Membership and Revenue Trends - Total active members decreased from 38,660 in 2022 to 32,410 in December 2023, representing a decline of approximately 16.2%[33] - Revenue from Hong Kong, which includes members residing in China, decreased from 28,550 to 23,490, a decline of about 17.7%[33] - In 2023, approximately 79% of the company's revenue was generated in Hong Kong, with most sales delivered to members in China[82] - The company experienced negative operating cash flows in 2023 and 2022, primarily due to revenue declines exceeding managed expenditure reductions[84] - The company experienced a 16% decrease in active members at the end of 2023 compared to the end of 2022, which significantly contributed to the decline in year-over-year sales[110] - Total net sales for the year ended December 31, 2023, were $43,924,000, a decrease of 10.0% from $49,134,000 in 2022[242] Operational and Regulatory Challenges - The company’s operations have been affected by recent political and social developments in Hong Kong and regulatory changes in China[37] - The regulatory environment in China imposes restrictions on multi-level compensation and member recruitment activities, impacting the company's operations[58] - The company is subject to extensive governmental regulations regarding product marketing and safety, including compliance with FDA and FTC requirements[61] - The product registration process in China can take from nine months to over 18 months, affecting product launches[64] - The company has increased its internal regulatory staff to comply with evolving dietary supplement regulations and ensure product safety[65] - The company is subject to various regulatory issues, including foreign exchange control and compliance with local direct selling laws, which may lead to scrutiny from government authorities[71] - The company is subject to ongoing scrutiny by Chinese government regulators, which has previously impacted member activities and could lead to enforcement actions[122] - The Chinese government's 100-day campaign targeting health product companies continues to affect the business environment, with potential long-term benefits as substandard products are driven from the market[126] Financial Performance and Risks - Gross profit for 2023 was $32,749,000, down from $36,473,000 in 2022, reflecting a gross margin of 74.5%[242] - Net income for 2023 increased to $568,000, compared to $313,000 in 2022, resulting in a net income per share of $0.05[242][245] - Total current assets decreased to $64,229,000 in December 2023 from $77,551,000 in December 2022, a decline of 17.1%[240] - Total liabilities decreased to $27,491,000 in December 2023 from $32,666,000 in December 2022, a reduction of 15.5%[240] - Stockholders' equity as of December 31, 2023, was $41,600,000, down from $50,151,000 in 2022, a decrease of 17.1%[240] - Operating expenses for 2023 totaled $34,420,000, a decrease of 6.5% from $36,743,000 in 2022[242] - The company reported a loss from operations of $1,671,000 for 2023, compared to a loss of $270,000 in 2022[242] - Deferred revenue increased to $6,166,000 in December 2023 from $5,597,000 in December 2022, an increase of 10.2%[240] Marketing and Compensation Structure - The company has implemented a hybrid marketing strategy combining in-person and virtual events due to disruptions from the COVID-19 pandemic[36] - The company’s marketing and distribution strategy relies on a network marketing system, emphasizing personal recommendations and customer service[30] - The compensation plan allows members to earn income through commissions based on bonus volume points from product purchases made by their down-line members[47] - Members can earn commissions weekly, with eligibility potentially requiring nominal monthly purchases of products[48] - The company employs a binary compensation plan with unilevel features, enabling members to sponsor others across different countries[47] Product and Supply Chain Management - The company sources products from manufacturers primarily located in the United States, South Korea, Hong Kong, Taiwan, Europe, and China[24] - The company relies on a limited number of independent third-party manufacturers, which poses risks related to product quality and timely supply[102] - The introduction of new products is critical for member engagement; failure to gain market acceptance could adversely affect the company's operations[99] Compliance and Legal Risks - The company faces risks from potential non-compliance with direct selling regulations, which could result in substantial fines and restrictions on business operations[128] - The company is subject to anti-bribery laws, and violations could result in significant expenses and reputational damage[164] - The company does not have a comprehensive product liability insurance program, which could expose it to various product liability claims[166] - The company faces risks from potential lawsuits, claims, and governmental proceedings that could harm its business[142] Cybersecurity and IT Risks - The company's operations are highly dependent on the accuracy and reliability of its information technology systems, with any interruptions potentially having a material adverse effect on its financial condition[171] - Cybersecurity risks are a significant concern, with potential disruptions or breaches possibly harming the company's reputation and financial results[174] - The company has implemented a cybersecurity risk management program, including third-party vendor engagement for monitoring and threat detection[185] - The company maintains cybersecurity insurance, but costs related to cybersecurity threats may not be fully covered[186] Market Competition - The company faces competitive risks from larger multinational corporations and local operators in the network marketing industry, which may affect its market position[77] - The company faces significant competition from larger direct selling organizations, which may hinder its ability to recruit and retain members effectively[97] - The company competes with other direct selling organizations for member recruitment, which is challenging due to high attrition rates[110] Economic and Geopolitical Factors - Political and economic risks in foreign markets may impede the company's growth and expansion efforts[103] - Ongoing geopolitical tensions between the United States and China may adversely affect trade relations and the company's operations in these markets[130] - The company has significant foreign exchange exposure, particularly if the Hong Kong dollar were no longer pegged to the U.S. dollar[145]

Natural Health Trends Corp. (NASDAQ:NHTC) Q4 2023 Earnings Conference Call February 7, 2024 11:30 AM ET Company Participants Michelle Glidewell – Senior Manager Chris Sharng – President and Director Scott Davidson – Senior Vice President and Chief Financial Officer Conference Call Participants Operator Greetings. Welcome to Natural Health Trends Corp. Fourth Quarter 2023 Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] Please note this conference is ...

HONG KONG, Jan. 31, 2024 (GLOBE NEWSWIRE) -- Natural Health Trends Corp. (NASDAQ:NHTC), a leading direct-selling and e-commerce company that markets premium quality personal care, wellness, and "quality of life" products under the NHT Global brand, today announced the Company will report its financial results for the fourth quarter ended December 31, 2023 on Wednesday, February 7, 2024 at 9:00 a.m. Eastern Time. Chris Sharng, Natural Health Trends' President, and Scott Davidson, Senior Vice President and Ch ...

HONG KONG, Jan. 31, 2024 (GLOBE NEWSWIRE) -- Natural Health Trends Corp. (NASDAQ: NHTC), a leading direct-selling and e-commerce company that markets premium quality personal care, wellness, and “quality of life” products under the NHT Global brand, today announced the Company will report its financial results for the fourth quarter ended December 31, 2023 on Wednesday, February 7, 2024 at 9:00 a.m. Eastern Time. Chris Sharng, Natural Health Trends’ President, and Scott Davidson, Senior Vice President and C ...

Natural Health Trends Corp (NASDAQ:NHTC) Q3 2023 Earnings Conference Call November 1, 2023 11:30 AM ET Company Participants Michelle Glidewell - Senior Manager of NHT Global Corp Chris Sharng - President and Director Timothy Davidson - Senior VP, CFO and Secretary Operator Greetings. Welcome to Natural Health Trends Corp. Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Michelle Glidewell with Natural ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to _______ Commission File Number: 001-36849 NATURAL HEALTH TRENDS CORP. (Exact name of registrant as specified in its charter) D ...

Natural Health Trends Corp. (NASDAQ:NHTC) Q2 2023 Earnings Conference Call August 2, 2023 11:30 AM ET Company Participants Michelle Glidewell - Senior Manager, NHT Global Corp Chris Sharng - President Scott Davidson - SVP & CFO Conference Call Participants Operator Greetings, and welcome to the Natural Health Trends Corp. Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It is now ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to _______ Commission File Number: 001-36849 NATURAL HEALTH TRENDS CORP. (Exact name of registrant as specified in its charter) Delawa ...

Natural Health Trends Corp. (NASDAQ:NHTC) Q1 2023 Results Earnings Conference Call May 3, 2023 11:30 AM ET Company Participants Michelle Glidewell - Senior Manager, NHT Global Corp Chris Sharng - President Scott Davidson - Senior Vice President and Chief Financial Officer Conference Call Participants Operator Greetings. Welcome to the Natural Health Trends Corp. First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions]. Please note, this c ...

Financial Performance - Net sales for the three months ended March 31, 2023, were $11,861,000, an increase from $11,546,000 in the same period of 2022, representing a growth of 2.7%[15] - Gross profit for the same period was $8,830,000, compared to $8,638,000 in the prior year, indicating a slight increase of 2.2%[15] - Net income for the three months ended March 31, 2023, was $257,000, a turnaround from a net loss of $105,000 in the same period of 2022[15] - The company reported a comprehensive income of $157,000 for the three months ended March 31, 2023, compared to a comprehensive loss of $333,000 in the same period of 2022[18] - Product sales for the three months ended March 31, 2023, were $11.048 million, compared to $10.322 million for the same period in 2022, reflecting an increase of 7.0%[41] - The primary reporting segment's income from operations for the three months ended March 31, 2023, was $1.827 million, compared to $1.915 million for the same period in 2022, reflecting a decrease of 4.6%[83] - Other income increased to $681,000 for the three months ended March 31, 2023, compared to $110,000 in the same period last year[118] Assets and Liabilities - Total current assets decreased to $75,012,000 as of March 31, 2023, down from $77,551,000 at the end of 2022, reflecting a decline of 3.3%[13] - Total liabilities decreased to $32,132,000 as of March 31, 2023, compared to $32,666,000 at the end of 2022, a reduction of 1.6%[13] - Cash and cash equivalents as of March 31, 2023, were $66,610,000, down from $69,667,000 at the end of 2022, a decrease of 4.0%[13] - Working capital decreased by $2.1 million to $55.0 million as of March 31, 2023, compared to December 31, 2022[121] Expenses - Operating expenses for the three months ended March 31, 2023, totaled $9,224,000, slightly higher than $9,021,000 in the same period of 2022, an increase of 2.3%[15] - Selling, general and administrative expenses decreased to $4.2 million for the three months ended March 31, 2023, from $4.3 million in the same period last year[117] - Compensation expense related to phantom shares for the three months ended March 31, 2023, was $127,000, down from $196,000 for the same period in 2022[73] - Commissions expense was 42.1% of net sales for the three months ended March 31, 2023, up from 41.0% in the prior year[116] Cash Flow - The company reported a net cash used in operating activities of $696,000 for the three months ended March 31, 2023, significantly improved from $2.348 million used in the same period of 2022[24] - Cash, cash equivalents, and restricted cash at the end of the period were $66.648 million, down from $79.464 million at the end of March 31, 2022[24] - The effect of exchange rates on cash, cash equivalents, and restricted cash resulted in a loss of $91,000 for the three months ended March 31, 2023[24] Market and Operations - The company operates in multiple international markets, including the Americas, Greater China, Southeast Asia, and Europe, with a focus on direct-selling and e-commerce for personal care and wellness products[26] - The company generated approximately 94% of its net sales from subsidiaries located outside the Americas, with the Hong Kong subsidiary accounting for 82% of net sales in the latest fiscal quarter[91] - The company plans to focus resources on investing in Greater China and other key markets, including Southeast Asia, India, South America, and Europe[126] Challenges and Outlook - The company anticipates continued adverse impacts on financial performance in the near term due to ongoing challenges in the market[101] - The Chinese government has not issued any new direct selling licenses since the 100-day campaign began in January 2019, which has negatively affected the company's operations[94] - Recent political and social developments in Hong Kong have adversely affected operations, leading to the cessation of member meetings and events in the region[99] - The COVID-19 pandemic and related government control measures have significantly disrupted operations, particularly in 2022, but there are signs of improvement in 2023[97] Shareholder Returns - The company declared and paid cash dividends of $0.20 per common share during the first quarter of 2023, totaling $2.3 million[75] - The company has $21.9 million remaining available for future purchases under its stock repurchase program, which was authorized for a total of $70.0 million[76] Tax and Regulatory Matters - The effective income tax rate for the three months ended March 31, 2023, includes estimates for foreign income inclusions such as global intangible low-taxed income (GILTI)[59] - The company has a valuation allowance against deferred tax assets in certain foreign jurisdictions with an overall net operating loss as of March 31, 2023[59] - The Company does not expect a material impact on its financial statements from the finalized U.S. tax regulations effective March 7, 2022[135] Membership and Commissions - As of March 31, 2023, the company had 38,330 active members, a decrease from 38,660 at December 31, 2022, and 44,490 at March 31, 2022[90] - Member commissions represented 42% of net sales in the first three months of 2023, compared to 41% in the same period of 2022[107]