NATURAL HEALTH TRENDS CORP.
Quarterly Report on Form 10-Q
September 30, 2025
INDEX
| Page |
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| PART I - FINANCIAL INFORMATION |
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| Item 1. | Financial Statements | 1 |
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| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16 |
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| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 22 |
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| Item 4. | Controls and Procedures | 22 |
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| PART II - OTHER INFORMATION |
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| Item 1. | Legal Proceedings | 23 |
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| Item 1A. | Risk Factors | 23 |
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| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 23 |
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| Item 3. | Defaults Upon Senior Securities | 23 |
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| Item 4. | Mine Safety Disclosures | 23 |
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| Item 5. | Other Information | 23 |
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| Item 6. | Exhibits | 24 |
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| Signatures | 25 | |
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FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, in particular “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” includes “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). When used in this report, the words or phrases “will likely result,” “expect,” “intend,” “will continue,” “anticipate,” “estimate,” “project,” “believe” and similar expressions are intended to identify “forward-looking statements” within the meaning of the Exchange Act. These statements represent our expectations or beliefs concerning, among other things, future revenue, earnings, growth strategies, new products and initiatives, dividend policies, future operations and operating results, and future business and market opportunities.
Forward-looking statements in this report speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. We caution and advise readers that these statements are based on certain assumptions that may not be realized and involve risks and uncertainties that could cause actual results to differ materially from the expectations and beliefs contained herein.
For a summary of certain risks related to our business, see “Part I, Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K, and “Part II, Item 1A. Risk Factors” in this Quarterly Report on Form 10-Q, which include the following:
| • | Changes in government trade and economic policies, including the imposition of tariffs and other restrictive trade policies, and ongoing political and economic disputes between the United States and other jurisdictions, particularly China, may have a negative effect on global economic conditions and our business, financial results and financial condition; |
| • | Because our Hong Kong operations account for a substantial portion of our overall business, and substantially all of our Hong Kong business is derived from the sale of products to members in China, any material adverse change in our business relating to either Hong Kong or China would likely have a material adverse impact on our overall business; |
| • | Hong Kong’s political and economic landscape has in recent years undergone significant change, and this upheaval or related consequences could negatively impact our business and financial performance; |
| • | We experienced negative operating cash flows during the years ended December 31, 2024, 2023 and 2022, and only modest positive operating cash flows during the years ended December 31, 2021 and 2020. Unless our operating cash flows improve, this negative financial performance could have a material adverse effect on our business and our stock price; |
| • | Adverse publicity associated with our products, ingredients or network marketing program, or those of similar companies, could harm our financial condition and operating results; |
| • | Our business and financial performance may be adversely affected by unfavorable economic and market conditions and the uncertain geopolitical environment; |
| • | We are subject to risks relating to product concentration and lack of revenue diversification; |
| • | Epidemics, natural disasters, terrorist attacks or acts of war or hostility may seriously harm our business; |
| • | The high level of competition in our industry could adversely affect our business; |
| • | Failure of new products to gain member and market acceptance could harm our business; |
| • | We rely on a limited number of independent third parties to manufacture and supply our products on a timely basis; |
| • | Growth may be impeded by the political and economic risks of entering and operating in foreign markets; |
| • | Failure to maintain effective internal controls in accordance with the Sarbanes-Oxley Act of 2002 could negatively impact our business and the market price of our common stock; |
| • | We could be adversely affected by management changes or an inability to attract and retain key management, directors and consultants; |
| • | Our continuing loss of a significant number of members is adversely affecting our business, and if we cannot stabilize or increase the number of members our business could be further negatively impacted; |
| • | Although virtually all of our members are independent contractors, improper member actions that violate laws or regulations could harm our business; |
| • | An increase in the amount of compensation paid to members would reduce profitability; |
| • | We may be held responsible for certain taxes or assessments relating to the activities of our members and service providers, which could harm our financial condition and operating results; |
| • | Our business in China is subject to compliance with a myriad of applicable laws and regulations, and any actual or alleged violations of those laws or government actions otherwise directed at us could have a material adverse impact on our business and the value of our company; |
| • | Direct-selling laws and regulations may prohibit or severely restrict our direct sales efforts and cause our revenue and profitability to decline, and regulators could adopt new regulations that harm our business; |
| • | Our business is subject to a variety of laws, regulations and other obligations regarding privacy, data protection and information security. Any actual or perceived failure by us or our third-party vendors to comply with such laws, regulations or other obligations could materially adversely affect our business; |
| • | Challenges by third parties to the legality of our business operations could harm our business; |
| • | We have in the past been involved in, and may in the future face, lawsuits, claims, and governmental proceedings and inquiries that could harm our business; |
| • | Currency exchange rate fluctuations could lower our revenue and net income; |
| • | Changes in tax or duty laws, and unanticipated tax or duty liabilities, could adversely affect our net income; |
| • | Transfer pricing regulations affect our business and results of operations; |
| • | Our products and related activities are subject to extensive government regulation, which could delay, limit or prevent the sale of some of our products in some markets; |
| • | New regulations governing the marketing and sale of nutritional supplements could harm our business; |
| • | Regulations governing the production and marketing of our personal care products could harm our business; |
| • | If we are found not to be in compliance with good manufacturing practices our operations could be harmed; |
| • | Failure to comply with domestic and foreign laws and regulations governing product claims and advertising could harm our business; |
| • | We are subject to anti-bribery laws, including the U.S. Foreign Corrupt Practices Act; |
| • | We do not have a comprehensive product liability insurance program and product liability claims could hurt our business; |
| • | We may be unable to protect or use our intellectual property rights; |
| • | We rely on and are subject to risks associated with our reliance upon information technology systems; |
| • | System disruptions or failures, cybersecurity risks, and compromises of data, or the failure to comply with related laws and regulations, could harm our business; |
| • | Our systems, software and data reside on third-party servers, exposing us to risks that disruption or intrusion of those servers could temporarily or permanently interrupt our access and damage our business; |
| • | Our common stock is particularly subject to volatility because of the industry and markets in which we operate; and |
| • | Our common stock continues to experience wide fluctuations in trading volumes and prices. This may make it more difficult for holders of our common stock to sell shares when they want and at prices they find attractive. |
Additional factors that could cause actual results to differ materially from our forward-looking statements are set forth in this report, including under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in our financial statements and the related notes.
