SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D**
Under the Securities Exchange Act of 1934
(Amendment No. )*
Natural Health Trends Corp.
(Name of Issuer)
Common Stock, $.001 Par Value
(Title of Class of Securities)
63888P406
(Cusip Number)
Robin B. Connor
201 Main Street, Suite 2500
Fort Worth, Texas 76102
(817) 878-3575
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
February 8, 2007
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ].
*The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
|
SOURCE OF FUNDS |
AMOUNT OF FUNDS |
Ru |
Personal Funds |
$ 2,210.00 |
Chief China |
Partnership Contributions |
$767,489.00 |
Bai |
Personal Funds |
$544,630.46 |
Ma |
Personal Funds |
$ 37,311.28 |
Zhao |
Personal Funds |
$ 47,195.00 |
Wang |
Personal Funds |
$ 37,492.00 |
Siu |
Personal Funds |
$ 61,579.80 |
Item 4. PURPOSE OF TRANSACTION
The Reporting Persons represent approximately 5.5% of the Issuer's outstanding Common Stock and, as distributors of the Company's products, account for the substantial majority of the Issuer's sales volume in the Hong Kong area.
The Reporting Persons no longer have trust or confidence in two of the Company's current board members, specifically Mr. Colin J. O'Brien and Mr. Terrence M. Morris. Accordingly, on February 12, 2007, the following letter was sent on behalf of the Reporting Persons to each member of the Issuer's Board of Directors:
February 12, 2007
Ladies and Gentlemen:
We are writing to you on behalf of our client, Rudy Ru. Mr. Ru and a number of Chinese stockholders and distributors (such stockholders and distributors are hereinafter collectively referred to as the "Chinese Stockholders") collectively own approximately 5.5% of the Company and account for the substantial majority of the Company's Hong Kong-based sales volume.
Mr. Ru and the Chinese Stockholders no longer have trust or confidence in two of the Company's current board members, specifically, Mr. Colin J. O'Brien and Mr. Terrence M. Morris. Accordingly, our client has asked us to write to you on his and the Chinese Stockholders' behalf to demand the immediate resignations of Messrs. O'Brien and Morris from the Board of Directors and to inform you that, if such resignations do not occur immediately, our client believes that the Company's key distributors in the greater Chinese area will take their business elsewhere. Our client has also asked us to inform you that (i) he and the Chinese Stockholders would like to recommend two replacement board members to fill the board seats vacated by Messrs. O'Brien and Morris and (ii) certain of the Chinese Stockholders may be willing to invest additional capital directly into the Company, but will not consider doing so unless Messrs. O'Brien and Morris resign.
Although Mr. Ru and the Chinese Stockholders hope that Messrs. O'Brien and Morris can be persuaded to leave the Company voluntarily, they are prepared to explore all alternatives available to them to remove Messrs. O'Brien and Morris from the board. Mr. Ru and the Chinese Stockholders anticipate filing their Schedule 13D with the Securities and Exchange Commission, thereby making their demands public, on or about February 14, 2007. Our client also informs us that he and the Chinese Stockholders intend to issue a press release outlining their concerns and demands that same day.
Our client believes that Messrs. O'Brien and Morris should resign for the following reasons:
In addition, our client demands that the Board take the following actions:
(i) Cause the Company to implement the necessary measures to protect the Company's investment in its Chinese and Hong Kong subsidiaries and reduce wasteful spending elsewhere;
(ii) Terminate Gerard (sik) Senke's employment agreement and invest the resultant savings in the greater Chinese market; and
(iii) Until the resignations of Messrs. O'Brien and Morris, refrain from taking any action with respect to (x) arrangements concerning current management or directors (other than the termination of Mr. Senke) or (y) material corporate financing and spending decisions.
Our client would like to emphasize that any action outside the ordinary course of business, and not in furtherance of the foregoing demands, will be viewed as unacceptable. Our client would also like to stress that he believes that the continued board membership of Messrs. O'Brien and Morris puts the Company's major source of revenue - the greater Chinese market - at risk.
Our client, finally, sincerely hopes that you will act in accordance with this letter and in the stockholders' and the Company's best interests, and believes that your fiduciary duties as a director of a Delaware corporation require no less than the actions described in this letter. Should you fail to act promptly to implement these changes, our client and the Chinese Stockholders intend to do everything in their power to hold you personally liable for the consequences.
Very truly yours,
/s/ Robin B. Connor
Robin B. Connor
In addition to the concerns outlined in the above letter, the Reporting Persons are deeply dismayed by the Issuer's failure to timely reach an amicable settlement agreement with Terry L. LaCore and Mark D. Woodburn, the founders of the Issuer. The Reporting Persons believe that the Issuer should have attempted to reach an agreement with Messrs. La Core and Woodburn, thereby allowing them to bring their invaluable industry expertise back to the Issuer at a time when the Issuer badly needed it, much sooner than October 2006.
Depending on market conditions and other factors that the Reporting Persons may deem material to their investment decision, the Reporting Persons may purchase additional Common Stock in the open market or in private transactions. Depending on these same factors, the Reporting Persons may sell all or a portion of their Common Stock on the open market or in private transactions.
Except as set forth in this Item 4, the Reporting Persons have no present plans or proposals that relate to or that would result in any of the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D of the Act.
Item 5. INTEREST IN SECURITIES OF THE ISSUER.
(a)
Reporting Persons
Ru
Pursuant to Rule 13d-3 of the Act, Ru beneficially owns 1,000 shares of the Common Stock, which constitutes approximately 0.01% of the outstanding shares of the Common Stock. Ru's percentage of beneficial ownership was arrived at by dividing the total number of shares of Common Stock beneficially owned by him by the 8,199,933 shares of Common Stock reported as outstanding in the Issuer's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2006 filed with the Securities and Exchange Commission on November 9, 2006 (the "Form 10-Q").
Chief China
Pursuant to Rule 13d-3 of the Act, Chief China beneficially owns 300,902 shares of the Common Stock, which constitutes approximately 3.6% of the outstanding shares of the Common Stock. Chief China's percentage of beneficial ownership was arrived at by dividing the total number of shares of Common Stock beneficially owned by it by the 8,199,933 shares of Common Stock reported as outstanding in the Form 10-Q.
Bai
Pursuant to Rule 13d-3 of the Act, Bai beneficially owns 63,275 shares of the Common Stock, which constitutes approximately 0.8% of the outstanding shares of the Common Stock. Bai's percentage of beneficial ownership was arrived at by dividing the total number of shares of Common Stock beneficially owned by her by the 8,199,933 shares of Common Stock reported as outstanding in the Form 10-Q.
Ma
Pursuant to Rule 13d-3 of the Act, Ma beneficially owns 23,000 shares of the Common Stock, which constitutes approximately 0.28% of the outstanding shares of the Common Stock. Ma's percentage of beneficial ownership was arrived at by dividing the total number of shares of Common Stock beneficially owned by him by the 8,199,933 shares of Common Stock reported as outstanding in the Form 10-Q.
Zhao
Pursuant to Rule 13d-3 of the Act, Zhao beneficially owns 20,000 shares of the Common Stock, which constitutes approximately 0.24% of the outstanding shares of the Common Stock. Zhao's percentage of beneficial ownership was arrived at by dividing the total number of shares of Common Stock beneficially owned by her by the 8,199,933 shares of Common Stock reported as outstanding in the Form 10-Q.
Wang
Pursuant to Rule 13d-3 of the Act, Wang beneficially owns 15,600 shares of the Common Stock, which constitutes approximately 0.2% of the outstanding shares of the Common Stock. Wang's percentage of beneficial ownership was arrived at by dividing the total number of shares of Common Stock beneficially owned by him by the 8,199,933 shares of Common Stock reported as outstanding in the Form 10-Q.
Siu
Pursuant to Rule 13d-3 of the Act, Siu beneficially owns 26,000 shares of the Common Stock, which constitutes approximately 0.32% of the outstanding shares of the Common Stock. Siu's percentage of beneficial ownership was arrived at by dividing the total number of shares of Common Stock beneficially owned by him by the 8,199,933 shares of Common Stock reported as outstanding in the Form 10-Q.
Controlling Person
In his capacity as the general partner of Chief China, K. Wang may, pursuant to Rule 13d-3 of the Act, be deemed to be the beneficial owner of 300,902 shares of the Common Stock, which constitutes approximately 3.6% of the outstanding shares of the Common Stock.
To the best of the knowledge of each of the Reporting Persons, other than as set forth above, none of the persons named in Item 2 herein is the beneficial owner of any shares of the Common Stock.
(b)
Reporting Persons
Ru
Ru has the sole power to vote or to direct the vote of 1,000 shares of the Common Stock, and the sole power to dispose or to direct the disposition of 1,000 shares of the Common Stock.
Chief China
Chief China has the sole power to vote or to direct the vote of 300,902 shares of the Common Stock, and the sole power to dispose or to direct the disposition of 300,902 shares of the Common Stock.
Bai
Bai has the sole power to vote or to direct the vote of 63,275 shares of the Common Stock, and the sole power to dispose or to direct the disposition of 63,275 shares of the Common Stock.
Ma
Ma has the sole power to vote or to direct the vote of 23,000 shares of the Common Stock, and the sole power to dispose or to direct the disposition of 23,000 shares of the Common Stock.
Zhao
Zhao has the sole power to vote or to direct the vote of 20,000 shares of the Common Stock, and the sole power to dispose or to direct the disposition of 20,000 shares of the Common Stock.
Wang
Wang has the sole power to vote or to direct the vote of 15,600 shares of the Common Stock, and the sole power to dispose or to direct the disposition of 15,600 shares of the Common Stock.
Siu
Siu has the sole power to vote or to direct the vote of 26,000 shares of the Common Stock, and the sole power to dispose or to direct the disposition of 26,000 shares of the Common Stock.
Controlling Person
In his capacity as the general partner of Chief China, K. Wang has the sole power to vote or to direct the vote of 300,902 shares of the Common Stock, and the sole power to dispose or to direct the disposition of 300,902 shares of the Common Stock.
(c) During the past 60 days, each of the Reporting Persons named below have purchased and/or sold shares of the Common Stock in transactions executed on the NASDAQ National Market as follows:
|
|
NO. OF |
|
Chief China |
12/22/06 |
400 (P) |
$1.43 |
Chief China |
12/26/06 |
2,000 (P) |
$1.40 |
Ma |
12/27/06 |
8,000 (P) |
$1.56 |
Chief China |
12/29/06 |
2,000 (P) |
$1.46 |
Ma |
01/09/07 |
4,100 (P) |
$1.60 |
Ma |
01/09/07 |
2,900 (P) |
$1.60 |
Ma |
01/09/07 |
8,000 (P) |
$1.71 |
Chief China |
01/12/07 |
7,500 (S) |
$2.83 |
Chief China |
01/25/07 |
3,500 (S) |
$2.75 |
Siu |
01/30/07 |
3,000 (P) |
$2.41 |
Siu |
01/30/07 |
5,000 (P) |
$2.39 |
Siu |
01/30/07 |
3,000 (P) |
$2.37 |
Zhao |
01/30/07 |
10,000 (P) |
$2.28 |
Zhao |
01/31/07 |
10,000 (P) |
$2.44 |
Siu |
01/31/07 |
10,000 (P) |
$2.37 |
Siu |
01/31/07 |
5,000 (P) |
$2.32 |
Wang |
01/31/07 |
10,000 (P) |
$2.50 |
Ru |
02/06/07 |
1,000 (P) |
$2.21 |
Chief China |
02/07/07 |
32,500 (P) |
$2.23 |
Chief China |
02/07/07 |
2,500 (P) |
$2.25 |
Chief China |
02/08/07 |
6,000 (P) |
$2.22 |
Wang |
02/08/07 |
5,600 (P) |
$2.24 |
Except as set forth in this paragraph (c), to the best of the knowledge of each of the Reporting Persons, none of the persons named in response to paragraph (a) has effected any transactions in the shares of the Common Stock during the past 60 days.
(d) Each of the Reporting Persons affirms that no person other than the Item 2 Persons has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares of the Common Stock owned by such Reporting Person.
(e) Not Applicable.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
Except as set forth herein or in the Exhibits filed or to be filed herewith, there are no contracts, arrangements, understandings or relationships with respect to the shares of the Stock owned by the Item 2 Persons.
Item 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 99.1 Agreement and Power of Attorney pursuant to Rule 13d-1(k)(1)(iii).
/s/ Rudy Ru
RUDY RU
/s/ Rudy Ru
Rudy Ru, Attorney in fact for:
CHIEF CHINA RESOURCES LTD.(1)
LING BAI (1)
YAN TAO ZHAO (1)
CHANG HUI MA (1)
WEI MING WANG (1)
WING HUNG SIU (1)
(1) A Power of Attorney authorizing Rudy Ru, et. al., to act on behalf of each of Chief China Resources Ltd., Ling Bai, Yan Tao Zhao, Chang Hui Ma, Wei Ming Wang and Wing Hung Siu is filed herewith as Exhibit 99.1.
EXHIBIT INDEX
Exhibit Description
99.1 Agreement and Power of Attorney pursuant to Rule 13d-1(k)(1)(iii) (filed herewith).