, she/he may return it
to the associate from whom the purchase was made,  within 90 days of enrollment.
The  associate is required to refund the  purchase  price to the  consumer.  The
associate  may  then  return  the  unused   portion  of  the  product  to  Kaire
Nutraceuticals for an exchange of equal value. If an associate requests a refund
in lieu of an exchange,  a check or credit is issued.  All  associates  enrolled
with Kaire  prior to July 1, 1999 may return  products  for  exchange  or refund
within 30 days from the date of purchase.  All products  are  warranted  against
defect by the  manufacturer of those products.  Most products  returned to Kaire
Nutraceuticals, however, are not found to be defective in manufacture.

                                      -8-

<PAGE>

         Manufacturing

     The Company does not intend to develop its own  manufacturing  capabilities
since management  believes that the availability of manufacturing  services from
third parties on a contract basis is adequate to meet the Company's  needs.  The
Company has utilized a number of manufacturers who have sufficient manufacturing
capacity to meet the Company's anticipated production needs.

     Kaire Nutraceuticals  currently purchases all of its vitamins,  nutritional
supplements and all other products and ingredients from parties that manufacture
such  products  to  Kaire  Nutraceuticals'  specifications  and  standards.  All
nutritional  supplements,  raw  materials  and finished  products are subject to
sample testing, weight testing and purity testing by independent laboratories.

     Except for an agreement with Enzo Nutraceuticals,  Inc., the Company has no
existing   contractual   commitments  or  other   arrangements  for  the  future
manufacture of its products.  Rather, it places orders for component or finished
goods  manufacturing  services as required based upon price quotations and other
terms obtained from selected  manufacturers.  During the year ended December 31,
1999,  Kaire  Nutraceuticals  purchased  amounts of its products  from a limited
number  of  vendors,  including  46% from MW  International,  Inc.  The  Company
currently buys all of its  Pycnogenol,  an important  component of its products,
from one supplier.

Marketing and Distribution

     Kaire   Nutraceuticals'   products  are  distributed  through  its  network
marketing  system of associates.  Associates  are  independent  contractors  who
purchase  products  directly  from  Kaire  Nutraceuticals  for  resale to retail
consumers.  Associates  may elect to work on a full-time  or a part-time  basis.
Management  believes  that  its  network  marketing  system  is well  suited  to
marketing its nutritional  supplements and other products  because sales of such
products are  strengthened by ongoing  personal contact between retail consumers
and associates, many of whom use Kaire Nutraceuticals' products.

     Our goal is to offer  distributors a business  opportunity  that allows the
part-time and full-time  network  marketers to achieve income levels relative to
their business practices and sales levels.  Distributors have the opportunity to
earn immediate,  residual, and retirement incomes. Bonuses are paid to qualified
distributors based on sales for each month. Rank titles for the distributors are
Associate,  Broker, Director,  Executive,  Managing Executive, Senior Executive,
and Master  Executive.  Each increased rank has additional  standards to achieve
and maintain rank, as well as providing the ability to earn additional bonuses.

     To become an  associate,  a person must simply sign an  agreement to comply
with the policies and  procedures  of Kaire  Nutraceuticals.  No  investment  is
necessary to become an associate.  Kaire Nutraceuticals  considers approximately
30,000 of its  associates to be "active,"  that is, an individual  associate who
has  ordered at least $50 of Kaire's  products  during  the  preceding  12 month
period.


                                      -9-

<PAGE>

     Kaire  Nutraceuticals  has  sponsored  opportunity  meetings in various key
cities and  participates in motivational and training events in its market areas
designed   to  inform   prospective   and   existing   associates   about  Kaire
Nutraceuticals'   product   line  and  selling   techniques.   Associates   give
presentations relating to their experiences with Kaire Nutraceuticals'  products
and the  methods  by  which  they  have  developed  their  own  organization  of
associates. Specific selling techniques are explained, and emphasis is placed on
the need for consistency in using such  techniques.  Participants are encouraged
to ask questions regarding selling techniques and product developments, to share
information  with other  associates  and to develop  confidence  in selling  and
goal-setting  techniques.  Motivation is offered to  participants in the form of
recognition,  gifts,  excursions  and  tours,  which are  intended  to foster an
atmosphere of excitement  throughout  the  associate  organization.  Prospective
associates  are  educated  about the  structure,  dynamics and benefits of Kaire
Nutraceuticals' network marketing system.

     Kaire Nutraceuticals continues to develop marketing strategies and programs
to motivate  associates.  These  programs are  designed to increase  associates'
monthly product sales and the recruiting of new associates.  An example of these
programs is the Kaire AutoShip Program.

     Under the Kaire  AutoShip  Program,  an  associate  may enroll in a minimum
ordering program to maintain eligibility for performance bonuses. Minimum orders
ranging  from $50 to $550 per month are  automatically  placed by credit card or
electronic  bank draft.  The associate also gets preferred  pricing,  no minimum
purchase  requirement  (once  they  have a  qualifying  select  order  set  up),
exclusive  access  to  some  product  introductions,   and  discounts  on  Kaire
Nutraceuticals' sponsored events.

     As part of Kaire Nutraceuticals' maintenance of constant communication with
its  associate  network,  Kaire  Nutraceuticals  offers  the  following  support
programs to its associates:

 Touchtalk and Faxback

     An automated  telephone  system that  associates can call 24 hours a day to
place orders,  receive reports on the sales activity of their  organization  and
listen to  selected  messages  on special  offers,  marketing  program  updates,
product  information,  and  similar  information.  Certain  information  is also
available via facsimile to the associate.

 24 Hour Teleconference

     A weekly  teleconference  on various  subjects  such as  technical  product
discussions,  associate  organization  building and  management  techniques.  An
associate can listen to any of the last four weekly teleconferences.

 Internet

     Kaire Nutraceuticals maintains a web-site at http:\www.kaireint.com. There,
the user can read news  letters,  learn more about  products,  place an order or
sign up to be an associate. In addition, associates can send messages and orders
to Kaire Nutraceuticals  e-mail address of kaireint.com.  This allows associates
to potentially be able to sponsor associates and order products 24 hours a day.

                                      -10-

<PAGE>

 Product Literature

     Kaire  Nutraceuticals  produces  for  its  associates, color  catalogs  and
brochures displaying and describing Kaire Nutraceuticals' products.

 Toll Free Access

     A toll free number is available to place  orders,  sponsor new  associates,
and for consumer support.

 Broadcast Fax/Broadcast E-mail

     Kaire Nutraceuticals'  announcements and product specials are automatically
sent via facsimile and/or e-mail to associates who have requested this service.

         Markets

     Kaire   Nutraceuticals  has  operations  in  the  United  States,   Canada,
Australia, New Zealand, Trinidad and Tobago and the United Kingdom.

     Upon  deciding  to enter a new  market,  Kaire  Nutraceuticals  hires local
counsel to assist ensuring that Kaire  Nutraceuticals'  network marketing system
and   products   comply  with  all   applicable   regulations   and  that  Kaire
Nutraceuticals' profits may be expatriated.  In addition,  local counsel assists
in establishing  favorable relations in the new market area by acting as liaison
between Kaire Nutraceuticals and local regulatory authorities,  public officials
and business  people.  Local counsel also is responsible  for  explaining  Kaire
Nutraceuticals'  products and product ingredients to appropriate regulators and,
when  necessary,  will  arrange for local  technicians  to conduct any  required
ingredient analysis tests of Kaire Nutraceuticals' products.

     If   regulatory   approval  is  required   in  a  foreign   market,   Kaire
Nutraceuticals'  local  counsel  interfaces  with local  regulatory  agencies to
confirm  that all of the  ingredients  of  Kaire  Nutraceuticals'  products  are
permissible  within the new market.  During the regulatory  compliance  process,
Kaire  Nutraceuticals  may alter the  formulation,  packaging or labeling of its
products to conform to  applicable  regulations  as well as local  variations in
customs and consumer habits, and Kaire Nutraceuticals may modify certain aspects
of  its  network  marketing  system  as  necessary  to  comply  with  applicable
regulations.

     Following   completion   of  the   regulatory   compliance   phase,   Kaire
Nutraceuticals   undertakes  the  steps   necessary  to  meet  the   operational
requirements  of the new market.  Kaire  Nutraceuticals  then initiates plans to
satisfy inventory,  distribution,  personnel and transportation  requirements of
the  new  market,  and  modifies  its  associate  training  materials  as may be
necessary to be suitable for the new market.

                                      -11-

<PAGE>

Management Information Systems

     Kaire  Nutraceuticals   maintains  a  computerized  system  for  processing
associate  orders  and  calculating  associate  commission  and  bonus  payments
enabling it to promptly  remit  payments to  associates.  Kaire  Nutraceuticals'
computer  system  provides each associate a detailed  monthly  accounting of all
sales and  recruiting  activity  in his or her  organization.  These  convenient
statements  eliminate the need for  substantial  record keeping on behalf of the
associate. As a precaution,  duplicate copies of Kaire Nutraceuticals'  computer
records are transferred  daily to an off-site  location for  safekeeping.  Kaire
Nutraceuticals  believes that prompt  remittance of  commissions  and bonuses is
vital to  maintaining  a  motivated  network of  associates  and that  associate
loyalty has been enhanced by Kaire  Nutraceuticals  making  commission and bonus
payments as scheduled.

Competition

     Kaire  Nutraceuticals  competes with many  companies  which market and sell
products  similar to our own  products.  It also competes  intensely  with other
network marketing companies in the recruitment of associates.

     There are many network marketing companies with which Kaire  Nutraceuticals
competes for  associates.  Some of the largest of these are  Nutrition  for Life
International,  Inc., Nature's Sunshine,  Inc., Herbalife  International,  Inc.,
Amway and Rexall Sundown,  Inc. Each of these companies is substantially  larger
than Kaire Nutraceuticals and has significantly  greater financial and personnel
resources  than  Kaire   Nutraceuticals.   Kaire  Nutraceuticals   competes  for
associates  by means of its  marketing  program  that  includes  its  commission
structure, training and support services, and other benefits.

     Not all  competitors  market  all  types  of  products  marketed  by  Kaire
Nutraceuticals, and some competitors market products and services in addition to
those marketed by Kaire Nutraceuticals.  For example, some competitors are known
for and are identified with sales of herbal formulations, some are known for and
are identified with sales of household cleaning and personal care products,  and
others are known for and are identified  with sales of  nutritional  and dietary
supplements. Kaire Nutraceuticals' principal methods of competition for the sale
of products are its  responsiveness  to changes in consumer  preferences and its
commitment to quality, purity, and safety.

                                      -12-

<PAGE>

Seasonality

     Sales of topical analgesic  products are strongest during the colder winter
months when  arthritis  sufferers  tend to feel pain and stiffness more acutely.
Conversely, sales of skin treatment products (e.g., hydrocortisone creams, etc.)
are slightly stronger during the non-winter months. The Company does not believe
that the sales of wart removal products are seasonal.

     Sales of the Company's  weight  management  products are  strongest  during
January when New Year's  resolutions are made and during the spring season.  The
Company does not believe that its other nutritional  supplements are affected by
seasonality.

Government Regulation

     The Company's president and chief executive officer believe that all of its
existing  products are homeopathic  medicines which do not require  governmental
approvals prior to marketing in the United States. The processing,  formulation,
packaging,  labeling and advertising of such products,  however,  are subject to
regulation by one or more federal agencies  including the FDA, the Federal Trade
Commission,   the  Consumer  Products  Safety  Commission,   the  Department  of
Agriculture,   the   Department  of  Alcohol,   Tobacco  and  Firearms  and  the
Environmental  Protection Agency.  The Company's  activities are also subject to
regulation  by  various  agencies  of the  states  and  localities  in which its
products  are  sold.  In  addition,  the  sale  of  the  Company's  products  by
distributors  in foreign  markets are subject to  regulation  and  oversight  by
various federal, state and local agencies in those markets.

     The FDA  traditionally  has been the main  agency  regulating  the types of
products sold by homeopathic and natural over-the-counter  pharmaceutical firms.
Official legal  recognition  of homeopathic  drugs in the United States dates to
the Federal Food,  Drug and Cosmetic Act of 1938. The Food Drug and Cosmetic Act
provides  that the term "drug"  includes  articles  recognized  in the  official
Homeopathic  Pharmacopoeia of the United States.  The Food Drug and Cosmetic Act
further  recognizes the separate nature of homeopathic  drugs from  traditional,
allopathic  drugs by providing  that  whenever a drug is  recognized in both the
U.S. Pharmacopoeia and the Homeopathic Pharmacopoeia, it shall be subject to the
requirements of the U.S. Pharmacopoeia unless it is labeled and offered for sale
as a homeopathic  drug,  in which case it shall be subject to the  provisions of
the Homeopathic Pharmacopoeia and not to those of the U.S. Pharmacopoeia.

                                      -13-

<PAGE>

     In 1988, the FDA issued a Compliance Policy Guide that formally established
the manner in which homeopathic drugs are regulated. The Compliance Policy Guide
provides that homeopathic drugs may only contain  ingredients that are generally
recognized  as  homeopathic.  Such  recognition  is most often  obtained via the
publication of a monograph in the  Homeopathic  Pharmacopoeia.  The FDA has also
noted that a product's  compliance  with a Homeopathic  Pharmacopoeia  monograph
system  does  not  necessarily  mean  that it has  been  shown  to be  safe  and
effective.  According  to the  Compliance  Policy  Guide,  and  consistent  with
established FDA principles  regarding  allopathic  drugs, a homeopathic drug may
only  be  marketed   without  a  prescription  if  it  is  intended  solely  for
self-limiting disease conditions amenable to self-diagnosis and treatment. Other
homeopathic drugs must be marketed as prescription  products.  In addition, if a
Homeopathic  Pharmacopoeia monograph states that a drug should only be available
on a prescription  basis,  this criteria will apply even if the drug is intended
for a self limiting  condition.  The  Compliance  Policy Guide provides that the
FDA's general  allopathic  drug  labeling  requirements  are also  applicable to
homeopathic drugs. All firms that manufacture,  prepare,  compound, or otherwise
process  homeopathic drugs must register their drug  establishments with the FDA
and must also "list" their drugs with the agency. Homeopathic drugs must also be
manufactured  in  conformance  with "current good  manufacturing  practices." In
addition,  homeopathic  drugs are exempt from FDA's  requirements for expiration
date labeling.

     The  Homeopathic   Pharmacopoeia  is  updated  regularly.  The  Homeopathic
Pharmacopoeia  was  initially  published  by the  Committee  on  Pharmacy of the
American  Institute of Homeopathy and is currently  published by the Homeopathic
Pharmacopoeia  Convention of the United  States,  a private,  non-profit  entity
organized exclusively for charitable,  educational,  and scientific  activities.
The Homeopathic  Pharmacopoeia  is an official  publication that is cited in the
Federal  Food and  Drug  Laws  and  Compliance  Policy  Guide.  The  Homeopathic
Pharmacopoeia  contains hundreds of monographs for homeopathic  ingredients that
have been found by the Homeopathic  Pharmacopoeia Convention to be both safe and
effective. The Homeopathic Pharmacopoeia also contains general standards for the
preparation of homeopathic drugs.

     Based on information provided by the Company's president, in November 1991,
the FDA issued proposed  regulations  designed to, among other things, amend its
food  labeling  regulations.  The  proposed  regulations  met  with  substantial
opposition. In October 1994, the "Dietary Supplement Health and Education Act of
1994" ("DSHEA") was enacted.  Section 11 of the Dietary  Supplement Law provided
that the advance  notice of proposed rule making by the FDA  concerning  dietary
supplements was null and void. FDA regulations  that became effective on June 1,
1994 require standard format nutrition labeling on dietary supplements. However,
because  the new  Dietary  Supplement  Law also  addresses  labeling  of dietary
supplements,   the  FDA  indicated  that  it  would  not  enforce  its  labeling
regulations until January 1, 1998.

     Based on information provided by the Company's president,  in January 2000,
the  FDA  issued  a  final  ruling,  effective  February  7,  2000,  related  to
structure/function  statements that may be claimed on dietary supplement product
labels. The rule provides for clarification of when a  structure/function  claim
may be made  without  prior FDA approval  and when a claim  constitutes  disease
related  claims.  The final rule provides for the adoption of previously  issued
language by the  Nutrition  Labeling and  Education Act ("NLEA") for `disease or
health related conditions' and among other things allows for express and implied
disease  claims to be made  through  the name of a product,  through a statement
about the formulation of a product,  or through the use of pictures,  vignettes,
or symbols. The finalized rule now interprets DSHEA to permit structure/function
claims for the effects of "natural states" or common

                                      -14-

<PAGE>

conditions  associated  with  natural  states and may  include  such  phrases as
"maintains a healthy  circulatory  system".  In addition,  the FDA  acknowledged
permissible  statements for minor pain,  calming,  upset stomach,  etc., but not
tied to any particular condition or symptom.

     The Company's  president believes that the above finalized rule loosens the
restrictions  on its  labeling of products  regarding  dietary  supplements  and
structure/function  claims provided that any such statements by the Company does
not  suggest  that the  supplement  is intended to augment or replace a specific
prescription drug or therapy for a disease.

     Kaire  Nutraceuticals is unaware of any legal actions pending or threatened
by the FDA or any other governmental authority against Kaire Nutraceuticals.

     Certain ingredients  utilized in the Company's weight management  products,
primarily  ephedrine,  are increasingly subject to regulations being promulgated
by various state agencies.  These regulations  generally limit the amount of the
ingredient or require a conspicuous  warning  labels be affixed to each product.
In addition, certain states have prohibited the sale of ephedrine based products
to minors  or at all.  The can be no  assurances  that the  Company  will not be
subject to additional regulation on its weight management product line.

     Direct selling activities are regulated by various  governmental  agencies.
These laws and  regulations  are  generally  intended to prevent  fraudulent  or
deceptive schemes, often referred to as "pyramid" or "chain sales" schemes, that
promise  quick  rewards for little or no effort,  require high entry costs,  use
high pressure recruiting methods and/or do not involve legitimate products.

     Based on research  conducted in opening its existing markets the nature and
scope of inquiries  from  government  regulatory  authorities  and the Company's
history of operations in such markets to date, the Company's  president believes
that its method of distribution  is in compliance in all material  respects with
the laws and regulations  relating to direct selling activities of the countries
in which Kaire  Nutraceuticals  currently  operates.  Even though the  Company's
president  believes that laws governing  direct  selling are generally  becoming
more permissive, many countries currently have laws in place that would prohibit
Kaire  Nutraceuticals from conducting business in such markets.  There can be no
assurance  that Kaire  Nutraceuticals  will be allowed  to  continue  to conduct
business in each of its existing  markets that it currently  services or any new
market it may enter in the future.

     The Company's  president believes that Kaire  Nutraceuticals is in material
compliance  with all  regulations  applicable  to it.  Despite this belief,  the
Company may be found not to be in material compliance with existing  regulations
as a  result  of,  among  other  things,  the  considerable  interpretative  and
enforcement  discretion  given to regulators or misconduct by associates.  There
can be no  assurances  that the  Company  will not be subject to  inquiries  and
regulatory  investigations  or disputes and the effects of any adverse publicity
resulting  therefrom.  Any assertion or determination that the Company or any of
its  associates are not in compliance  with existing laws or  regulations  could
have a  material  adverse  effect  on  the  Company'  business  and  results  of
operations. In addition, in any

                                      -15-

<PAGE>

country or  jurisdiction,  the adoption of new laws or regulations or changes in
the  interpretation  of existing laws or  regulations  could  generate  negative
publicity  and/or have a material  adverse  effect on the Company'  business and
results of  operations.  The Company cannot  determine the effect,  if any, that
future  governmental  regulations  or  administrative  orders  may  have  on the
Company's business and results of operations. Moreover, governmental regulations
in  countries  where the  Company  may  commence  or expand its  operations  may
prevent,  delay or limit  market  entry  of  certain  products  or  require  the
reformulation of such products.  Regulatory action, whether or not it results in
a final  determination  adverse  to the  Company,  has the  potential  to create
negative  publicity,  with detrimental effects on the motivation and recruitment
of associates and consequently, on the Company's sales and earnings.

Patents and Trademarks

     Global  Health,  through  Natural Health  Laboratories,  Inc., has a United
States Patent covering the use of certain  inactive  botanical  ingredients as a
base for  several of its  Natural  Relief 1222  products.  The Company  also has
obtained  marketing  and  manufacturing  rights to a family  of  Chinese-origin,
patented,  natural topical medical products. Global Health has federal trademark
registrations for Natural Relief 1222, Ellon, Calming Essence,  Contentmints and
Mesozoic  Minerals.  The Company also has trademark  registrations  for Nature's
Relief and Nature's Relief 1222 in Canada. Most Kaire  Nutraceuticals'  products
are packaged under Kaire  Nutraceuticals'  "private label." Kaire Nutraceuticals
has registered trademarks with the United States Patent and Trademark Office for
its  name,  logo and  various  products  names.  It has  applied  for  trademark
registration in several countries outside of those it is currently  operating in
for its name, logo and various product names.

     Additional  trademark  registration  applications which may be filed by the
Company  with  the  United  States  Patent  and  Trademark  Office  and in other
countries  may or may not be granted and the breadth or degree of  protection of
the Company's existing or future trademarks may not be adequate.  Moreover,  the
Company  may not be able to defend  successfully  any of its legal  rights  with
respect  to its  present or future  trademarks.  The  failure of the  Company to
protect  its legal  rights to its  trademarks  from  improper  appropriation  or
otherwise may have a material adverse effect on the Company.

Employees

     As of December 31, 1999,  the Company had 37 full time employees and 2 part
time  employee,  of  which  15 were  involved  in  sales  and  marketing,  11 in
administration and finance and 13 in operations. None of the Company's employees
are represented by a union, and the Company believes that its employee relations
are good.

Insurance

     The Company carries general liability insurance in the amount of $5,000,000
per  occurrence  and  $6,000,000 in the aggregate  including  product  liability
insurance. There can be no assurance, however, that the Company's insurance will
be sufficient to cover  potential  claims or that an adequate  level of coverage
will be available in the future at a  reasonable  cost,  if at all. A successful
claim could have a material adverse effect on the Company.

                                      -16-

<PAGE>

ITEM  2. DESCRIPTION OF PROPERTY.
         -----------------------

     Kaire Nutraceuticals leases an aggregate of approximately 8,500 square feet
of office and warehouse  space in an office complex in Longmont,  Colorado.  The
lease term is month to month and the current rate is  approximately  $93,000 per
year. The Australian  and New Zealand  subsidiaries  also lease their office and
warehouse  facilities  of  approximately  8,000 square feet for a period of four
years at an annual rental of $30,000 and $24,000, respectively. The Trinidad and
Tobago  office is  approximately  1,100  square feet in downtown  Port-of-Spain,
Trinidad,  which lease is for one year with two  one-year  renewals.  We believe
that such properties are suitable and adequate for our current operating needs.

ITEM  3. LEGAL PROCEEDINGS.
         -----------------

     On  August 4,  1997  Samantha  Haimes  brought  an action in the  Fifteenth
Judicial Circuit of Palm Beach County,  Florida,  against us and National Health
Care Centers of America,  Inc., the Company's wholly-owned  subsidiary.  We have
asserted counterclaims against Samantha Haimes and Leonard Haimes. The complaint
arises out of the defendant's  alleged breach of contract in connection with the
Company's  natural health care center which was located in Boca Raton,  Florida.
The plaintiff is seeking  damages in the amount of  approximately  $535,000.  On
September 10, 1997 Rejuvenation  Unlimited,  Inc. and Sam Lilly, Inc. brought an
action in the Fifteenth Judicial Circuit of Palm Beach County, Florida,  arising
out of  the  Company's  alleged  breach  of  contract  in  connection  with  the
acquisition  of the  Company's  natural  health care center which was located in
Boca Raton,  Florida from the  plaintiff.  The  plaintiff is seeking  damages in
excess of $15,000.  The Company has agreed to settle such  actions for shares of
common  stock with a fair market  value of  $325,000,  but not less than 125,000
shares of common stock and has agreed to register shares of Common Stock.

     In Global Health and Ellon, Inc. v. Leslie Kaslof,  Ralph Kaslof, and Ellon
USA, Inc., pending in the United States District Court for the District of Maine
(the "Maine Kaslof Case") claims have been made arising out of the sale of Ellon
USA's ("Old Ellon") assets to Global Health's  wholly-owned  subsidiary,  Ellon,
Inc.  ("New  Ellon").  In  connection  with that sale,  Leslie  Kaslof and Ralph
Kaslof,  former shareholders and officers of Old Ellon,  entered into employment
and  consulting   agreements  with  Global  Health.  Global  Health's  potential
obligation to the Kaslofs under the  employment  and  consulting  agreements was
approximately  $525,000.  The  complaint  in  the  Maine  Kaslof  Case  seeks  a
determination that the Kaslofs materially breached their respective  obligations
under the  agreements  and that  Global  Health and New Ellon are  excused  from
further  performance  thereunder.  The complaint  includes a breach of fiduciary
claim  against  Ralph  Kaslof,  as  well  as a claim  to  recover  approximately
$142,000.  In a related civil action brought by the Kaslofs and Old Ellon in the
United States District Court for the Eastern District of New York (the "New York
Kaslof  Action").  The Kaslofs  have  alleged  breaches of the purchase and sale
agreement,  the  employment  and  consulting  agreements,  and other  agreements
executed in connection with the sale of Old Ellon's assets.  The complaint seeks
to recover damages in an unspecified amount, but not less than $1,300,000, costs
of court,  reasonable  attorney  fees,  and interest.  Global Health  intends to
vigorously  defend  any  and  all  claims  asserted  by the  Kaslofs  and  their
corporation.

                                      -17-

<PAGE>

     Inter/Media  Time Buying Corp.  ("Inter/Media")  v. Global Health,  et al.,
which is pending in the United States District Court for the Central District of
California (the "Inter/Media  Action"),  is based on Inter/Media's  provision of
marketing,  media purchasing,  and related advertising services to Global Health
in connection with Natural Relief 1222. The complaint seeks compensatory damages
of $144,500,  unstated special damages, attorney fees and costs of court. Global
Health answered the complaint,  denying all material  allegations  therein,  and
asserting a counterclaim  arising out of  Inter/Media's  creation of a defective
national direct response campaign which prevented a successful nationwide retail
launch for a  clinically-proven  product.  By its  counterclaim,  which includes
claims for  breach of  contract,  negligence,  intentional  interference  with a
prospective  economic advantage,  fraud and intentional  misrepresentation,  and
negligent  misrepresentation,  Global Health seeks to recover general damages of
not less  than  $6,500,000,  special  damages,  costs of  suit,  and  reasonable
attorney fees.  Inter/Media  has sought an attachment  against  Global  Health's
assets for the full amount of its claims.

     The Company is currently negotiating with Inter/Media for settlement of the
case.

     In PIC-TV v. Global Health,  et al.,  PIC-TV seeks to recover  compensatory
damages of not less than  $319,656,  together  with  interest and costs of suit,
based on the sale of advertising time and sponsorships to Global Health.  PIC-TV
has received default judgment in its suit against Global Health. Such amount has
been accrued in the financial statements.

     In September 1999 Command Financial Press Corp.  commenced an action in the
Supreme  Court of the State of New York in New York City against the company for
unpaid invoices for printing  services in the amount of  approximately  $65,000.
The Company is defending the action.



ITEM  4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
         ---------------------------------------------------

     During the last  quarter of 1999,  the Company did not submit any matter to
the vote of its shareholders.


ITEM  5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
         --------------------------------------------------------

                           PRICE RANGE OF COMMON STOCK

     The common stock is quoted on the Nasdaq  SmallCap  Market under the symbol
"NHTC." The  following  table sets forth the range of high and low closing  sale
prices as reported by The Nasdaq  SmallCap  Market for the common  stock for the
quarters indicated.
                                                           High        Low
                                                             Common Stock

1997
First Quarter                                             $100.00     $40.00
Second Quarter                                              90.00      35.00
Third Quarter                                               40.00       8.75
Fourth Quarter                                              10.00       1.25

1998
First Quarter                                                5.00       1.88
Second Quarter                                               3.75        .56
Third Quarter                                                2.13        .78
Fourth Quarter                                               4.00       1.91

                                      -18-

<PAGE>

1999
First Quarter                                                5.63       3.56
Second Quarter                                               4.34       3.31
Third Quarter                                                4.25       2.47
Fourth Quarter                                               2.93       1.75

2000
First Quarter                                                2.00       1.22

Holders

     As of January 22, 1999, the Company had approximately 192 record holders of
its common stock and 1,669 beneficial holders of its common stock.

Dividends

     The Company has not paid any cash dividends on its common stock to date and
does not anticipate  declaring or paying any cash  dividends in the  foreseeable
future.  In addition,  future  financing  arrangements,  if any, may preclude or
otherwise restrict the payment of dividends.

Recent Sales of Unregistered Securities

     In October and November 1999, the Company issued  convertible  notes in the
amount of  $100,000  and  $70,000,  respectively,  to Domain  Investments,  Inc.
pursuant to the exemption from registration under Section 4(2) of the Securities
Act.

     In October  1999,  the Company  issued  125,000  shares of Common  Stock to
Samantha  Haimes in a  litigation  settlement  pursuant  to the  exemption  from
registration under Section 4(2) of the Securities Act.

     In October  1999,  the Company  issued   3,018 shares of Common Stock to an
employee  and  25,000  shares  to a  director  pursuant  to the  exemption  from
registration under Section 4(2) of the Securities Act.

     In October 1999, the Company issued 95,000 shares of Common Stock to Domain
Investments,  Inc. and 125,000 shares of Common Stock to Meridian  Equities Hong
Kong, Ltd. for consulting  services  pursuant to the exemption from registration
under Section 4(2) of the Securities Act.

ITEM  6.          MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
                  ---------------------------------------------------------

Background

     Prior to August 1997, the Company's  operations  consisted of the operation
of natural health care centers and vocational  schools.  Upon the acquisition of
Global Health on July 23, 1997, the Company commenced marketing and distributing
a line of natural,  over-the-counter  homeopathic  pharmaceutical  products.  In
February 1999,  the Company  acquired  substantially  all of the assets of Kaire
International,  Inc. and commenced marketing and distributing a line of natural,
herbal  based  dietary   supplements  and  personal  care  products  through  an
established network marketing system. The Company discontinued the operations of
the natural  health care centers  during the third  quarter of 1997 and sold the
vocational  schools in August 1998.  During most of the year ended  December 31,
1997, the Company's ongoing lines of business were not in operation,  not having
been acquired until July 1997 and February 1999.

                              RESULTS OF OPERATIONS

Year Ended December 31, 1999 Compared to the Year Ended December 31, 1998

 Revenues

     Revenues  for  the  year  ended   December  31,  1999  were   approximately
$15,270,000  as  compared to revenues  for the year ended  December  31, 1998 of
approximately  $1,191,000, an increase of approximately $14,079,000 or 1,282.1%.
Sales for the year ended  December 31, 1998 were  primarily  from Global Health.
The increase in sales is primarily  attributable to Kaire  Nutraceuticals' sales
of  approximately  $14,401,000  which  commenced on February  19,  1999.  Global
Health's revenues declined approximately $132,000 or 13.2% during the year ended
December  31,  1999 as  compared  to the year ended  December  31, 1998 due to a
change in the marketing approach used  to a less capital intensive method.

                                      -19-

<PAGE>

 Cost of Sales

     Cost of sales  for the  year  ended  December  31,  1999 was  approximately
$4,267,000 or 27.9% of revenues.  Cost of sales for the year ended  December 31,
1998 was  $454,000 or 38.1% of  revenues.  The total cost of sales  increased by
approximately  $3,813,000  or  839.9%  of  which  approximately  $3,938,000  was
attributable  to the  Kaire  Nutraceuticals  and  its  related  operations.  The
decrease in the cost of sales as a percentage  of revenues is also  attributable
to the  effect  of Kaire  Nutraceuticals'  sales  due to the  different  pricing
structure associated with Kaire Nutraceuticals' sales distribution channel.

 Gross Profit

     Gross  profit  increased  from  approximately  $737,000  in the year  ended
December 31, 1998 to  approximately  $11,003,000  in the year ended December 31,
1999. The increase was approximately  $10,266,000 or 1,357.3%.  The increase was
attributable to Kaire Nutraceuticals' gross profit.

 Commissions

     Distributor commissions were approximately  $7,230,000 or 47.3% of revenues
in the year  ended  December  31,  1999  attributable  to Kaire  Nutraceuticals'
marketing system.

 Selling, General and Administrative Expenses

     Selling,  general and  administrative  costs  increased from  approximately
$3,277,000  or  275.1%  of  revenues  in the year  ended  December  31,  1998 to
approximately  $7,723,000  or 50.6% of revenues in the year ended  December  31,
1999, an increase of approximately $4,446,000 or 135.7% which is attributable to
Kaire Nutraceuticals' operations.

 Loss from Operations

     Operating  losses  increased from $2,540,000 in the year ended December 31,
1998  to   approximately   $7,117,000  in  the  year  ended  December  31,  1999
representing a 180.2% increase in the loss or approximately  $4,577,000  between
comparable  periods.  This  increase is due  primarily  to larger  losses  being
incurred  by Global  Health  due to  reduced  revenues  without a  corresponding
reduction in operating expenses.

Gain on dissolution

     Kaire Nutraceuticals, Inc. closed its wholly owned subsidiary in the United
Kingdom in February 2000. The $200,000  represents the  anticipated  gain on the
liquidation of this asset.

Interest Expense

     Interest  expense  was  approximately  $200,000 or 16.8% of revenues in the
year ended  December  31, 1998  increased to  approximately  $663,000 or 4.3% of
revenues  in the  year  ended  December  31,  1999,  a change  of  approximately
$463,000. This increase is primarily due to the beneficial conversion feature of
certain debt instruments.

                                      -20-

<PAGE>

 Income Taxes

     Income tax benefits were not reflected in either  period.  The  anticipated
benefits of  utilizing  net  operating  losses  against  future  profits was not
recognized in the years ended  December 31, 1999 or 1998 under the provisions of
Financial  Standards Board Statement of Financial  Accounting  Standards No. 109
(Accounting for Income Taxes),  utilizing its loss carry forwards as a component
of income tax expense. A valuation allowance equal to the net deferred tax asset
has been  recorded,  as management of Natural Health Trends has not been able to
determine  that it is more likely than not that the  deferred tax assets will be
realized.

 Net Loss from Continuing Operations

     Net loss from  continuing  operations was  approximately  $7,558,000 in the
year ended  December 31, 1999 or 49.5% of revenues as compared to  approximately
$2,740,000 or 230.0% of revenues in the year ended December 31, 1998.

 Discontinued Operations

     In February,  1998,  Natural  Health Trends closed the natural  health care
center in Pompano Beach,  Florida.  The  anticipated  gain on this  discontinued
operation  was  reflected  in  the  year  ended  December  31,  1999  and  1998,
respectively.

 Gain on Forgiveness of Debt

     During the year ended December 31, 1998,  Natural Health Trends  realized a
$816,000 gain on the work-out of various debt and payables of Global Health.

     Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

Revenues

     Total revenues for continuing operations for Fiscal 1998 were approximately
$1,191,120,  as compared to revenues of approximately  $1,133,726 for the fiscal
year ended  December 31, 1997  ("Fiscal  1997"),  an increase of 5.1%.  Although
revenues  increased  during  Fiscal  1998,  the revenues for Fiscal 1998 reflect
operations for a full year. However, revenues for Fiscal 1997 reflect operations
for only five months.  On an annualized  basis,  revenues  decreased by 57%. The
company  believes that the decrease in revenues is primarily  attributable  to a
decrease in the sale of Natural  Relief 1222 to mass market  retailers and major
drug chains.  The company  believes  that such decrease was due to a decrease in
spending on marketing and  advertising as a result of the company's  decision to
pursue less capital intensive channels of distribution.

Cost of Sales

     Cost of sales for  Fiscal  1998 were  approximately  $454,370,  or 38.1% of
revenues,  as compared to  approximately $3,375,034,  or 33.1% of revenues,  for
Fiscal 1997. Gross profit for Fiscal 1998 was approximately  $736,750,  or 61.9%
as a percentage of revenues, as compared to approximately  $758,692, or 66.9% as
a  percentage  of  revenues,  for Fiscal  1997.  The company  believes  that the
decrease in gross profit as a percentage of revenues was primarily  attributable
to a write-down of $75,000 for obsolete inventory for Fiscal 1998.

                                      -21-

<PAGE>

Selling, General and Administrative Expenses

     Selling,   general  and  administrative   expenses  for  Fiscal  1998  were
approximately  $3,277,047,  as compared to  approximately  $4,194,044 for Fiscal
1997, a decrease of 21.9%.  The company  believes  that the decrease in selling,
general  and  administrative  expenses  was  primarily  attributable  to reduced
spending on advertising and promotion.  Advertising and promotion  expenses were
approximately  $1,771,095  for Fiscal 1997 as  compared  to $692,344  for Fiscal
1998.

Interest Expense

     Interest  expense for Fiscal 1998 was  $199,757 as compared to $868,721 for
Fiscal 1997.  Excluding the amortization of notes payable  discount  (related to
the  company's  convertible  debentures)  which  amounted to $433,333 for Fiscal
1997,  interest  expense  decreased  by 54.1%.  The  company  believes  that the
decrease in interest  expense was primarily  attributable  to the  conversion of
convertible  debentures  during the fourth  quarter of Fiscal 1998 and the first
quarter of Fiscal 1997.

Discontinued Operations

     In October 1997,  the company closed its natural health care center in Boca
Raton,  Florida. In February 1998, the company sold its remaining natural health
care  center  in  Pompano  Beach,  Florida.  The  anticipated  losses  on  these
discontinued  operations  were reflected in our financial  statements for Fiscal
1997. In August 1998, the company sold its three vocational  schools and certain
related businesses,  recognizing a gain of $1,424,379 from the sale. In November
1998, the company sold an office  building  which  previously  accommodated  its
corporate headquarters and one of its vocational schools, realizing an estimated
loss of $829,000 which was reflected in our financial statements for the quarter
ended September 30, 1998.

Gain on Forgiveness of Debt

     During Fiscal 1998, the company realized a gain of $815,636 on the work-out
of various debt and trade payables.

Liquidity and Capital Resources

     We have funded our working  capital  and capital  expenditure  requirements
primarily  from  cash  provided   through   borrowings  from   institutions  and
individuals,  and from the sale of our  securities  in private  placements.  Our
other ongoing source of cash receipts has been from the sale of Global  Health's
and Kaire Nutraceuticals' products.

     In  February  1998,  we issued  $300,000  face amount of Series B Preferred
Stock,  net of  expenses  of  $38,500.  The  Series B  Preferred  Stock has been
converted into 541,330 shares of common stock.

     In April  1998,  we issued  $4,000,000  face  amount of Series C  Preferred
Stock, net of expenses of $492,500 from the proceeds raised,  we paid $2,500,000
to retire  $1,568,407  face value of Series A Preferred Stock  outstanding.  The
Series C Preferred  Stock has been  converted  into  3,608,296  shares of common
stock.

                                      -22-

<PAGE>

     In July 1998,  we issued  $75,000 face amount of Series D Preferred  Stock,
which was redeemed in August 1998 for $91,291.

     In August  1998,  we issued  $1,650,000  face  amount of Series E Preferred
Stock, net of expenses of $210,500.  The Series E Preferred Stock pays dividends
of 10% per annum and is convertible  into shares of common stock at the lower of
the  closing  bid price on the date of issue or 75% of the  market  value of the
common stock. In September  1999,  $610,000 of face amount of Series E Preferred
Stock was converted into 603,130 shares of common stock.

     In August 1998, we sold our three  vocational  schools and certain  related
businesses for $1,778,333  and other  consideration.  From the proceeds from the
sale of the schools,  we paid  $1,030,309 to retire the remaining  $631,593 face
value of Series A Preferred Stock then outstanding, and $91,291 to redeem all of
the Series D Preferred Stock  outstanding.  The remaining  proceeds were used to
pay down payables.

     In March and April 1999, we issued  $1,400,000 of Series H Preferred Stock.
The Series H Preferred  Stock pays dividends of 10% per annum and is convertible
into shares of common stock at the lower of the closing bid price on the date of
issue or 75% of the market value of the common stock.

     In June 1999, we borrowed $100,000 from Domain  Investments,  Inc. The loan
bears  interest  at 10%  per  annum  and is  payable  on  demand.  The  note  is
convertible  into  shares  of  common  stock at a  discount  equal to 60% of the
average closing bid price of the common stock on the three days preceding notice
of conversion.

     In July 1999,  the Company  borrowed  $50,000 from H. Newcomb  Eldredge and
issued a nine month secured  promissory note bearing interest at the rate of 14%
per annum,  but in no event shall the interest  payable be less than $5,000.  In
November 1999, the note to H. Newcomb Eldredge was repaid in full.

     In July 1999, we borrowed $50,000 from Capital  Development S.A. and issued
a nine month  secured  promissory  note bearing  interest at the rate of 14% per
annum,  but in no event  shall the  interest  payable  be less than  $5,000.  In
November 1999, the note was repaid in full.

     In July and August 1999 we borrowed  $150,000 from Filin  Corporation,  and
issued a secured  promissory note due on the earlier of 60 days from the date of
issuance or upon the sale of its  securities  resulting in gross  proceeds of at
least  $5,000,000 and bearing  interest at the rate of 10% per annum,  but in no
event less than  $12,000.  In October  1999 we amended  the  promissory  note to
provide that the note is payable upon demand and is  convertible  into shares of
common stock at a discount equal to 60% of the average  closing bid price of the
common stock on the three days preceding notice of conversion.

     In October 1999, we borrowed  $100,000  from Domain  Investments,  Inc. The
loan bears  interest  at 10% per annum and is  payable  on  demand.  The note is
convertible  into  shares  of  common  stock at a  discount  equal to 60% of the
average closing bid price of the common stock on the three days preceding notice
of conversion.

     In November  1999, we borrowed  $70,000 from Domain  Investments,  Inc. The
loan bears  interest  at 10% per annum and is  payable  on  demand.  The note is
convertible  into  shares  of  common  stock at a  discount  equal to 60% of the
average closing bid price of the common stock on the three days preceding notice
of conversion. This note was repaid with interest in March 2000.

                                      -23-

<PAGE>

     During  1999,  the Company has not made its payroll tax  deposits  with the
Internal  Revenue Service ("IRS") and the various state taxing  authorities on a
timely  basis.  The  Company has filed all  required  payroll tax returns and is
currently  negotiating a payment plan with the IRS. As of December 31, 1999, the
Company  owes  approximately  $668,400 of  delinquent  payroll  tax  liabilities
including  interest and penalties.  The Company's  failure to pay its delinquent
payroll tax liabilities  could result in tax liens being filed by various taxing
authorities.

     During  1999,  the  Company  did not make its sales tax  deposits  with the
various  sales tax  authorities  on a timely  basis.  The  Company has filed all
required  sales  tax  returns.  As  of  December  31,  1999,  the  Company  owed
approximately  $189,900 in current and delinquent  sales taxes which is included
in other current liabilities.  The Company's failure to pay its delinquent sales
taxes could result in tax liens being filed by various taxing authorities.

     In March  2000,  we sold 1,000  shares of Series J  Preferred  Stock with a
stated  value of $1,000 per share  realizing  net  proceeds of  $1,000,000.  The
preferred  stock pays a dividend  at the rate of 10% per  annum.  The  preferred
stock and the  accrued  dividends  thereon  are  convertible  into shares of the
Company's  common stock at a conversion  price equal to the lower of the closing
bid price on the date of issuance or 70% of the average closing bid price of the
common  stock for the lowest  three  trading  days  during the twenty day period
immediately  preceding  the  date  on  which  the  Company  receives  notice  of
conversion  from a holder.  In  connection  with the  offering  of the  Series J
Preferred  Stock,  the Company  issued  warrants to purchase  141,907  shares of
common stock at an exercise price of $1.41 per share.

     At December 31, 1999,  our ratio of current  assets to current  liabilities
was .23 to 1.0 and we had a working capital deficit of approximately $6,455,000.

     Cash  used in  operations  for the  period  ended  December  31,  1999  was
approximately  $715,000. Cash used by investing activities during the period was
approximately  $1,677,000,  which primarily relates to the Kaire acquisition and
computer  upgrades at Kaire.  Cash provided by financing  activities  during the
period was  approximately  $2,532,000,  primarily from the issuance of preferred
stock of  approximately  $3,724,000  and partially  offset by the  redemption of
preferred   stock  of   approximately   $1,552,000.   Total  cash  increased  by
approximately $140,000 during the period.

     Our independent  auditors' report on our consolidated  financial statements
stated as of December 31, 1999 due to net losses and a working capital  deficit,
there is  substantial  doubt about the company's  ability to continue as a going
concern.  The Company requires  additional  financing to continue  operations of
which there can be no  assurance.  Management  has revised its business  plan of
marketing development and support for Global Health's products, licensing rights
to sell its  products.  We believe that the Company  will require  approximately
$1,500,000,  primarily to finance  operations for the next 12 months The Company
intends to raise such additional  financing  through  additional debt and equity
financings,  of which  there  can be no  assurance  and for  which  there are no
commitments  or definitive  agreements.  As of December 31, 1999,  Global Health
owed approximately  $2,090,000 to creditors and had a working capital deficit of
approximately  $2,090,000.  We have not reached  satisfactory  settlements  with
Global Health's creditors and we have ceased the operations of Global Health and
may file for protection from creditors under the bankruptcy  laws.  There can be
no assurance that we will be able to achieve  satisfactory  settlements with our
creditors or secure such  additional  financing.  The failure of Natural  Health
Trends  to  achieve  satisfactory  settlements  with our  creditors  and  secure
additional  financing  would have a  material  adverse  effect on our  business,
prospects,  financial  conditions  and results of operations  and we may have to
curtail or cease operations.

                                      -24-

<PAGE>

ITEM  7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
         -------------------------------------------

     Our  consolidated  financial  statements,   including  the  notes  thereto,
together with the report of independent  certified public  accountants  thereon,
are presented beginning at page F-1.


ITEM  8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE.
         -----------------------------------------------------------

         None.

     Our independent  auditor's report on our consolidated  financial statements
stated as of December 31, 1999 due to net losses and a working capital  deficit,
there is  substantial  doubt about the company's  ability to continue as a going
concern.


                                    PART III


ITEM  9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
         PERSONS; COMPLIANCE WITH SECTION 16(a).
         ----------------------------------------------------

                                   MANAGEMENT

Directors and Executive Officers

     The following table sets forth certain information concerning the directors
and executive officers of the Company.

  Name                 Age                  Position

Robert L. Richards     53       President, Chief Executive Officer and Director
Mark D. Woodburn       29       Chief Financial Officer, Secretary and Treasurer
Martin C. Licht        57       Director
Dirk D. Goldwasser     38       Director


     The  following  is a brief  summary  of the  background  of each  executive
officer and director of the Company:


     The  following  is a brief  summary  of the  background  of each  executive
officer and director of the Company:


                                      -25-

<PAGE>

     Robert L. Richards is the Chief Executive  Officer of Kaire  Nutraceuticals
and became a director  of the  Company  in April  1999 and  president  and chief
executive  officer  of  Natural  Health  Trends  in  September  1999.  He  was a
co-founder   and  had  been  an   executive   officer  and   director  of  Kaire
International, Inc. since its inception in 1992.

     Mark D.  Woodburn  became the chief  financial  officer  of the  Company in
April,  1999 and  secretary  in  October  1999.  He had been a  secretary  and a
director of Kaire International, Inc. from 1992 to the present.

     Martin C. Licht has been a practicing attorney since 1967. Mr. Licht became
a director of the Company in July 1995.

     Dirk D.  Goldwasser  has been a  consultant/trader  with Filin  Corp.  from
August 1996 to the present.  From June 1994 to July 1996 he was a vice president
with Bankers Trust Securities Company. From December 1993 to June 1994 he was an
associate with  Oppenheimer  and Co. From 1988 to December 1993, he was director
of sales for Galbreath Asset Advisors/Loews Organization.  Mr. Goldwasser became
a director in September 1998.

Compliance with Section 16(a) of the Exchange Act

     Based  solely  upon a review  of (i) Forms 3 and 4 and  amendments  thereto
furnished  to the  company  pursuant  to Rule  16a-3(e),  promulgated  under the
Securities  Exchange  Act of 1934 (the  "Exchange  Act"),  during the  Company's
fiscal year ended  December 31, 1999,  and (ii) Forms 5 and  amendments  thereto
and/or written representations furnished to the Company by any director, officer
or ten percent security holder of the Company (collectively "Reporting Persons")
stating  that he or she was not  required to file a Form 5 during the  Company's
fiscal year ended  December 31, 1999, it has been  determined  that no Reporting
Person is delinquent with respect to his or her reporting  obligations set forth
in Section  16(a) of the Exchange  Act,  except that the Company did not receive
any Form 5's from its officers and  directors or Form 3's from Messrs.  Grace or
Goldwasser.

ITEM  10.         EXECUTIVE COMPENSATION.

                           SUMMARY COMPENSATION TABLE

                  The  following  table  provides a summary of cash and non-cash
compensation  for each of the last three fiscal  years ended  December 31, 1997,
1998 and 1999 with respect to the following officers of the Company:
<TABLE>
<CAPTION>
                                      -26-

<PAGE>
                                       Annual Compensation                 Long Term Compensation

    Name and              Year    Salary($)    Bonus($)        Other        Restricted    Securities     LTIP     All Other
Principal Position        ----    ---------    --------       Annual          Stock      Underlying    Payouts   Compensa-
------------------                                            Compensation     Award(s)       Options       ($)      tion($)
                                                              ($)(1)            $          SARs(#)
                                                              ------------   ---------   ------------   -------  -----------
                                                                              Awards                    Payouts
<S>                       <C>     <C>
Robert L. Richards,(2)    1999    $196,923        -                -             -             -            -          -
President
Joseph P. Grace,(3)       1999    $133,333        -                -             -             -            -          -
Former President          1998    $162,500


Sir Brian Wolfson,       1999            0        -                -             -             -            -          -
Chairman of the Board (4)1998       50,000        -                -             -             -            -          -
                         1997            0        -                -             -             -            -          -
Neal R. Heller,(5)       1999            0        -                -             -             -            -          -
President and Chief      1998      155,365        -                -             -             -            -          -
 Executive Officer       1997      201,500        -                -             -             -            -          -
Elizabeth S. Heller(6)   1999            0        -                -             -             -            -          -
Secretary                1998       50,885        -                -             -             -            -          -
                         1997      141,100        -                -             -             -            -          -

</TABLE>
--------------------------------
(1)  Excludes  perquisites and other personal  benefits that in the aggregate do
     not exceed 10% of each of such individual's total annual salary and bonus.
(2)  Mr. Richards became the Company's President in September 1999.
(3)  Mr. Grace  resigned in September 1999 and will receive  consulting  fees of
     $8,333 per month for a period of nine months commencing October 1, 1999.
(4)  Sir Brian Wolfson waived $50,000 of his 1999 and 1997 salary.
(5)  Mr. Woodburn became the Company's Chief Financial Officer in April 1999 and
     Secretary in October 1999.
(6)  Mr. Heller is no longer an officer or employee of the Company.
(7)  Mrs. Heller is no longer an officer or employee of the Company.

Option Grants in Last Fiscal Year

     We did not grant any options during the fiscal year ended December 31, 1999
to the named executive officers. During the fiscal year ended December 31, 1999,
none of the named executive officers exercised any options issued by us.

Consulting Agreements

     In October 1999, the Company entered into a two year  consulting  agreement
with Domain  Investments,  Inc.  pursuant to which Domain  Investments Inc. will
provide the company with  financial  advisory  services  relating to mergers and
acquisitions and strategic alliances in consideration for the issuance of 95,000
shares of common stock.

     In October  1999,  the Company  entered  into a consulting  agreement  with
Meridian Equities Hong Kong, Ltd. pursuant to which Meridian Equities Hong Kong,
Ltd. will negotiate  settlements  with the Company's  creditors in consideration
for the issuance of 185,000 shares of common stock.

                                      -27-
<PAGE>

Directors' Compensation

     Directors  of the Company do not receive any fixed  compensation  for their
services  as  directors.   Directors  are   reimbursed   for  their   reasonable
out-of-pocket  expenses  incurred in connection with performance of their duties
to the  Company.  We did  not pay  our  directors  any  cash  or  other  form of
compensation  for  acting in such  capacity,  although  directors  who were also
executive  officers of the Company received cash  compensation for acting in the
capacity of executive  officers.  Mr.  Goldwasser  received  options to purchase
50,000  shares of common  stock and Mr.  Ellison,  a former  director,  received
options to purchase 20,000 shares of common stock during the year ended December
31, 1998 and 20,000 shares of common stock for the year ending December 31, 1999
at an  exercise  price of $1.00 per share.  See  "?Executive  Compensation."  No
director  received  any other form of  compensation  for the  fiscal  year ended
December 31, 1998.

Stock Options

     The 1998 Stock Option Plan (the "1998  Plan")  provides for the granting of
options  to  key  employees,  including  officers,  non-employee  directors  and
consultants of the Company and its subsidiaries to purchase up to 200,000 shares
of common stock which are intended to qualify either as Incentive  Stock Options
within  the  meaning  of the Code or as  options  which are  Nonstatutory  Stock
Options.

     The 1997 Stock Option Plan (the "1997  Plan")  provides for the granting of
options  to  key  employees,  including  officers,  non-employee  directors  and
consultants of the Company and its  subsidiaries to purchase up to 75,000 shares
of common stock which are intended to qualify either as incentive  stock options
("Incentive  Stock  Options")  within the meaning of Section 422 of the Internal
Revenue Code of 1986,  as amended,  (the  "Code"),  or as options  which are not
intended  to  meet  the  requirements  of  such  section   ("Nonstatutory  Stock
Options").

     The Company has adopted the 1994 Stock  Option Plan (the "1994 Plan") under
which up to 16,667 options to purchase  shares of common stock may be granted to
key employees,  officers,  consultants  and members of the Board of Directors of
the Company.  Options granted under the 1994 Plan may be either  Incentive Stock
Options or Nonstatutory Options.

     The plans are administered by the Board of Directors.  Under the plans, the
Board of Directors  has the  authority to determine  the persons to whom options
will be granted, the number of shares to be covered by each option,  whether the
options  granted  are  intended to be  incentive  stock  options,  the manner of
exercise, and the time, manner and form of payment upon exercise of an option.

     Incentive  stock  options  granted  under the Plans may not be granted at a
price less than the fair market  value of the common  stock on the date of grant
(or less than 110% of fair market value in the case of employees  holding 10% or
more of the voting stock of the  Company).  Non-qualified  stock  options may be
granted at an exercise price established by the Stock Option Committee  selected
by the Board of Directors,  but may not be less than 85% of fair market value of
the shares on the date of grant. Incentive stock options granted under the plans
must  expire not more than ten years  from the date of grant,  and not more than
five years from the date of grant in the case of incentive stock options granted
to an employee holding 10% or more of the voting stock of the Company.

                                      -28-

<PAGE>

     In April 1999,  the Company  granted  options to purchase  shares of common
stock to the following  individuals at an exercise price of $3.50 per share as a
bonus for the year ended December 31, 1998:


Person                                           Number of Options
Joseph P. Grace....................                  150,000
Dirk Goldwasser ...................                   50,000
Sir Brian Wolfson..................                   50,000
Martin C. Licht....................                   25,000
Kevin Underwood....................                   20,000



ITEM  11.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
         ---------------------------------------------------------------

     The following  table sets forth certain  information as to the common stock
ownership of each of the Company's directors,  executive officers, all executive
officers and  directors as a group,  and all persons  known by the Company to be
the beneficial owners of more than five percent of the Company's common stock.
<TABLE>
<CAPTION>



                                                       Number of                          Approximate
Name and Address(1) of Beneficial Owner(2)             Shares(3)                  Percentage of Common Stock

<S>                                                    <C>
Dirk D. Goldwasser                                     66,125(4)                               *

Martin C. Licht                                        35,300(5)                               *

Sir Brian Wolfson                                       9,850(6)                               *

Robert L. Richards                                        ---                                  *

Mark D. Woodburn                                          ---                                  *

All Executive Officers and Directors as a Group
         (5 persons)
                                                        111,275                                *

</TABLE>

* Owns less than one (1%) percent.


     (1) Unless otherwise noted, all persons named in the table have sole voting
and  dispositive  power with  respect to all shares of common tock  beneficially
owned by them.

     (2) The address of each executive  officer and director is c/o the Company,
380 Lashley Street, Longmont, CO 80501.


                                      -29-
<PAGE>

     (3) The table does not include  shares of common  stock  issuable  upon the
conversion of the Company's Series E, F, G, H and J preferred stock. Pursuant to
the terms of the Series E, F, G H and J preferred  stock,  the  holders  thereof
generally are not entitled to convert such  instruments  to the extent that such
conversion would increase the holders'  beneficial  ownership of common stock to
an amount in excess of 4.9%, except in the event of mandatory conversion. On the
date of a mandatory conversion of the Series E, F, G, H and J preferred stock, a
change in control of the Company  may occur,  based upon the number of shares of
common stock issuable to such holders.

     (4) Includes  options to purchase  65,000 shares of common stock,  but does
not include  options to  purchase  35,000  shares of common  stock which are not
exercisable within 60 days.

     (5)  Includes  options to purchase  9,000  shares of common stock which are
exercisable  within 60 days,  but does not include  options to  purchase  16,000
shares of common stock which are not exercisable within 60 days.

     (6) Includes options to purchase 9,000 shares of common stock, but does not
include  options  to  purchase  41,000  shares  of  common  stock  which are not
exercisable within 60 days.

* Represents less than 1% of applicable shares of common stock outstanding.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
         ----------------------------------------------

     In August 1998, we sold our three vocational  schools that we operated as a
junior college in Orlando,  Pompano Beach and Miami, Florida that offer training
and  preparation  for licensing in therapeutic  massage and skin care to Florida
College of Natural  Health,  Inc. Neal R. Heller,  our former  President,  Chief
Executive Officer, a principal  stockholder and a former director,  Elizabeth S.
Heller,  his wife, our former  secretary,  a principal  stockholder and a former
director,  and Mr. Arthur Kaiser,  a former  director of ours,  were at the time
principal  shareholders of Florida  College.  The purchase price for the schools
was  $1,778,333  in  cash.  In  addition,  Florida  College  assumed  all of the
liabilities  in  connection  with the  operations  of the schools  together with
additional liabilities in the aggregate amount of approximately  $2,559,249.  We
were not  released  from such  liabilities  despite such  assumption  by Florida
College.

     In  connection  with  the  sale  of the  schools,  Mr.  and  Mrs.  Heller's
employment  agreements  were  canceled,  and they each resigned as directors and
officers of ours.  Mr. and Mrs.  Heller also  transferred to us 79,175 shares of
common stock which were canceled and options to purchase 20,000 shares of common
stock.

     Martin C. Licht, a director of Natural  Health Trends,  was a member of law
firms which received $263,221  attributable to 1998 and $79,000  attributable to
1999.

                                      -30-
<PAGE>

     As of  December  31,  1999,  we owed  approximately  $37,000  to  Robert L.
Richards,  the president and a director,  in connection with liabilities assumed
in  connection  with the Kaire  acquisition.  In  addition  we owed two  current
employees and one former employee  approximately  $112,000.  Mr.  Woodburn,  our
chief financial officer,  and Mr. Richards have guaranteed a loan to the Company
in the amount of $87,000 from STAR Financial Bank.

     In January 2000, we entered into a licensing  agreement  with GLI, Inc., of
which our former  president,  Joseph Grace,  is a principal.  We licensed to GLI
certain rights to manufacture,  distribute and sell the four Natural Relief 1222
products  through various  distribution  channels and the exclusive right to the
trademark "Natural Relief 1222". The licensing  agreement is for a percentage of
GLI's net sales for five years  with a minimum  royalty  guaranteed.  After five
years, the royalty is reduced to a lower percentage of net sales with no minimum
royalty guaranteed.  As part of the licensing agreement,  GLI agreed to purchase
any unused inventory of the product.

     We  believe  that  the  transactions  between  us and any of our  officers,
directors  and/or 5%  stockholders  have been on terms no less  favorable to the
Company than could have been obtained from  independent  third  parties.  Future
transactions,  if any,  between the Company and any of its  officers,  directors
and/or 5%  stockholders  will be on terms no less  favorable to us than could be
obtained  from  independent  third parties and will be approved by a majority of
the  independent,  disinterested  directors.  In addition,  any  forgiveness  of
indebtedness  of officers,  directors or 5%  stockholders  will be approved by a
majority  of  disinterested  directors  who  do  not  have  an  interest  in the
transactions and who have access, at our expense, to counsel.


ITEM  13.         EXHIBITS, LIST AND REPORTS ON FORM 8-K.

         (a) Exhibits

Index to Exhibits
--------------
NUMBER  DESCRIPTION OF EXHIBIT

2.1      Asset Purchase Agreement dated April 29, 1998 by and among
         Natural Health Trends Corp., Neal Heller & Elizabeth S.
         Heller and Florida College of Natural Health, Inc. (2)
2.2      Acquisition Agreement among the Company, NHTC Acquisition
         Corp. and Kaire International, Inc. (the "Acquisition
         Agreement").(3)
3.1      Amended and Restated Certificate of Incorporation of the
         Company.(4)
3.2      Amended and Restated By-Laws of the Company.(4)
4.1      Specimen Certificate of the Company's Common Stock.(4)
4.2      Form of Class A Warrant.(4)
4.3      Form of Class B Warrant.(4)
4.4      Form of Warrant Agreement between the Company and
         Continental Stock Transfer & Trust Company for Class A and B
         Warrants.(4)


                                      -31-

<PAGE>

4.5      1994 Stock Option Plan.(4)
4.6      1997 Stock Option Plan.(11)
4.7      1998 Stock Option Plan.(11)
4.8      Articles of Amendment of Articles of Incorporation of the
         Company.(6)
4.9      Articles of Amendment of Articles of Incorporation- Series C
         Preferred Stock.(7)
4.10     Articles of Amendment of Articles of Incorporation- Series E
         Preferred Stock.(3)
4.11     Articles of Amendment of Articles of Incorporation- Series F
         Preferred Stock.(3)
4.12     Articles of Amendment of Articles of Incorporation- Series G
         Preferred Stock.(3)
4.13     Articles of Amendment of Articles of Incorporation- Series H
         Preferred Stock.(3)
4.14     Form of Warrant in connection with the Acquisition
         Agreement.(3)
4.15     Articles of Amendment of Articles of Incorporation - Series J Preferred
         Stock (13)
10.1     Agreement among Natural Health Trends Corp. Health Wellness
         Nationwide Corp., Samantha Haimes and Leonard Haimes.(8)
10.2     Leases (Two) for Registrant's Denver, Colorado
         facilities.(11)
10.3     Manufacturing and Distribution Agreement between Kaire
         International Inc. and ENZO Nutraceuticals, Ltd.(11)
10.4     Assignment of Patents Agreement dated May 23, 1997 between
         MikeCo., Inc. and Troy Laboratories, Inc. and H. Edward
         Troy.(11)
10.5     Agreement dated April 8, 1998 among Global Health
         Alternatives, Inc. and MikeCo., Inc., Troy Laboratories,
         Inc., H. Edward Troy, Kevin Underwood and Patrick
         Killorin.(11)
10.6     Assumption Agreement and Amendment of Commercial Security
         Agreement dated February 19, 1999 by and between STAR
         Financial Bank, Kaire International, Inc. and NHTC
         Acquisition Corp.(11)
10.7     Agreement dated September 17, 1999 between the Company and
         Joseph P. Grace.(11)
10.8     Promissory Note in the amount of $150,000 from the Company
         to Filin Corporation.(11)
10.9     Promissory Note in the amount of $50,000 from the Company to
         H. Newcomb Eldredge.(11)
10.10    Promissory Note in the amount of $50,000 from the Company to
         Capital Development S.A.(11)
10.11    Promissory Note in the amount of $100,000 between the
         Company and Domain Investments, Inc.(10)
10.12    Promissory Note in the amount of $100,000 between the
         Company and Domain Investments, Inc.(10)
10.13    Consulting Agreement between the Company and Meridian
         Equities Hong Kong, Ltd.(10)
10.14    Consulting Agreement between the Company and Domain
         Investments, Inc.(10)
10.15    Promissory  Note  in  the  amount of $70,000 from the Company to Domain
         Investments, Inc. (12)
10.16    Licensing Agreement between GLI, Inc. and the Company(12)
21.1     List of Subsidiaries.(9)
23.1     Consent of Feldman Sherb Horowitz & Co P.C.(1)
27.1     Financial Data Schedule.(12)

                                      -32-

<PAGE>

-------------------------
(1)      Filed upon the initial filing of this Registration Statement.

(2)      Previously  filed with the Company's  Proxy  Statement on Schedule 14A,
         dated May 14, 1998.

(3)      Previously  filed with the Company's  Proxy  Statement on Schedule 14A,
         dated January 25, 1999.

(4)      Previously filed with Registration Statement No. 33-91184.

(5)      Previously filed with the Company's Form 8-K dated August 7, 1997.

(6)      Previously filed with the Company's Form 10-QSB dated June 30, 1997.

(7)      Previously  filed  with  the  Company's Form 10-QSB dated September 30,
         1998.

(8)      Previously  filed  with  the  Company's  Form 10-KSB for the year ended
         December 31, 1996.

(9)      Previously filed with the Company's Form 10-KSB for the year ended
         December 31, 1998.

(10)     To be filed by Amendment.

(11)     Previously filed with the Company's Registration Statement, File
         No. 333-80465.


(12)     Filed herewith.
(13)     Previously filed with the Company's Form 8-K dated March 17, 2000.




         (b)      Reports on Form 8-K

               No  reports  on Form 8-K were  filed  during  the  quarter  ended
               December 31, 1999.

                                      -33-

<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
and Exchange  Act of 1934,  the company has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.

                           Natural Health Trends Corp.


Signature                                  Title                  Date


/s/ Robert L. Richards     President, Chief Executive
-------------------------  Officer and Director               May 9, 2000
    Robert L. Richards

/s/ Mark D. Woodburn    Chief Financial Officer, Secretary    May 9, 2000
----------------------- (Principal Financial and Accounting
    Mark D. Woodburn     Officer)




     Pursuant to the  requirements  of  Securities  Exchange  Act of 1934,  this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant   and   in   the   capacitites   and   on   the   dates    indicated.

Signature                                  Title                    Date

/s/ Robert L. Richards                   Director              May 9, 2000
------------------------
    Robert L. Richards

/s/ Martin C. Licht                      Director              May 9, 2000
---------------------
    Martin C. Licht

/s/ Dirk D. Goldwasser                    Director             May 9, 2000
-----------------------
    Dirk D. Goldwasser




                                      -32-
<PAGE>




                  NATURAL HEALTH TRENDS CORP. AND SUBSIDIARIES
                          INDEX TO FINANCIAL STATEMENTS


     The following  consolidated  financial  statements of Natural Health Trends
Corp. are included in response to Item 7:



                                                                      PAGE


Report of Independent Auditors......................................  F-2

Consolidated Balance Sheets.........................................  F-3

Consolidated Statements of Operations...............................  F-4

Consolidated Statements of Stockholders' Equity ....................  F-5

Consolidated Statements of Cash Flows.............................  F-6-7

Notes to Consolidated Financial Statements.......................  F-8-23


















                                       F-1


<PAGE>




                          INDEPENDENT AUDITORS' REPORT



Board of Directors
Natural Health Trends Corp. and Subsidiaries
New York, New York

         We have audited the accompanying consolidated balance sheets of Natural
Health Trends Corp. and  Subsidiaries  as of December 31, 1999 and 1998, and the
related  consolidated  statements of operations,  stockholders'  equity and cash
flows for the years ended  December 31,  1999,  1998 and 1997.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

         We conducted our audit in accordance with generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining on a test basis,  evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

         In our opinion,  the  financial  statements  referred to above  present
fairly,  the financial  position of Natural Health Trends Corp. and Subsidiaries
as of December 31, 1999 and 1998, and the results of its operations and its cash
flows for the years ended December 31, 1999,  1998 and 1997, in conformity  with
generally accepted accounting principles.

         The accompanying  financial statements have been prepared assuming that
the Company will continue as a going concern. The Company has incurred losses in
each of the last three fiscal  years and as more fully  described in Note 2, the
Company  anticipates  that  additional  funding will be necessary to sustain the
Company's  operations  through the fiscal year ending  December 31, 2000.  These
conditions raise  substantial doubt about the Company's ability to continue as a
going concern.  Management's plans in regard to these matters are also described
in Note 2. The financial  statements do not include any  adjustments  that might
result from the outcome of this uncertainty.

                                          /s/ Feldman Sherb Horowitz & Co., P.C.
                                              Feldman Sherb Horowitz & Co., P.C.
                                              Certified Public Accountants

New York, New York
March 10, 2000









                                       F-2

<PAGE>
                  NATURAL HEALTH TRENDS CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                                     December 31,
                                            -------------------------------
                                               1999                 1998
                                            -----------       -------------
    ASSETS
Current Assets
  Cash                                    $    434,063        $    294,220
  Restricted cash                              152,505                   -
  Account receivables                          407,490              19,331
  Inventory                                    847,212             314,367
  Due from affiliate                                 -             250,000
  Prepaid expenses and other current assets    120,481               3,370
                                            -----------       -------------
   Total Current Assets                      1,961,751             881,288

Property and Equipment, net                    567,065              78,436
  Long Term Prepaids                            54,228             498,125
  Patents and Customer Lists                 7,912,594           4,415,049
  Goodwill                                     682,654             829,468
  Deposits and Other Assets                     75,607             150,350
                                            -----------       -------------
   Total Assets                           $ 11,253,899        $  6,852,716
                                            ===========       =============

   LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Checks written in excess of deposits    $    556,884        $          -
  Accounts payable                           4,511,772           1,685,313
  Accrued expenses                             404,458             139,566
  Accrued bonus payable                        472,503                   -
  Payroll taxes payable                        668,390                   -
  Accrued expenses for discontinued operations       -             314,593
  Notes payable                                854,684             314,684
  Current portion of capital lease obligations  75,995                   -
  Notes payable related parties                112,363                   -
  Accrued consulting contract                        -             405,385
  Other current liabilities                    231,926              38,481
  Deferred revenue                             527,831                   -
                                            -----------       -------------
    Total Current Liabilities                8,416,806           2,898,022

Capital Lease Obligations, net
  of current portion                            53,158                   -
                                            -----------       -------------
    Total Liabilities                        8,469,964           2,898,022

Common Stock Subject to Put                          -             380,000

Stockholders' Equity:
  Preferred Stock, $1,000 par value;
   1,500,000 shares authorized;
   5,164, and 1,650 shares issued
   and outstanding                           5,163,695           1,650,000
  Common Stock, $.001 par value;
   50,000,000 shares authorized;
   7,989,847 and 6,220,331 shares
   issued and outstanding                        7,990               6,221
  Additional Paid in Capital                21,443,914          16,668,257
  Accumulated Deficit                      (23,165,664)        (14,369,784)
  Deferred Compensation                       (666,000)                  -
  Common Stock subject to put                        -            (380,000)
                                            -----------       -------------
    Total Stockholders' Equity               2,783,935           3,574,694
                                            -----------       -------------
   Total Liabilities and
   Stockholders' Equity                   $ 11,253,899        $  6,852,716
                                            ===========       =============


                 See Notes to Consolidated Financial Statements
                                                                  .
                                       F-3
<PAGE>

                  NATURAL HEALTH TRENDS CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                   Year Ended
                                                   December 31,
                                  ------------------------------------------
                                      1999           1998           1997
                                  ------------   ------------   ------------
Revenues                          $ 15,269,631   $ 1,191,120    $ 1,133,726

Cost of sales                        4,267,045       454,370        375,034
                                  ------------   ------------   ------------
Gross profit                        11,002,586       736,750        758,692

Distributor commissions              7,229,758             -              -
Write-down of patents and
 goodwill                            3,166,841             -              -
Selling, general and
 administrative  expenses            7,723,157     3,277,047      4,194,044
                                  ------------   ------------   ------------
Operating loss                      (7,117,170)   (2,540,297)    (3,435,352)

Minority interest in loss
 of subsidiaries                        89,756             -              -
Other (expense)                        (67,180)            -              -
Gain on dissolution                    200,000             -              -
Interest,  net                        (663,289)     (199,757)      (868,721)
                                  ------------   ------------   ------------

Loss from continuing operations     (7,557,883)   (2,740,054)    (4,304,073)
                                  ------------   ------------   ------------
Discontinued operations:
Income (loss) from discontinued
 operations                            304,593       (86,234)    (2,919,208)
Gain (loss) on disposal                      -       722,640       (501,839)
                                  ------------   ------------   ------------
Gain (loss) from discontinued
 operations                            304,593       636,406     (3,421,047)
                                  ------------   ------------   -------------

Loss before extraordinary gain      (7,253,290)   (2,103,648)    (7,725,120)

Extraordinary gain -
 forgiveness of debt                         -       815,636              -
                                  ------------   ------------   -------------

Net loss                            (7,253,290)   (1,288,012)    (7,725,120)


Preferred stock dividends            1,542,590     2,011,905        733,333
                                  ------------   ------------   -------------

Net loss to common shareholders   $ (8,795,880)  $(3,299,917)   $(8,458,453)
                                  ============   ============   =============

Basic and diluted loss per common share:

Continuing operations             $      (1.26)  $     (2.15)   $    (11.60)
Discontinued operations                   0.04          0.29          (7.88)
Extraordinary gain                           -          0.37              -
                                  ------------   ------------   -------------
Net loss to common shareholders   $      (1.22)  $     (1.49)   $    (19.48)
                                  =============  ============   =============

Basic and diluted weighted common
 shares used                         7,233,297     2,210,458        434,265
                                  =============  ============   =============


                 See Notes to Consolidated Financial Statements.

                                       F-4


<PAGE>

<TABLE>
<CAPTION>



                  NATURAL HEALTH TRENDS CORP. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                                                                                 Common
                                                                        Additional                Stock      Deferred
                                    Common Stock     Preferred Stock     Paid-in   Accumulated    Subject      Stock
                                --------------------------------------
                                   Shares   Amount  Shares  Amount     Capital     Deficit      to Put    Compensation    Total
                                ----------------------------------------------------------------------------------------------------
<S>                               <C>      <C>             <C>         <C>        <C>           <C>         <C>         <C>
BALANCE - DECEMBER 31, 1996       308,650  $  309       -  $    -      $6,242,689 $ (2,595,123)  $(380,000)  $  96,250)  $3,171,625

Sales of Convertible Series A           -       -   2,200   1,900,702           -            -           -           -    1,900,702
preferred stock
Preferred stock dividends imputed       -       -       -        -        733,333     (733,333)          -           -            -
Conversion of debentures          303,986     303       -        -      1,207,172            -           -           -    1,207,475
Stock issued for acquisition      145,000     145       -        -      2,899,855            -           -           -    2,900,000
Other issuances                       500       1       -        -         24,999            -           -           -       25,000
Issuances of stock options              -       -       -        -        400,000            -           -           -      400,000
Amortization of deferred stock          -       -       -        -              -            -           -      82,500       82,500
compensation
Discount on debentures                  -       -       -        -        433,333            -           -           -      433,333
Net loss                                -       -       -        -              -   (7,725,120)          -           -   (7,725,120)
                                ----------------------------------------------------------------------------------------------------
BALANCE - DECEMBER 31, 1997       758,136     758   2,200   1,900,702  11,941,381  (11,053,576)   (380,000)    (13,750)   2,395,515
Sales of Convertible Series B           -       -     300     261,500           -            -           -            -     261,500
preferred stock
Sales of Convertible Series C           -       -   4,000   3,507,500           -            -           -            -   3,507,500
preferred stock
Sales of Convertible Series D           -       -      75      75,000           -            -           -            -      75,000
preferred stock
Sales of Convertible Series E           -       -   1,650   1,650,000    (210,500)           -           -            -   1,439,500
preferred stock
Preferred stock dividends imputed       -       -       -        -      2,011,905   (2,011,905)          -            -           -
Redemption of Convertible Series A
preferred stock                         -       - (2,200)  (1,900,702) (1,629,607)           -           -            -  (3,530,309)
Redemption of Convertible Series D
preferred stock                         -       -    (75)     (75,000)          -      (16,291)          -            -    (91,291)
Conversion of debentures          206,603     207      -         -        188,418            -           -            -     188,625
Conversion of Convertible Series
B preferred stock                 541,330     541   (300)    (261,500)    260,959            -           -            -           -
Conversion of Convertible Series
C preferred stock               3,608,296   3,608 (4,000)  (3,507,500)  3,503,892            -           -            -           -
Conversion of notes payable     1,195,473   1,196      -         -        697,917            -           -            -     699,113
Redemption of shares re: school
sale                              (79,175)    (79)     -         -        (96,118)           -           -            -     (96,197)
Shares cancelled in reverse
stock split                       (10,332)    (10)     -         -             10            -           -            -           -
Amortization of deferred stock          -       -      -         -              -            -           -       13,750      13,750
compensation
Net loss                                -       -       -        -              -   (1,288,012)          -            -  (1,288,012)
                                ----------------------------------------------------------------------------------------------------
BALANCE - DECEMBER 31, 1998     6,220,331   6,221   1,650   1,650,000  16,668,257  (14,369,784)   (380,000)           -   3,574,694
Issuance of Convertible Series
F preferred stock                       -       -   2,800   2,800,000           -            -           -            -   2,800,000
Issuance of Convertible Series
G preferred stock                       -       -     350     350,000           -            -           -            -     350,000
Sale of Convertible Series
H preferred stock                       -       -   1,400   1,400,000    (198,985)           -           -            -   1,201,015
I preferred stock                       -       -     516     516,000           -            -           -            -     516,000
Issuance of common stock warrants       -       -       -        -        682,000            -           -            -     682,000
Preferred stock dividends imputed       -       -       -        -        632,455     (632,455)          -            -           -
Accrued preferred stock dividends       -       -       -        -        910,135     (910,135)          -            -           -
Conversion of Convertible Series
I preferred stock                 160,104     160    (516)    515,840    (516,000)           -           -            -           -
Conversion of Convertible Series
E preferred stock                 603,130     603   (610)    (610,000)    609,397            -           -            -           -
Exercise of Series E warrants     185,769     186      -         -           (186)           -           -            -           -
Conversion of Convertible Series
H preferred stock                 255,254     255   (426)    (426,305)    426,050            -           -            -           -
Deferred stock compensation             -       -      -         -              -            -           -     (666,000)   (666,000)
Exercise of put                         -       -      -         -              -            -     380,000            -     380,000
Shares issued for services        433,018     433      -         -      1,122,383            -           -            -   1,122,816
Shares issued for interest        132,241     132      -         -         76,568            -           -            -      76,700
Net loss                                       -       -         -              -   (7,253,290)          -            -  (7,253,290)
                                ----------------------------------------------------------------------------------------------------
BALANCE - December 31, 1999
                                7,989,847  $7,990  5,164   $5,163,695 $21,443,914 $(23,165,664)  $       -   $ (666,000) $2,783,935
                                ====================================================================================================
</TABLE>

                 See Notes to Consolidated Financial Statements.
                                       F-5


<PAGE>



                  NATURAL HEALTH TRENDS CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                    Year Ended
                                                                                    December 31,
                                                                   -------------------------------------------
                                                                        1999           1998           1997
                                                                   -------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                 <C>            <C>            <C>
Net loss ........................................................   $(7,253,290)   $(1,288,012)   $(7,725,120)
  Adjustments to reconcile net loss to net
   cash used in operating activities:
      (Gain) on dissolution .....................................      (200,000)          --             --
      Loss from discontinued operations .........................      (304,593)        86,234      2,919,208
      (Gain) loss on disposal of discontinued operations ........          --         (722,640)       501,839
      Depreciation and amortization .............................       374,154        549,668        255,345

      Loss on disposal of fixed asset ...........................        (3,802)          --             --
      Interest settled by issuance of stock .....................       122,868        112,971        116,065
                                                                                                      200,000
      Write down of patents and goodwill ........................     3,166,841           --

      Amortization of note payable discount .....................          --             --          433,333
                                                                                                     (815,636)
      Gain on forgiveness of debt ...............................       (81,260)          --
  Changes in assets and liabilities, net of business combination:
     (Increase) decrease in accounts receivable .................       228,684        141,774        (62,446)
     (Increase) decrease in inventories .........................       253,033        405,359       (219,144)
     (Increase) decrease in prepaid expenses ....................      (134,364)         7,970        102,353
     (Increase) decrease in prepaid royalties ...................       498,125       (491,825)          --
     Decrease in deposits and other assets ......................       283,200         42,514         66,775
     Increase in accounts payable ...............................     1,113,501        154,963      1,380,509
     Increase (decrease) in accrued expenses ....................       179,690       (698,805)       506,021
     Increase (decrease) in accrued expenses for
     discontinued operations ....................................       (10,000)       (41,469)       356,062
     Increase in accrued interest ...............................       352,906           --             --
     Increase in accrued consulting contract ....................          --           45,254        360,131
     Increase in deferred revenue ...............................       453,744           --             --
     Increase (decrease) in other current liabilities ...........       245,478       (121,339)        33,397
                                                                    -----------     -----------   ------------
  Net cash used in continuing operations ........................      (715,085)    (2,433,019)      (975,672)

  Net cash used in discontinued operations ......................          --       (2,057,177)    (3,455,155)
                                                                    -----------     -----------   -----------
NET CASH USED IN OPERATING ACTIVITIES ...........................      (715,085)    (4,490,196)    (4,430,827)
CASH FLOWS FROM INVESTING ACTIVITIES:
 Capital expenditures ...........................................      (127,077)        (7,510)       (32,658)
 Business acquisitions net of assets acquired ...................    (1,353,573)          --             --
 Increase in cash overdraft .....................................      (168,792)          --             --
 Increase in restricted cash ....................................       (27,505)          --             --
 Proceeds from disposition of discontinued operations ...........          --        4,349,700           --
                                                                    -----------     -----------   -----------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES .............    (1,676,947)     4,342,190        (32,658)
                                                                    -----------     -----------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Increase (decrease) in due to affiliate ........................       250,000       (250,000)          --
 Loan origination costs - preferred stock .......................          --             --         (299,299)
 Proceeds from preferred stock ..................................     3,724,195      5,283,000      2,200,000
 Redemption of preferred stock ..................................    (1,552,305)    (3,621,600)          --
 Proceeds from sale of debentures ...............................          --             --        1,626,826
 Payments of debentures .........................................          --             --         (355,650)
 Proceeds from notes payable and long-term debt .................       581,899           --          850,000
 Payments of notes payable and long-term debt ...................      (471,914)      (940,000)        (8,692)
 Redemption of common stock .....................................          --          (96,197)          --
                                                                    -----------     -----------   -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES .......................     2,531,875        375,203      4,013,185
                                                                    -----------     -----------   -----------
NET INCREASE (DECREASE) IN CASH .................................       139,843        227,197       (450,300)
CASH, BEGINNING OF YEAR .........................................       294,220         67,023        517,323
                                                                    -----------     -----------   -----------
CASH, END OF YEAR ...............................................   $   434,063    $   294,220    $    67,023
                                                                    ===========     ===========   ===========
</TABLE>

                See Notes to Consolidated Financial Statements.
                                       F-6



<PAGE>



                  NATURAL HEALTH TRENDS CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                    Year Ended
                                                                    December 31,
                                                         ------------------------------------
                                                           1999        1998       1997
                                                         ------------------------------------
DISCLOSURE OF NONCASH FINANCING AND INVESTING
  ACTIVITIES:
<S>                                                   <C>          <C>          <C>
   (1) Conversion of preferred stock to common stock  $ 1,552,305  $ 3,769,000  $         -
   (2) Conversion of debentures, notes payable and
       related accrued interest to common stock       $         -  $   887,738  $ 1,207,475
   (3) Stock and warrants issued for acquisition      $         -  $         -  $ 2,900,000
   (4) Preferred stock dividends                      $ 1,542,590  $ 2,011,905  $         -
</TABLE>




              See Notes to Consolidated Financial Statements.
                                       F-7


<PAGE>





                  NATURAL HEALTH TRENDS CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 1999, 1998 and 1997


1. ORGANIZATION

     Natural Health Trends Corp. (formerly known as Florida Institute of Massage
Therapy,  Inc.) (the "Company") was incorporated  under the laws of the State of
Florida in December 1988.

     In 1996,  the Company opened two natural health care centers which provided
multi-disciplinary  complementary  health care in the areas of  alternative  and
nutritional  medicine.  These facilities were closed during 1997 and accordingly
are being accounted for as discontinued operations.

     In July 1997,  the  Company  acquired  Global  Health  Alternatives,  Inc.,
("Global")  a company  incorporated  in  Delaware,  which is in the  business of
marketing and distribution of over-the-counter homeopathic pharmaceutical health
products.  Global operates its business  through its wholly owned  subsidiaries:
Ellon,  Inc.  ("Ellon"),   Maine  Naturals,  Inc.  ("MNI")  and  Natural  Health
Laboratories, Inc.

     In 1998, the Company sold its schools and related facilities,  that offered
curricula  in  therapeutic  massage  training  and  skin  care  therapy.   These
operations are being accounted for as discontinued operations.

     In February  1999,  the Company's  newly formed,  wholly-owned  subsidiary,
Kaire Nutraceuticals,  Inc., ("Kaire Nutraceuticals") acquired substantially all
the assets of Kaire  International  Inc.,  ("Kaire").  Kaire  Nutraceuticals  is
engaged in the distribution of health and personal care products through network
marketers  throughout the United States,  Canada,  New Zealand,  Australia,  and
Trinidad  and Tobago.  Included in the purchase was shares of common stock owned
by  Kaire  in  each of its  wholly-owned  and /or  majority  owned  subsidiaries
including,  but not limited to Kaire New Zealand  Ltd., , Kaire  Australia  Pty.
Ltd., Kaire Trinidad, Ltd., and Kaire Europe Ltd., (subsequently closed in March
2000). Kaire  Nutraceuticals  acquired 100% of the common stock of Kaire Europe,
Ltd. and Kaire Trinidad,  Ltd., and it acquired 51% of the common stock of Kaire
New Zealand Ltd. and Kaire Australia Pty. Ltd.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     A.  Principles of  Consolidation-The  accompanying  consolidated  financial
statements  include  the  accounts  of  Natural  Health  Trends  Corp.  and  its
subsidiaries.  All material  inter-company  transactions have been eliminated in
consolidation.

     B. Accounts Receivable-Accounts  receivable are stated net of allowance for
doubtful accounts of approximately $0 for 1999 and $2,000 for 1998.

     C. Inventories-Inventories  consisting primarily of nutritional supplements
are  stated  at the  lower  of cost or  market.  Cost is  determined  using  the
first-in, first-out method.

     D.  Property  and  Equipment-Property  and  equipment  are carried at cost.
Depreciation is computed using the straight-line method over the useful lives of
the various assets.

     E. Cash  Equivalents-Cash  equivalents consist of money market accounts and
commercial  paper with an initial term of fewer than three months.  For purposes
of the  statement  of cash  flows,  the  Company  considers  highly  liquid debt
instruments  with  original  maturities  of  three  months  or  less  to be cash
equivalents.

                                       F-8


<PAGE>




     F. Earnings  (Loss) Per Share-In  February 1997,  the Financial  Accounting
Standards  Board  issued  Statement of Financial  Accounting  Standards  No. 128
("SFAS 128") "Earnings Per Share",  which became  effective for both interim and
annual financial statements for periods ending after December 15, 1997. SFAS 128
requires a presentation of "Basic" and (where applicable) "Diluted" earnings per
share.  Generally,  Basic  earnings  per share is computed on only the  weighted
average number of common shares actually  outstanding during the period, and the
Diluted  computation  considers  potential  shares  issuable  upon  exercise  or
conversion  of  other  outstanding  instruments  where  dilution  would  result.
Furthermore, SFAS 128 requires the restatement of prior period reported earnings
per share to conform to the new  standard.  The per share  presentations  in the
accompanying  financial  statements  reflect the provisions of SFAS 128. Diluted
earnings  per  share is not being  shown  due to the fact  that the years  ended
December  31,  1999,  1998 and 1997  show a net loss and the  conversion  of the
preferred  stock and  common  stock  outstanding  during  those  years  would be
anti-dilutive.

     G.  Accounting   Estimates-The   preparation  of  financial  statements  in
accordance with generally accepted accounting  principles requires management to
make estimates and  assumptions  that affect the reported  amounts of assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses  during the reported  period.  Actual results could differ
from those estimates.

     H. Income Taxes-Pursuant to Statement of Financial Accounting Standards No.
109 ("SFAS 109") "Accounting for Income Taxes",  the Company accounts for income
taxes under the liability  method.  Under the liability  method,  a deferred tax
asset or liability is  determined  based upon the tax effect of the  differences
between  the  financial  statement  and tax basis of assets and  liabilities  as
measured  by the enacted  rates  which will be in effect when these  differences
reverse.

     I. Fair Value of Financial Instruments-The carrying amounts reported in the
balance  sheet for cash,  receivables,  accrued  expenses,  and  long-term  debt
approximate fair value based on the short-term maturity of these instruments.

     J. Stock Based Compensation-The  Company accounts for stock transactions in
accordance with APB Opinion No. 25,  "Accounting For Stock Issued To Employees."
In accordance  with Statement of Financial  Accounting  Standards No. 123 ("SFAS
123"),  "Accounting For Stock-Based  Compensation,"  the Company adopted the pro
forma disclosure requirements of SFAS 123.

     K. Impairment of Long-Lived  Assets-The  Company reviews long-lived assets,
certain  identifiable assets and goodwill related to those assets on a quarterly
basis for impairment  whenever  circumstances  and  situations  change such that
there is an  indication  that the  carrying  amounts  may not be  recovered.  At
December 31, 1999 and 1998, the Company  recorded a charge  against  patents and
goodwill upon such review (Note 4).

     L. Basis of  Presentation-The  Company had a working capital  deficiency of
approximately  $6,597,000  and  $2,017,000 for the years ended December 31, 1999
and  1998,  and  they  recorded  net  losses  of  approximately  $7,152,000  and
$1,288,000  respectively,  that  raise  substantial  doubt  about the  Company's
ability to continue as a going  concern.  The Company's  continued  existence is
dependent on its ability to obtain  additional  debt or equity  financing and to
generate profits from operations.

     M. Royalty Expense-Royalties that are incurred on a per unit sold basis are
included  in  Cost  of  Sales.  Additional  royalty  amounts  incurred  to  meet
contractual minimum levels are classified as Selling, General and Administrative
Expenses.

     N.  Reclassifications-The  Company has reclassified certain expenses in its
consolidated  statements of operations for the year ended December 31, 1997 as a
result of the sale of its schools and related  facilities.  These changes had no
significant impact on previously reported results of operations or stockholders'
equity.

                                       F-9


<PAGE>

     O. Foreign Currency Translations-Assets and liabilities of subsidiaries are
translated at the rate of exchange in effect on the balance  sheet date;  income
and expenses of  subsidiaries  are  translated  at the average rates of exchange
prevailing  during  the year or  period  then  ended.  The  related  transaction
adjustments are reflected as a cumulative translation adjustment in consolidated
stockholders'   equity.   Foreign  currency  gains  and  losses  resulting  from
transactions  are included in results of  operations  in the period in which the
transaction occurred.

     P. Revenue  Recognition-Kaire  Nutraceuticals sells its product directly to
independent  distributors.  Sales are recorded when products are shipped.  Kaire
Nutraceuticals  has a program  that  provides a 100% refund  (less  shipping and
handling) to all end users,  for any unopened product that is returned within 30
days from the date of  purchase in  resalable  condition.  Kaire  Nutraceuticals
provides a 100% product  exchange  for any product  that does not meet  customer
satisfaction  if returned  within 30 days under this  program.  An  associate is
allowed 90 days from order date for  exchange or refund only if product  bottles
(empty,  partial or full) are returned.  SFAS No. 48 "Revenue  Recognition  When
Right of Return Exists"  requires that Kaire  Nutraceuticals  accrue losses that
may be expected from sales returns. Kaire Nutraceuticals monitors its historical
sales  returns  and  accrues a  liability  for sales  returns  when and if sales
returns become significant.

     Q. Comprehensive Income-Subsequent to the acquisition of Kaire, the Company
has adopted  Statement of Financial  Accounting  Standards  No. 130 ("SFAS 130")
"Reporting Comprehensive Income".  Comprehensive income is comprised of net loss
and all changes to the consolidated  statements of stockholders'  equity, except
those  due to  investments  by  stockholders,  changes  in paid in  capital  and
distribution to stockholders.  For the year ended December 31, 1999, the Company
has deemed comprehensive  income to be negligible,  due to the purchase of Kaire
in February, and has reported comprehensive income as such.

     R. Concentration of Risk-The Company maintains its cash accounts in several
bank accounts.  Accounts in the United States are insured by the Federal Deposit
Insurance Corporation (FDIC) up to $100,000.  The Company's cash balance in some
of its bank accounts generally exceeds the insured limits.

     Kaire   Nutraceuticals   sells  its  products  through  network   marketers
throughout the United States, Canada, New Zealand,  Australia,  and Trinidad and
Tobago.  Credit is  extended  for  returned  checks  and/or  until  credit  card
purchases have cleared the bank.

     Credit losses,  if any, have been provided for in the financial  statements
and are based on management's  expectations.  The Company's accounts  receivable
are subject to potential  concentrations  of credit  risk.  The Company does not
believe  that it is subject to any unusual or  significant  risk,  in the normal
course of business.

     S.  Restricted  Cash-Kaire  Nutraceuticals  has  three (3) restricted  cash
accounts (i) two (2) with credit card processing companies.  The primary purpose
of these  accounts is to provide a reserve for potential  uncollectible  amounts
and chargebacks by Kaire Nutraceuticals' credit card customers.  The credit card
processing companies may periodically  increase the restricted cash account. The
amount on deposit  is  calculated  at 2% of net sales  over a rolling  six month
average and (ii) a third  account is  maintained  with a bank as security  for a
note payable which was refinanced in January 2000 using this restricted cash (of
approximately  $27,000),  to pay down a portion of the note  principal (see Note
5).

3. PROPERTY AND EQUIPMENT
         Property and Equipment consisted of the following:


                                                      December 31,
                                                   ----------------
                                                  1999           1998
                                                 -------         ------
Equipment, furniture and fixtures    5 to 7     $641,579        $91,795
Leasehold improvements               3 to 5            -          4,190
                                                 -------         ------
                                                 641,579         95,985
Less: Accumulated depreciation                   (74,514)       (17,549)
                                                 -------         ------
                                                $567,065        $78,436
                                                 =======         ======

                                    F-10
<PAGE>


4. PATENTS, CUSTOMER LISTS AND GOODWILL

     Patents and customer lists consisted of the following:
                                                            December 31,
                                               ---------------------------------
                                                      1999             1998
                                               ----------------- ---------------
Patents and trademarks, net of accumulated
amortization of $1,076,984 and  $873,540
for 1999 and 1998 respectively                 $   1,739,736     $ 4,374,674

Customer lists, net of accumulated
amortization of $29,316 and $16,625 for
1999 and 1998 respectively.                        6,172,825          40,375
                                               ----------------- ---------------
                                               $   7,912,594     $ 4,415,049
                                               ================= ===============

Goodwill, net of accumulated
amortization of $89,319 and $28,071
for 1999 and 1998 respectively                  $    682,654     $   829,468
                                               ================= ===============

     The goodwill,  the patents and trademarks,  and the customer lists arose in
connection  with the  acquisitions of businesses made by the Company in 1997 and
1999. The goodwill, the patents and trademarks, and the customer lists are being
amortized  over their  estimated  useful  lives  which are 5 to 10 years for the
customer lists,  15 years for goodwill and 11 and 17 years for patents.  In 1999
and 1998, the Company under Statement of Financial  Accounting  Standards (SFAS)
No. 121,  "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets  to  be  Disposed"   evaluated  the  recoverability  of  its  patent  and
trademarks, by comparing its carrying amount to income generated. As a result of
such evaluation the Company  recorded a charge of  approximately  $3,166,841 and
$200,000 against the patent and trademarks in 1999 and 1998, respectively.

     In connection  with the  acquisition of Kaire in February 1999, the Company
has recognized $7,719,459 in goodwill and customer list (Note 18).

Goodwill                                                $771,947
Customer List                                          6,947,512
                                                       ---------
                                                      $7,719,459
                                                       =========


















                                           F-10
<PAGE>


5. LONG-TERM DEBT

     Long-term debt consisted of the following:


                                                       December 31,
                                                    ----------------
                                                    1999       1998
                                                    ----       ----
(i) $375,000  note  payable,  non-interest       $239,865    $239,865
    bearing,  due October 1, 2000 (less
    unamortized discount based on imputed
    interest rate of 12% per annum ($41,385))
    Initial payment of $93,750 on October 15,
    1996, then monthly payments  of  $7,813
    beginning on November 1, 1997 and ending
    October 1, 2000
(i) $75,000 note payable, non-interest             47,819      47,819
    bearing,  due September 15, 1998
    (less  unamortized  discount  based on
    imputed  interest  rate of 12% per
    annum  ($1,349))
(i) $69,000 note payable, non-interest             27,000      27,000
    bearing, due October 15, 1997.
(ii)$120,000 note payable, 10% interest, due      120,000           -
    January 15, 2000
(iii)$270,000 notes payable, 10% interest,        270,000           -
     due on demand
(iv) $150,000 note payable, 10% interest,         150,000           -
     due on demand                               --------    ---------
                                                 $854,684    $314,684
                                                 ========    =========

(i)  The above  notes were  issued  upon the  purchase  of Ellon,  Inc. in 1996.
     Scheduled  payments have not been made since 1997, due to disputes with the
     note holders,  and  accordingly  all unpaid  balances are included in notes
     payable.

(ii) In  accordance  with the asset  purchase  agreement of Kaire (Note 18), the
     Company  assumed a note payable to a bank that bears  interest at 10.5% per
     annum and is collateralized by inventories,  accounts  receivable,  certain
     assets,  and the personal  guarantees of certain  officers and directors of
     Kaire. The term loan is payable in monthly principal  installment of $5,000
     plus accrued  interest and is due in January 2000.  In January  2000,  this
     note was refinanced at the same terms and is now due July 15, 2001.

(iii)In the event the note is not paid on  demand,  the holder has the option to
     convert the note at any time into shares of common stock at 40% of the five
     day  average  closing  bid  price of the  common  stock  on the  five  days
     preceding notice of conversion. Due to the beneficial conversion feature in
     this note, imputed interest of $405,000 has been recorded.

(iv) In October 1999, the Company  amended the  promissory  note to provide that
     the note is payable  upon demand and is  convertible  into shares of common
     stock at a discount  equal to 40% of the  average  closing bid price of the
     common  stock on three  days  preceding  notice of  conversion.  Due to the
     beneficial  conversion  feature in this note,  imputed interest of $225,000
     has been recorded.


6. NOTES PAYABLE RELATED PARTY

         As of  December  31,  1999,  the Company  owed  $112,363 to four of its
executive  officers and  directors.  All four notes bear interest at 10% and are
payable upon demand.

7. PAYROLL TAX AND SALES TAX LIABILITIES

     During  1999,  the Company has not made its payroll tax  deposits  with the
Internal  Revenue Service ("IRS") and the various state taxing  authorities on a
timely  basis.  The  Company has filed all  required  payroll tax returns and is
currently  negotiating a payment plan with the IRS. As of December 31, 1999, the
Company  owes  approximately  $668,400 of  delinquent  payroll  tax  liabilities
including  interest and penalties.  The Company's  failure to pay its delinquent
payroll tax liabilities  could result in tax liens being filed by various taxing
authorities.

                                      F-12


<PAGE>

     During  1999,  the  Company  did not make its sales tax  deposits  with the
various  sales tax  authorities  on a timely  basis.  The  Company has filed all
required  sales  tax  returns.  As  of  December  31,  1999,  the  Company  owed
approximately  $189,900 in current and delinquent  sales taxes which is included
in other current liabilities.  The Company's failure to pay its delinquent sales
taxes could result in tax liens being filed by various taxing authorities.

8. STOCKHOLDERS' EQUITY

     A Common  Stock-The  Company is  authorized to issue  50,000,000  shares of
common stock, $.001 par value share. In October 1999, the Company entered into a
two year consulting agreement with a consultant pursuant to which the consultant
will  provide  the  Company  with  advisory  services  relating  to mergers  and
acquisitions and strategic alliances in consideration for the issuance of 95,000
shares of common stock.

     In October 1999,  the Company  entered into a consulting  agreement  with a
consultant pursuant to which the consultant will negotiate  settlements with the
Company's  creditors  in  consideration  for the  issuance of 185,000  shares of
common stock.

     In  November  1999,  the  Company  issued  125,000  shares of common  stock
pursuant to a settlement agreement.

     In November  1999,  the Company  issued  3,018  shares of common stock to a
former employee pursuant to an employment agreement.

     In November  1999,  the Company  issued  25,000 shares of common stock to a
Director in connection with legal services performed on the Company's behalf.

     B.  Preferred  Stock-The  Company  is  authorized  to  issue a  maximum  of
1,500,000  shares  of $.001  par  preferred  stock,  in one or more  series  and
containing such rights,  privileges and  limitations,  including  voting rights,
dividend rates,  conversion privileges,  redemption rights and terms, redemption
prices and  liquidation  preferences,  as the Company's  board of directors may,
from time to time, determine.

     Series A Preferred Stock-In June 1997, the Company sold 2,200 shares of its
convertible  Series A Preferred  Stock for $1,000 a share realizing net proceeds
of  $1,900,702.  The preferred  stock pays dividends at the rate of 8% per annum
payable in cash or shares of the  Company's  common  stock  valued at 75% of the
closing bid price.  The preferred  stock has a liquidation  preference of $1,000
per share. The preferred stock is convertible commencing 60 days after issuance,
provided  that a  registration  statement  covering  the resale of the shares of
common stock is effective,  at the rate of 75% of the average  closing bid price
of the common stock over the five days preceding the notice of  redemption.  The
Company has the right to redeem the preferred  stock for 240 days after the date
of issuance at the rate of 125% of the stated value. If a registration statement
is not deemed effective within 60 days of the date of issuance, then the Company
is obligated to pay a penalty at the rate of 2.5% per month.

     In 1998 all 2,200  shares of Series A  preferred  stock were  redeemed  for
$3,530,309, inclusive of face amount, redemption value, penalties and dividends.

     Series B Preferred  Stock.  In February 1998, the Company issued 300 shares
of Series B Preferred  Stock with a stated  value of $1,000 per share  realizing
net proceeds of $261,500.  The preferred stock and the accrued dividends thereon
are  convertible  into shares of the Company's  common stock at a price equal to
the lower of 70% of the average  closing  bid price of the common  stock for the
three trading days immediately  preceding the notice of conversion or $0.625 per
share. Due to the beneficial  conversion features in the issuance of this series
of preferred stock, an imputed dividend of $128,572 has been recorded.



                                      F-13


<PAGE>

     In 1998 all 300 shares of Series B Preferred  Stock converted to a total of
541,330 shares of the Company's common stock.

     Series C Preferred Stock. In April 1998, the Company issued 4,000 shares of
Series C Preferred  Stock with a stated value of $1,000 per share  realizing net
proceeds of $3,507,500.  The preferred stock and the accrued  dividends  thereon
are convertible  into shares of the Company's common stock at a conversion price
equal to 75% of the average  closing bid prices of the common stock for the five
day trading  period  ending on the day before  conversion  date,  or 100% of the
closing  bid  price  on the day of  funding.  Due to the  beneficial  conversion
features in the issuance of this series of preferred  stock, an imputed dividend
of $1,333,333 has been recorded.

     In 1998 all 4,000 shares of Series C Preferred  Stock  converted to a total
of 3,608,296 shares of the Company's common stock.

     Series D Preferred  Stock-In  July 1998,  the  Company  issued 75 shares of
Series D  Preferred  Stock with a stated  value of $1,000 per share.  The stated
value and the  accrued  dividends  thereon  are  convertible  into shares of the
Company's common stock at a conversion price equal to 70% of the average closing
bid prices of the common stock for the five day trading period ending on the day
before conversion date.

     In August 1998 all 75 shares of Series D Preferred  Stock were redeemed for
a total of $91,291.

     Series E Preferred  Stock.  In August 1998, the Company issued 1,650 shares
of Series E Preferred  Stock with a stated  value of $1,000 per share  realizing
net  proceeds of  $1,439,500.  The  preferred  stock and the  accrued  dividends
thereon  are  convertible  into  shares  of  the  Company's  common  stock  at a
conversion  price equal to the lower of 75% of the average  closing bid price of
the common stock for the five trading days immediately  preceding the conversion
date or 100% of the  closing  bid price on the day of  funding.  This  series of
stock is convertible  commencing 60 days after  issuance.  Due to the beneficial
conversion  features  in the  issuance  of this series of  preferred  stock,  an
imputed dividend of $550,000 has been recorded.

     If the Company does not have an effective  common  stock  registration  120
days subsequent to the issuance of Series E Preferred Stock, a 2% penalty on the
face  amount of  $1,650,000  accrues  for  every 30 days  without  an  effective
registration  statement.  As of the year ended December 31, 1999 the Company has
recorded a charge of $369,800 due to non-compliance with this clause.

     In the year ended  December 31,  1999,  $159,510 in accrued  dividends  was
recorded for the period such stock was outstanding.

     In September  1999, 610 shares of Series E Preferred Stock was converted to
603,130 of the Company's common stock.

     Series F Preferred Stock. In February 1999, the Company issued 2,800 shares
of Series F Preferred  Stock with a stated value of $1,000 per share realizing a
net value of $2,800,000.  This issuance is in accordance with the asset purchase
agreement  of Kaire  (Note 18).  The  preferred  stock pays a dividend at 6% per
annum and is payable  upon  conversion  into  either cash or common  stock.  The
preferred stock and the accrued dividends thereon are convertible into shares of
the  Company's  common stock at a  conversion  price equal to 95% of the average
closing bid price of the Common  stock for the three  trading  days  immediately
preceding the date on which the Company  receives  notice of  conversion  from a
holder.  The  Company is  permitted  at any time,  on five days prior to written
notice, to redeem the outstanding preferred stock at a redemption price equal to
the stated value and the accrued dividends thereon.

     In the year ended  December  31,  1999,  the  Company  recorded  an imputed
dividend of $147,368 due to the beneficial  conversion  features in the Series F
Preferred  Stock. An additional  $145,135 in accrued  dividends was recorded for
the period such stock was outstanding.

                                      F-14


<PAGE>




     Series G Preferred  Stock.  In February 1999, the Company issued 350 shares
of Series G Preferred  Stock with a stated value of $1,000 per share realizing a
net value of $350,000. The preferred stock pays a dividend at the rate of 6% per
annum.  The preferred  stock and the accrued  dividends  thereon are convertible
into shares of the Company's  common stock at a conversion price equal to 95% of
the average  closing bid price of the common  stock for the three  trading  days
immediately  preceding  the  date  on  which  the  Company  receives  notice  of
conversion.  The Company is  permitted at any time,  on five days prior  written
notice, to redeem the outstanding preferred stock at a redemption price equal to
the stated value and the accrued dividends thereon.

     In the year ended  December  31,  1999,  the  Company  recorded  an imputed
dividend of $18,421 due to the  beneficial  conversion  features in the Series G
Preferred Stock. An additional $18,142 in accrued dividends was recorded for the
period such stock was outstanding.

     Series H Preferred  Stock.  In March and April 1999, the Company sold 1,400
shares of  Series H  Preferred  Stock  with a stated  value of $1,000  per share
realizing net proceeds of $1,201,015. The preferred stock pays a dividend at the
rate of 8% per annum. The preferred stock and the accrued  dividends thereon are
convertible  into shares of the  Company's  common stock at a  conversion  price
equal to the lower of the  closing  bid price on the date of  issuance or 75% of
the average  closing bid price of the common  stock for the three  trading  days
immediately  preceding  the  date  on  which  the  Company  receives  notice  of
conversion from a holder.

     If the Company does not have an effective  common  stock  registration  120
days subsequent to the issuance of the Series H Preferred Stock, a 2% penalty on
the face amount of  $1,400,000  accrues for every 30 days  without an  effective
registration  statement.  As of the year ended  December 31,  1999,  the Company
recorded a charge of $123,500 due to non-compliance with this clause.

     In the year ended  December  31,  1999,  the  Company  recorded  an imputed
dividend of $466,667 due to the beneficial  conversion  features in the Series H
Preferred Stock. An additional $79,155 in accrued dividends was recorded for the
period such stock was outstanding.

     During the year ended  December 31,  1999,  the Company had  converted  426
shares of the Series H Preferred Stock into 255,254 shares of common stock.

     Series I Preferred  Stock.  In February  1999,  the Company  authorized the
issuance of 516 shares of Series I Preferred Stock with a stated value of $1,000
per share  realizing  a net  value of  $516,000.  These  shares  were  issued in
connection to services  rendered in connection with the Kaire  acquisition.  The
preferred stock pays a dividend at the rate of 8% per annum. The preferred stock
and the accrued  dividends  thereon are convertible into shares of the Company's
common stock at a conversion price equal to the average closing bid price of the
Common  stock  for the  five  trading  days  immediately  preceding  the date of
conversion.

     In the year ended  December  31,  1999,  $16,048 in accrued  dividends  was
recorded for the period such stock was outstanding.

     In July 1999 all 516 shares,  plus the accrued  interest payable of $16,048
of Series I Preferred  stock was  converted to 160,104  shares of the  Company's
common stock.

     C. Convertible  Debentures-In  April 1997, the Company issued $1,300,000 of
6% convertible debentures (the "Debentures"). Principal on the Debentures is due
in March  2000.  The  principal  and  accrued  interest  on the  Debentures  are
convertible  into shares of common  stock of the  Company.  The  Debentures  are
convertible  into  shares of common  stock at a  conversion  price  equal to the
lesser of $1.4375 or 75% of the average  closing  bid price of the common  stock
for the five trading days  immediately  preceding the notice of  conversion.  In
June 1997, the Company repaid $300,000 of the  Debentures.  As of December 1997,
$820,233 of such  debentures were converted into 303,986 shares of common stock.
As of December 1998,  the remaining  $179,767 were converted into 206,603 shares
of common stock.


                                      F-15


<PAGE>

     In  conjunction  with the issuance of the  Debentures,  the Company  issued
warrants to purchase an aggregate of 5,000 shares of Common Stock.  The warrants
are exercisable until April 3, 2002. Warrants to purchase 2,500 shares of Common
Stock are  exercisable at $97.50 per share,  and the balance are  exercisable at
$130.00 per share.

     D.  Options-During  the quarter  ended  September  30, 1997,  the Company's
president  and  secretary  were issued an aggregate of 20,000,  10 year options,
exercisable at $.001 per share.  The Company has recorded a non-cash  expense of
$400,000  representing  the  difference  between the exercise price and the fair
value of the common stock.

     In  connection  with  the  sale of the  schools,  to the  Company's  former
president and secretary, the above options were canceled.

     In April 1999, the Company issued an aggregate of 295,000,  5 year options,
exercisable  at $3.50 per share,  to the  Company's  president,  chairman of the
board of directors,  two directors, and an employee. The options were granted at
fair market value, accordingly, no expense has been recognized.

     In  connection  with  a  licensing  agreement,  in  February  2000,  to the
Company's former president, 150,000 of the above options were canceled.

     E. 1 For 40 Reverse Stock Split-On April 6, 1998, the Company  effected a 1
for  40  reverse  split  of  its  common  stock,  amending  its  certificate  of
incorporation to provide for the authority to issue  50,000,000  shares of $.001
par value common  stock.  All per share data in these  financial  statements  is
retroactively restated to reflect this reverse split.

     F. Conversion of Notes Payable-In May 1998 the Company  converted  $595,000
of its 12.5% promissory  notes, plus accrued interest of $104,113 into 1,195,473
shares of common stock.

     G.  Redemption of Shares-In  connection  with the sale of the schools,  the
Company  redeemed  79,175  shares of common stock from its former  president and
secretary.

9. DISCONTINUED OPERATIONS

     During the third  quarter of 1998,  the Company  sold its three  vocational
schools  and  certain  related  businesses.  Net  assets  of  the  schools  were
approximately  $2,875,285  consisting  primarily  of  furniture  and  equipment,
accounts  receivable and goodwill.  Liabilities were  approximately  $2,559,249.
Accordingly,   the  results  of  the  vocational  school  operations  are  shown
separately as "discontinued operations."

     Revenues of the discontinued  vocational school business were $3,351,959 in
1998 and $5,858,790 for the full year 1997.

     In November  1998, the Company sold an office  building  located in Pompano
Beach, Florida that previously accommodated the Company's corporate headquarters
and one of its vocational schools. Gross proceeds were approximately $2,900,000,
less net book value of $3,238,000 plus closing and financing costs of $498,000.

     During  the third  quarter  of 1997,  the  Company  reached a  decision  to
discontinue  the  medical  clinic  line of  business.  Net assets of the medical
clinics were  approximately  $1,509,405  consisting  primarily of furniture  and
equipment,  accounts  receivable and goodwill.  Liabilities  were  approximately
$213,987. The Company has accrued an estimated loss on disposal of approximately
$716,193  representing  primarily  an  accrued  employment  contract  and  lease
terminations.  Accordingly,  the  results  of the  clinic  operations  are shown
separately  as  "discontinued  operations."  As of  December  31,  1999  accrued
expenses on this discontinued operation totaled $0.

     Revenues of the  discontinued  clinic line of business were  $1,754,066 for
1997.

                                      F-16


<PAGE>



10. KAIRE EUROPE, LTD.

     In March 2000,  Kaire Europe,  Ltd. (a subsidiary of the Company) which had
been  served an  Involuntary  Winding  Up Order was  placed in  liquidation.  At
December  31,  1999,  the  remaining  assets and  liabilities  were written off,
resulting in a $200,000 gain.

11. INCOME TAXES

     The Company  accounts  for income taxes under the  provisions  of SFAS 109.
SFAS No. 109 requires the recognition of deferred tax assets and liabilities for
both the expected impact of differences  between the financial statement and tax
basis of assets and  liabilities,  and for the expected future tax benefit to be
derived  from tax  loss  and tax  credit  carryforwards.  SFAS 109  additionally
requires the establishment of a valuation allowance to reflect the likelihood of
realization  of deferred tax assets.  At December 31, 1999 and 1998, the Company
had  net  deferred  tax  assets  of  approximately  $7,000,000  and  $4,464,000,
respectively.  The Company has  established  a valuation  allowance for the full
amount of such  deferred tax assets at December 31, 1999 and 1998, as management
of the  Company has not been able to  determine  that it is more likely than not
that the deferred tax assets will be realized.

     The  following  table  reflects  the  Company's  deferred  tax  assets  and
(liabilities) at December 31, 1999 and 1998:



                                                            December 31,
                                                       ----------------------
                                                       1999            1998
                                                       ----            ----
Net operating loss deduction                        $7,000,000       $4,464,000
Valuation allowance                                 (7,000,000)      (4,464,000)
                                                     ----------      -----------
                                                    $       --       $       --
                                                     ==========      ===========

     The provision for income taxes (benefits)  differs from the amount computed
by applying the statutory  federal  income tax rate to income loss before income
taxes as follows:

                                             Year Ended December 31,
                                           ----------------------------
                                              1999             1998
                                              ----             ----

Income tax (benefit) computed at
 statutory rate                           $(2,500,000)     $(451,000)
Effect of permanent differences               450,000              -
Tax benefit not recognized                 (2,150,000)       451,000
                                          ------------      ----------
Provision for income taxes (benefit)      $         -      $       -
                                          ============      ==========

The net  operating  loss  carryforward  at December  31, 1999 was  approximately
$15,145,000 and expires in the years 2012 to 2019.

                                      F-17


<PAGE>



12. COMMITMENTS AND CONTINGENCIES

     A.  Leases-The  Company leases its Longmont,  Colorado office under a lease
expiring in 2000.  Rent  expense for the years ended  December 31, 1999 and 1998
was  $240,000  and  $24,000,   respectively.   In  October  1999,   the  Company
consolidated  it's operations from Portland,  Maine to Longmont,  Colorado.  The
Company is liable for lease  payments in Maine until  November  2001. In January
2000, the Company  assigned a portion of it's Maine  obligation to a third party
with consent. In 1998 Corporate headquarters rented facilities in New York City.
In December  1999,  the Company  consolidated  it's  Corporate  headquarters  to
Longmont,  Colorado.  Minimum rental commitments for the Longmont,  Portland and
New York City facilities over the next five years are as follows:


2000                                     $65,461
2001                                      23,840
2002                                      19,934
2003                                           -
2004                                           -


     B.  Employment  Agreement-During  the  quarter  ended March 31,  1997,  the
Company  renegotiated with a former  stockholder of Sam Lilly, Inc. with whom it
was obligated under an employment agreement,  to cancel the employment agreement
and replace it with a consulting  agreement.  The consulting  agreement required
the  individual to provide  services to the Company for one day per week through
December 1998 at the rate of $5,862 per week.  The Company  determined  that the
future services,  if any, that it will require will be of little or no value and
accounted  for this  obligation as a cost of severing the  employment  contract.
Accordingly all future payments have been accrued in full at September 1997. The
expense  associated  with  this  accrual  is  recorded  as part of the loss from
discontinued operations in 1997.

     C.   Renegotiation   of  Patent   Agreement-In   April  1998,  the  Company
renegotiated  the  terms  of its  acquisition  of the  Troy  Patent,  due to the
agreement  being in breach  because of unpaid minimum  royalties.  Under the new
agreement,  royalties  are payable at the rate of 3% of the first  $2,000,000 of
related  product  sales;  2% of the next  $2,000,000 in sales and 1% of sales in
excess of $4,000,000.

     D. Litigation- On  August 4,  1997  Samantha  Haimes  brought  an action in
the Fifteenth  Judicial  Circuit of Palm Beach County,  Florida,  against us and
National  Health  Care  Centers of America,  Inc.,  the  Company's  wholly-owned
subsidiary.  We have asserted  counterclaims against Samantha Haimes and Leonard
Haimes.  The complaint arises out of the defendant's  alleged breach of contract
in connection with the Company's natural health care center which was located in
Boca  Raton,  Florida.  The  plaintiff  is  seeking  damages  in the  amount  of
approximately $535,000. On September 10, 1997 Rejuvenation  Unlimited,  Inc. and
Sam Lilly,  Inc.  brought an action in the  Fifteenth  Judicial  Circuit of Palm
Beach County,  Florida,  arising out of the Company's alleged breach of contract
in connection with the  acquisition of the Company's  natural health care center
which was located in Boca Raton,  Florida from the  plaintiff.  The plaintiff is
seeking  damages in excess of  $15,000.  The  Company  has agreed to settle such
actions for shares of common stock with a fair market value of $325,000, but not
less than 125,000  shares of common  stock and has agreed to register  shares of
Common Stock.

     In Global Health and Ellon, Inc. v. Leslie Kaslof,  Ralph Kaslof, and Ellon
USA, Inc., pending in the United States District Court for the District of Maine
(the "Maine Kaslof Case") claims have been made arising out of the sale of Ellon
USA's ("Old Ellon") assets to Global Health's  wholly-owned  subsidiary,  Ellon,
Inc.  ("New  Ellon").  In  connection  with that sale,  Leslie  Kaslof and Ralph
Kaslof,  former shareholders and officers of Old Ellon,  entered into employment
and  consulting   agreements  with  Global  Health.  Global  Health's  potential
obligation to the Kaslofs under the  employment  and  consulting  agreements was
approximately  $525,000.  The  complaint  in  the  Maine  Kaslof  Case  seeks  a
determination that the Kaslofs materially breached their respective  obligations
under the  agreements  and that  Global  Health and New Ellon are  excused  from
further  performance  thereunder.  The complaint  includes a breach of fiduciary
claim  against  Ralph  Kaslof,  as  well  as a claim  to  recover  approximately
$142,000.  In a related civil action brought by the Kaslofs and Old Ellon in the
United States District Court for the Eastern District of New York (the "New York
Kaslof  Action").  The Kaslofs  have  alleged  breaches of the purchase and sale
agreement,  the  employment  and  consulting  agreements,  and other  agreements
executed in connection with the sale of Old Ellon's assets.  The complaint seeks
to recover damages in an unspecified amount, but not less than $1,300,000, costs
of court,  reasonable  attorney  fees,  and interest.  Global Health  intends to
vigorously  defend  any  and  all  claims  asserted  by the  Kaslofs  and  their
corporation.

     Inter/Media  Time Buying Corp.  ("Inter/Media")  v. Global Health,  et al.,
which is pending in the United States District Court for the Central District of
California (the "Inter/Media  Action"),  is based on Inter/Media's  provision of
marketing, media purchasing, and related advertising services to Global Health

<PAGE>

in connection with Natural Relief 1222. The complaint seeks compensatory damages
of $144,500,  unstated special damages, attorney fees and costs of court. Global
Health answered the complaint,  denying all material  allegations  therein,  and
asserting a counterclaim  arising out of  Inter/Media's  creation of a defective
national direct response campaign which prevented a successful nationwide retail
launch for a  clinically-proven  product.  By its  counterclaim,  which includes
claims for  breach of  contract,  negligence,  intentional  interference  with a
prospective  economic advantage,  fraud and intentional  misrepresentation,  and
negligent  misrepresentation,  Global Health seeks to recover general damages of
not less  than  $6,500,000,  special  damages,  costs of  suit,  and  reasonable
attorney fees.  Inter/Media  has sought an attachment  against  Global  Health's
assets for the full amount of its claims.

     The Company is currently negotiating with Inter/Media for settlement of the
case.

     In PIC-TV v. Global Health,  et al.,  PIC-TV seeks to recover  compensatory
damages of not less than  $319,656,  together  with  interest and costs of suit,
based on the sale of advertising time and sponsorships to Global Health.  PIC-TV
has received default judgment in its suit against Global Health. Such amount has
been accrued in the financial statements.

     In September 1999 Command Financial Press Corp.  commenced an action in the
Supreme  Court of the State of New York in New York City against the company for
unpaid invoices for printing  services in the amount of  approximately  $65,000.
The Company is defending the action.

     As of December 31, 1999, Global had a working capital deficit of $2,090,000
and Global is  attempting to achieve  settlements  with its  creditors.  Also at
December 31, 1999,  Global is a defendant in various  legal  actions  brought by
creditors to whom the Global is attempting settlement offers with.

         E. Major Supplier

     Kaire  Nutraceuticals  currently buys all of its  Pycnogenol,  an important
component of its products, from one supplier.

     For a period of five years, Kaire Nutraceuticals must purchase no less than
$73,750 per month of a different product from another  supplier.  Although there
are a limited number of  manufacturers  of this component,  management  believes
that other suppliers could provide similar components on comparable terms. Kaire
Nutraceuticals  does not maintain any other  contractual  commitments or similar
arrangements with other suppliers.

     Kaire   Nutraceuticals   purchases  its  products  from  manufacturers  and
suppliers on an as needed basis.  Should these  relationships  terminate,  Kaire
Nutraceuticals'  supply and ability to meet consumer  demands would be adversely
affected.


13. Capital Lease Obligations

     The Company has various capital lease obligations which are  collateralized
by equipment. Interest rates under the agreements range from 7.1% to 31.9%, with
monthly principal and interest payments ranging from $2,029 to $33,933.

     Future  minimum  lease  payments and the present value of the minimum lease
payments under the  noncancelable  capital lease  obligations as of December 31,
1999 are as follows:


December 31,                                       1999

2000                                             $75,995
2001                                              52,903
2002                                              26,931
                                                 --------
Total future minimum lease payments              155,829
Less amounts representing interest                26,676
                                                ---------
Present value of minimum lease payments          129,153

Less current maturities                           75,995
                                                ----------
Total long-term obligations                      $53,158
                                                ==========


                                      F-19




<PAGE>




14. COMMON STOCK SUBJECT TO PUT

     In connection  with the January 1996  acquisition  of the net assets of Sam
Lilly,  Inc.,  the 9,500 shares issued in connection  with the  acquisition  are
subject to the seller's ability to require the Company to repurchase such shares
for a three year period for  $380,000,  in the event that the  aggregate  market
value of the  shares  falls  below  $380,000.  Such  shares  are  excluded  from
permanent equity on the accompanying balance sheet. As of March 1998, the seller
had exercised the put and this matter is now subject to litigation.


15. STOCK OPTION PLANS AND WARRANTS

     Under the  Company's  1994 Stock Option Plan, up to 16,667 shares of common
stock are  reserved  for  issuance.  The  exercise  price of the options will be
determined by the Stock Option Committee selected by the board of directors, but
the  exercise  price will not be less than 85% of the fair  market  value on the
date of grant.  Towards the end of 1995,  50 options  were issued to each of two
directors  at an exercise  price equal to the market  price at the time.  During
1996 the  Company  issued 250 options to a director at a price equal to the fair
market value on the date of grant.

     In August 1997, the Company adopted a stock option plan covering  officers,
directors,  employees and  consultants.  In August the Company issued 43,750 ten
year options  under the 1997 Plan,  exercisable  at fair market value (which was
$22.40 per  share) to certain of its  officers  who were  former  principals  of
Global. Options to purchase 21,875 shares became exercisable in August 1998, and
the remaining 21,875 will be exercisable in August 1999.

     In 1998 the Company issued 100,000 warrants to two directors at an exercise
price of $1.00, which was equal to the fair market value at the date of grant.

     The  following  table  summarizes  the  changes  in  options  and  warrants
outstanding,  and the related  exercise price for shares of the Company's common
stock:
<TABLE>
<CAPTION>



                                                          Weighted                                      Weighted
                                                          Average                                       Average
                                              Shares      Exercise      Exercisable        Shares       Exercise      Exercisable
                                              ------                    -----------        ------                     -----------
                                                           Price                                         Price
                                                          Stock Options                                  Warrants




<S>                     <C> <C>                 <C>        <C>                 <C>      <C>               <C>          <C>
Outstanding at December 31, 1996                350        50.13               350      2,110,757         8.35         2,110,757
  Granted                                    63,750         5.77            20,000          5,000       113.75             5,000
                                            ---------      ------         ---------    ----------      ---------      -----------
Outstanding at December 31, 1997             64,100        71.00            20,350      2,115,757         8.60         2,115,757
  Granted                                        --           --                --        407,500         1.16           407,500
  Canceled                                  (20,000)        0.00             1,875             --           --                --
                                            ---------      ------         ---------    ----------      ---------      -----------
Outstanding at December 31, 1998             44,100        15.68            22,225      2,523,257         7.30         2,523,257
  Granted                                   295,000         3.50           295,000        250,000         3.93           250,000
                                            ---------      ------         ---------    ----------      ---------      -----------
Outstanding at December 31, 1999            339,100         6.01           317,225      2,773,257         7.00         2,773,257
                                           ==========     =======          =======     ==========      =========      ===========
</TABLE>

                                                  Options      Warrants

Weighted Average fair value of options
and warrants granted during 1996                  $40.42         None
Weighted Average fair value of options
and warrants granted during 1997                  $10.55       $78.03
Weighted Average fair value of options
and warrants granted during 1998                    None        $0.84
Weighted Average fair value of options
and warrants granted during 1999                    1.79         1.90



                                      F-20
<PAGE>

     The following table summarizes  information about exercisable stock options
and warrants at December 31, 1999:
<TABLE>
<CAPTION>
                                                                          Remaining        Average                        Average
                                     Range of             Number         Contractual      Exercise         Number         Exercise
                                  Exercise Price        Outstanding          Life           Price        Exercisable       Price
                                                  Outstanding                                        Exercisable

<S>                               <C>     <C>             <C>              <C>              <C>            <C>              <C>
Options:                          $3.50 - 101.20          339,100          2-8 years        $6.01          317,225          $4.35

Warrants:                               -               2,523,257          1-5 years        $7.00        2,773,257          $7.00

</TABLE>

     In fiscal 1997, the Company adopted the disclosure  provisions of SFAS 123.
For disclosure  purposes,  the fair value of options is estimated on the date of
grant using the Black-Scholes  option pricing model with the following  weighted
average  assumptions  used for stock  options  granted  during  the years  ended
December 31, 1999, 1998 and 1997 respectively:  annual dividends of $0; expected
volatility  of 50%; risk free interest rate of 7% and expected life of 10 years.
The weighted  average fair value of stock options granted during the years ended
December 31, 1999, 1998 and 1997 was $1.79, $0 and $21.60, respectively.  If the
Company had  recognized  compensation  cost of stock options in accordance  with
SFAS 123, the Company's  proforma loss and net loss per share would have been as
follows:
                                              Year Ended December 31,

                                    1999               1998           1997
                                    ----               ----           ----
Net loss to common stockholders
  As reported                    $(8,795,880)       $(3,299,917)    $(8,458,453)
  Pro forma                      $(8,925,006)       $(3,299,917)    $(9,214,453)
Net loss from continuing
operations:
  As reported                    $(9,100,473)       $(2,740,054)    $(4,304,073)
  Pro forma                      $(9,229,599)       $(2,740,054)    $(5,060,073)
Net loss per share to common
stockholders
  Basic
   As reported                        $(1.22)            $(1.49)        $(19.48)
   Pro forma                          $(1.24)            $(1.49)        $(21.22)
Net loss per share to common
stockholders continuing operations:
  Basic
   As reported                        $(1.26)            $(2.15)        $(11.60)
   Pro forma                          $(1.28)            $(2.15)        $(13.34)

16. FORGIVENESS OF DEBT

     During the year ended  December  31,  1998 the  Company  realized a gain of
approximately  $869,516 due to its ongoing efforts to restructure Global and its
various wholly owned subsidiaries.

     The Company for the years ended  December  31, 1999 and 1998,  reviewed the
fair value of its accounts payable, accrued expenses and other liabilities,  and
adjusted their gain on forgiveness of debt to approximately $816,000,  resulting
in an approximate decrease of $54,000 in gain that had been realized in the year
ended December 31, 1998.


                                      F-21
<PAGE>

17. RELATED PARTY TRANSACTION

     The Company sold its three vocational schools (Note 9) in 1998 to a company
controlled by the Company's  former President and Chief Executive  Officer,  the
Company's former Secretary, and a former director.

     The Company has paid legal fees to a law firm,  whose  member is a director
of the Company. Fees of approximately  $79,000,  $263,000 and $153,000 were paid
in the year's ended December 31, 1999, 1998 and 1997, respectively.

     The Company as of December  31,  1999 owed  $45,000 to its chief  financial
officer  and  $37,360 to its chief  executive  officer of the  Company,  both in
connection with liabilities assumed in connection with the Kaire acquisition.

18. FOREIGN SALES

     Since the  acquisition  of Kaire and its foreign  subsidiaries  in February
1999, the Company has substantially increased its international presence both in
sales and  long-lived  assets.  The  Company's  sales and  long-lived  assets by
country as of December 31, 1999 is as follows:
<TABLE>
<CAPTION>

                                          United         Australia and           Other           Consolidated
                                          States         New Zealand         Subsidiaries
<S>                                    <C>                <C>                  <C>             <C>
Sales to unaffiliated customers        $13,167,421        $1,334,770           $767,440        $15,269,631

Long-lived assets at   December 31,
   1999                                 $9,452,993           $39,320            $43,260         $9,535,573
</TABLE>

19. ACQUISITIONS

     On July 23,  1997,  the Company  closed on the  acquisition  of the capital
stock of Global.  The purchase  price for the  acquisition of Global was settled
with the issuance of 145,000 shares of the Company's  common stock.  The Company
has agreed to issue to former Global  shareholders  additional  shares of common
stock as follows:  i) up to 20,000 shares if Global's pre-tax operating earnings
equal or exceed  $1,200,000  for the period from July 1, 1997  through  June 30,
1998,  which did not occur and ii) shares equal in market value to the lesser of
$45 million or eight times Global pre-tax operating earnings for the period from
July 1, 1999  through  June 30, 2000 minus the fair market  value on the date of
issuance of the 145,000 share initial consideration.

     The  acquisition  was recorded  using the purchase  method of accounting by
which the assets are valued at fair market value at the date of acquisition. The
following table summarizes the acquisition.

Purchase price                                         $2,900,000
Liabilities assumed                                     4,530,741
Fair value of assets acquired                          (6,511,954)
Goodwill                                                 $918,787

     The assets  acquired  included  two  patents,  one (the "Troy  Patent") was
valued at  $4,819,000,  (subsequently  written down to  $2,500,000 in 1999 - see
note 4), and is being  amortized over its remaining life of 11 years,  the other
(the "Xu Patent") was valued at $404,000,. In December 1998 management evaluated
the  recoverability of the Xu patent, by comparing its carrying amount to income
generated.  As a result of such  evaluation  the  Company  recorded  a charge of
$200,000 against this patent (subsequently written down to $0 in 1999 - see note
4). The Troy Patent is being amortized over its remaining life of 17 years, from
the date of purchase, with adjustments for future amortization in regards to the
charge against it. Additionally,  the Company acquired a customer list valued at
$57,000, which is being amortized over 5 years.

                                      F-22
<PAGE>

     The  following  schedule  combines  the  unaudited   pro-forma  results  of
operations the Company and Global, as if the acquisition  occurred on January 1,
1997 and  includes  such  adjustments  which are  directly  attributable  to the
acquisition, including the amortization of goodwill. It should not be considered
indicative of the results that would have been achieved had the  acquisition not
occurred  or the  results  that would  have been  obtained  had the  acquisition
actually occurred on January 1, 1996.

                                                Year Ended December 31,
                                                          1997

Revenues                                               $7,856,071
Loss from continuing operations                       $(7,709,728)
Net loss                                             $(10,234,169)

Basic and diluted loss per share
from continuing operations                                $(15.21)
Basic and diluted net loss per share                      $(20.20)
Shares used in computation                                506,765

     The  Company in February  1999,  pursuant  to an asset  purchase  agreement
acquired  substantially all the assets of Kaire in exchange for the (i) issuance
to  Kaire,  of  $2,800,000  aggregate  stated  value of the  Company's  Series F
Preferred  Stock,  par value of $.001,  (ii)  issuance to  creditors of Kaire of
$350,000  aggregate  stated value of the Company's Series G Preferred Stock, par
value of $.001,  (iii)  issuance  to Kaire of five  year  warrants  to  purchase
200,000  shares  of  the  Company's  common  stock,  par  value  of  $.001,  and
acquisition  costs of $622,587 of which  $516,000 will be paid with the issuance
of $516,000  aggregate  stated value of the Company's  Series I Preferred Stock,
par value $.001 and  $106,587  was paid in cash.  The  Company  has  computed an
aggregate $682,000 value on the warrants for acquisition purposes. The value was
derived by using the Black-Scholes  Option Pricing model, (iv) the assumption of
certain  indebtedness  of Kaire,  as defined in the  agreement  and as agreed to
outside of the asset purchase agreement. (v) indemnification to certain officers
of Kaire against  certain  liabilities  accrued prior to the closing date of the
asset  purchase,  and (vi) certain annual payments to Kaire for a period of five
years commencing December 31, 1999 based upon revenues and net income.

     The acquisition  was recorded using the purchase  method of accounting,  by
which assets are valued at fair value on the date of acquisition.  The following
table summarized the acquisition:

Purchase price including acquisition costs                           $5,347,513
Liabilities assumed                                                   4,205,012
Fair value of assets acquired                                        (2,546,070)
Goodwill and customer list                                           $7,006,455

     The Goodwill acquired is approximately $772,000 and is being amortized over
its  remaining   useful  life  of  15  years.  The  customer  list  acquired  is
approximately  $6,948,000 and is being amortized over its remaining  useful life
of 10 years.

     The  following  schedule  combines  the  unaudited   pro-forma  results  of
operations of the Company and Kaire, as if the  acquisition  occurred on January
1, 1996 and includes such  adjustments  which are directly  attributable  to the
acquisition, including the amortization of goodwill. It should not be considered
indicative  of the results  that would have been  achieved  had the  acquisition
actually occurred on January 1, 1996.


                                      F-23


<PAGE>


                                            Years Ended December 31,
                                    1999                1998             1997
                                    ----                ----             ----
Revenues                         $17,572,637         $27,366,830     $36,815,238

Net loss to common
  stockholder                   $(10,302,249)       $(10,431,144)  $(15,362,756)

Basic and diluted loss per
  common share from continuing
  operations                          $(1.27)             $(3.63)       $(25.28)


Basic and diluted net loss            $(1.43)             $(4.72)       $(35.38)
   to common stockholder per share

Shares used in computation         7,233,297           2,210,458        434,265


20. FOURTH QUARTER ADJUSTMENTS

        Fourth quarter adjustments include the following:

                          Write-down of patents               $ 2,398,841
                          Write-off of prepaid royalty        $   163,000
                          Write-off of goodwill               $   768,000
                          Write-off of inventory              $   167,000

21. SUBSEQUENT EVENTS

     In January 2000, the Company  entered into a Licensing  Agreement with GLI,
Inc., ("GLI") a Delaware  corporation with whom Joseph Grace,  former C.E.O. and
director  of the  Company,  is a  principal.  The License  agreement  allows GLI
certain  worldwide  rights to manufacture,  distribute and sell certain products
under the Natural Relief 1222 trademark.  The licensing  agreement calls for the
Company to receive a royalty  based upon GLI's net sales with a minimum  royalty
guaranteed thorough the year 2004.

     In February 2000, the Company  entered into an Asset Purchase and Licensing
Agreement with Ellon  Botanicals,  Inc.  ("EBI").  The agreement  allows EBI the
exclusive  license  market  products  under the "Ellon",  "Calming  Essence" and
"ContentMints"  tradenames.  The  agreement  calls for the  Company to receive a
royalty based upon EBI's sales with a minimum royalty through the year 2004.

     In March 2000,  the Company sold 1,000  shares of Series J Preferred  Stock
with a stated value of $1,000 per share realizing net proceeds of $936,000.  The
preferred stock pays a dividend at the rate of 10% per annum, payable in cash or
stock at the Company's  option.  The preferred  stock and the accrued  dividends
thereon  are  convertible  into  shares  of  the  Company's  common  stock  at a
conversion  price  equal to the  lower of the  closing  bid price on the date of
issuance  or 70% of the average  closing  bid price of the common  stock for the
lowest three trading days during the twenty day period immediately preceding the
date on which the Company receives notice of conversion from a holder.

     In  connection  with the  offering  of the Series J  Preferred  Stock,  the
Company issued warrants to purchase 200,000 shares of common stock. The exercise
price shall be equal to 110% of the closing bid price on the day of funding.

                                      F-24