-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 TZ6Kl1HC4O9MfCea/coUqxSB44CiW4afw/UAkJVcIjQB3Ohrrau0W7ZhlCBFgYe1
 RYH2ALyQOofyGVTo9YRwQw==

<SEC-DOCUMENT>0000950134-05-021639.txt : 20051115
<SEC-HEADER>0000950134-05-021639.hdr.sgml : 20051115
<ACCEPTANCE-DATETIME>20051115131908
ACCESSION NUMBER:		0000950134-05-021639
CONFORMED SUBMISSION TYPE:	NT 10-Q
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20050930
FILED AS OF DATE:		20051115
DATE AS OF CHANGE:		20051115
EFFECTIVENESS DATE:		20051115

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NATURAL HEALTH TRENDS CORP
		CENTRAL INDEX KEY:			0000912061
		STANDARD INDUSTRIAL CLASSIFICATION:	WHOLESALE-MISCELLANEOUS NONDURABLE GOODS [5190]
		IRS NUMBER:				592705336
		STATE OF INCORPORATION:			FL
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		NT 10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-26272
		FILM NUMBER:		051205644

	BUSINESS ADDRESS:	
		STREET 1:		12901 HUTTON DRIVE
		STREET 2:		--
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75234
		BUSINESS PHONE:		972-241-4080

	MAIL ADDRESS:	
		STREET 1:		12901 HUTTON DRIVE
		STREET 2:		--
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75234
</SEC-HEADER>
<DOCUMENT>
<TYPE>NT 10-Q
<SEQUENCE>1
<FILENAME>d30433ntnt10vq.htm
<DESCRIPTION>NOTIFICATION OF LATE FILING
<TEXT>
<HTML>
<HEAD>
<TITLE>nt10vq</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<center>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="15%"></TD>
        <TD width="85%"></TD>
</TR>
<TR valign="top">
        <TD colspan="2"><font size="2"><hr size="1" noshade></font></TD>
</TR>
<TR valign="top">
        <TD valign="bottom"><font size="2">SEC 1344
<BR>(2-2002)<BR>Previous<BR> versions<BR> obsolete</font></TD>
        <TD valign="middle"><font size="2"><b>Persons who potentially are to respond to the collection of information
contained in this form are not required to respond unless the form displays a currently valid
OMB control number.</b></font></TD>
</TR>
<TR valign="top">
        <TD colspan="2"><font size="2"><hr size="1" noshade></font></TD>
</TR>
</TABLE>
</center>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="70%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="13%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="15%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD colspan="3" nowrap align="center"><FONT size="2">OMB APPROVAL</FONT></TD>
</TR>
<TR valign="bottom">
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD colspan="3" nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
OMB Number:
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="right" valign="top"><FONT size="2">3235-0058</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Expires:
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>

<TD nowrap align="right" valign="top"><FONT size="2">March&nbsp;31, 2006</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="2" nowrap align="left" valign="top"><FONT size="2">Estimated average burden<br>hours per

response</FONT></TD>

        <TD align="right" valign="bottom"><FONT size="2">2.50</FONT></TD>
</TR>
<TR valign="bottom">
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD colspan="3" nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>

<TD colspan="2" nowrap align="left" valign="top"><FONT size="2">SEC
FILE NUMBER</FONT></TD>

        <TD align="right" valign="bottom"><FONT size="2">0-26272&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD colspan="3" nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="2" nowrap align="left" valign="top"><FONT size="2">CUSIP NUMBER</FONT></TD>
        <TD align="right" valign="bottom"><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><font size="2"><B>UNITED STATES<BR>SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, D.C. 20549</B>
</font>

<P align="center"><FONT size="2"><B>FORM 12b-25</B></FONT>

<P align="center"><FONT size="2"><B>NOTIFICATION OF LATE FILING</B></FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="41%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="35%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="14%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align="left"><FONT size="2"><I>(Check One):</I></FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; Form&nbsp;10-K</FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; Form&nbsp;20-F</FONT></TD>
        <TD></TD>

<TD nowrap align="left" valign="top"><FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; Form&nbsp;11-K</FONT></TD>
</TR>

<TR><TD></TD></TR>

<TR valign="bottom">
<TD valign="top"><FONT size="2"><FONT face="wingdings">&#254;</FONT>&nbsp;&nbsp; Form&nbsp;10-Q</FONT></TD>
        <TD></TD>
        <TD  nowrap align="left" valign="top"><FONT size="2">
<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; Form&nbsp;10-D</FONT></TD>
        <TD></TD></TR>
<TR><TD></TD></TR>
<TR valign="bottom">
<TD valign="top"><FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; Form&nbsp;N-SAR</FONT></TD>
        <TD></TD>
        <TD  nowrap align="left" valign="top"><FONT size="2">
<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; Form&nbsp;N-CSR</FONT></TD>
        <TD></TD>
</TR>
</TABLE>
</CENTER>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="10%">&nbsp;</TD>
        <TD width="80%">&nbsp;</TD>
</TR>
<TR>
        <TD nowrap><FONT size="2">For Period Ended:&nbsp;&nbsp;</font></TD>
        <TD><FONT size="2">September&nbsp;30, 2005</font></TD>
</TR>
<TR>
        <TD align="left">&nbsp;</TD>
        <TD align="left"><hr size="1" noshade width="25%"></TD>
</TR>
</TABLE>

<BR clear="all">

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="49%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="46%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD nowrap valign="top"><FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; Transition Report on Form&nbsp;10-K</FONT></TD>
        <TD></TD>
        <TD  nowrap align="left" valign="top"><FONT size="2">
<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; Transition Report on Form&nbsp;10-Q</font></TD>
</TR>
<TR><TD></TD></TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; Transition Report on Form&nbsp;20-F</FONT></TD>
        <TD></TD>
        <TD  align="left" valign="top"><FONT size="2">
<FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; Transition Report on Form&nbsp;N-SAR</FONT></TD>
</TR>
<TR><TD></TD></TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; Transition Report on Form&nbsp;11-K</FONT></TD>
</TR>
</TABLE>
</CENTER>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="15%">&nbsp;</TD>
        <TD width="75%">&nbsp;</TD>
</TR>
<TR>
        <TD nowrap><FONT size="2">For the Transition Period Ended</font></TD>
        <TD><FONT size="2">&nbsp;</font></TD>
</TR>
<TR>
        <TD align="left">&nbsp;</TD>
        <TD align="left"><hr size="1" noshade width="25%"></TD>
</TR>
</TABLE>
<BR clear="all">

<P align="center"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Read
Instruction (on back page) Before Preparing Form.&nbsp;Please Print or
Type.</I></FONT>

<P align="center"><FONT size="2"><B>Nothing in this form shall be construed to imply that the Commission has
verified any information contained herein.</B></FONT>

<P><FONT size="2">If the notification relates to a portion of the filing checked above,
identify the Item(s) to which the notification relates:</FONT>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="100">&nbsp;</TD>
</TR>
<TR>
        <TD align="left"><FONT size="2">&nbsp;</font></TD>
</TR>
<TR>
        <TD><hr size="1" noshade></TD>
</TR>
</TABLE>
<BR clear="all">

<P align="left"><FONT size="2"><B>PART I &#151; REGISTRANT INFORMATION</B></FONT>

<p><FONT size="2">Natural Health Trends Corp.<hr size="1" noshade>Full Name of Registrant</font>
<p><FONT size="2"><hr size="1" noshade>Former Name if Applicable</font>
<p><FONT size="2">2050 Diplomat Drive<hr size="1" noshade>Address of Principal Executive
Office<i> (Street and Number)</i></font>
<p><FONT size="2">Dallas, Texas 75234<hr size="1" noshade>City, State and Zip Code</font>



<P align="left"><FONT size="2"><B>PART II &#151; RULES 12b-25(b)&nbsp;AND (c)</B></FONT>

<P><FONT size="2">If the subject report could not be filed without unreasonable effort or
expense and the registrant seeks relief pursuant to Rule&nbsp;12b-25(b), the
following should be completed. (Check box if appropriate)</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="3%">&nbsp;</TD>
        <TD width="1%" align="left"><FONT size="2">(a)</font></TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="93%"><FONT size="2">The reasons described in reasonable detail in Part III of this form
could not be eliminated without unreasonable effort or expense;</font></TD>
</TR>
<TR valign="top">
        <TD valign="middle" width="3%"><font face="wingdings">&#254;</font></TD>
        <TD width="1%" align="left"><FONT size="2">(b)</font></TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="93%"><FONT size="2">The subject annual report, semi-annual report, transition report on
Form&nbsp;10-K, Form 20-F, 11-K, Form N-SAR or Form&nbsp;N-CSR, or
portion thereof, will be filed on or before the fifteenth calendar day following the prescribed
due date; or the subject quarterly report or transition report on Form
10-Q or subject distribution report on Form 10-D, or portion thereof, will be filed on or before the fifth
calendar day following the prescribed due date; and</font></TD>
</TR>
<TR valign="top">
        <TD width="3%">&nbsp;</TD>
        <TD width="1%" align="left"><FONT size="2">(c)</font></TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="93%"><FONT size="2">The accountant&#146;s statement or other exhibit required by Rule&nbsp;12b-25(c)
has been attached if applicable.</font></TD>
</TR>
</TABLE>

<P align="left"><FONT size="2"><B>PART III &#151; NARRATIVE</B></font>

<P><FONT size="2">State below in reasonable detail the reasons why
Forms&nbsp;10-K, 20-F, 11-K, 10-Q, 10-D, N-SAR, N-CSR or the transition report
or portion thereof, could not be filed within the prescribed time period. </font>

<P><FONT size="2">As previously reported, Natural Health Trends Corp. (the &#147;Company&#148;) has recently learned certain information regarding certain of its former executive officers. As a result, the Company has yet to finalize its quarterly report. Accordingly, the Company could not file its Quarterly Report on Form&nbsp;10-Q within 45 days following end of the third quarter without reasonable effort or expense.</font>

<P align="center"><FONT size="2"><b>(Attach Extra Sheets if Needed)</b></font>


<P align="center">

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>


<P align="left"><FONT size="2"><B>PART IV &#151; OTHER INFORMATION</B>
</font>

<P><FONT size="2">(1)&nbsp;Name and telephone number of person to contact in regard to this
notification
</font>

<P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="25%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="25%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="25%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align="left" valign="top"><FONT size="2">Robert H. Hesse</FONT></TD>
        <TD></TD>
        <TD align="center" valign="top"><FONT size="2">972</FONT></TD>
        <TD></TD>
        <TD align="right" valign="top"><FONT size="2">241-4080</FONT></TD>
</TR>
<TR valign="bottom">
        <TD colspan=5 align="left" valign="top"><FONT size="2"><hr size="1" noshade></FONT></TD>
</TR>
<TR valign="bottom">
        <TD align="left" valign="top"><FONT size="2">(Name)</FONT></TD>
        <TD></TD>
        <TD align="center" valign="top"><FONT size="2">(Area Code)</FONT></TD>
        <TD></TD>
        <TD align="right" valign="top"><FONT size="2">(Telephone Number)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P><FONT size="2">(2)&nbsp;Have all other periodic reports required
under Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 or
Section&nbsp;30 of the Investment Company Act of 1940 during preceding
12&nbsp;months or for such shorter period that the registrant was required
to file such report(s) been filed? If answer is no, identify report(s).</FONT>

<P align="right"><FONT size="2"><FONT face="wingdings">&#254;</FONT>&nbsp;&nbsp; Yes <FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; No
</FONT>
<P><hr size="1" noshade>
<P><FONT size="2">(3)&nbsp;Is it anticipated that any significant change in results of operations
from the corresponding period for the last fiscal year will be reflected by the
earnings statements to be included in the subject report or portion thereof?
</FONT>

<P align="right"><FONT size="2"><FONT face="wingdings">&#254;</FONT>&nbsp;&nbsp; Yes <FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp; No
</FONT>


<P><FONT size="2">If so,&nbsp;attach an explanation of the anticipated change, both narratively
and quantitatively, and, if appropriate, state the reasons why a reasonable
estimate of the results cannot be made.
</FONT>

<P><FONT size="2">See Exhibit A attached hereto.</FONT>

<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" align="center">
<TR valign="bottom">
        <TD width="100%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align="center" valign="top"><FONT size="2">Natural Health Trends Corp.</FONT></TD>
</TR>
<TR valign="bottom">

<TD colspan=5 align="left" valign="top"><FONT size="2"><hr size="1" noshade></FONT></TD>
</TR>
<TR valign="bottom">
        <TD align="center" valign="top"><FONT size="2">(Name of Registrant as Specified in Charter)</FONT></TD>
</TR>

</TABLE>



<P><FONT size="2">has caused this notification to be signed on its behalf by the undersigned
hereunto duly authorized.
</FONT>

<p>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="25%"></TD>
        <TD width="3%"></TD>
        <TD width="25%"></TD>
</TR>
<TR>
        <TD align="right"><FONT size="2">Date&nbsp;&nbsp;</FONT></TD>
        <TD><FONT size="2">November&nbsp;15, 2005</font></TD>
        <TD align="right"><FONT size="2">By&nbsp;&nbsp;</FONT></TD>
        <TD><FONT size="2">/s/ Robert H. Hesse</font></TD>
</TR>

<TR>
        <TD></TD>
        <TD><hr size="1" noshade></TD>
        <TD></TD>
        <TD><hr size="1" noshade></TD>
</TR>

<TR>
        <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</font></TD>
        <TD align="right"><FONT size="2">&nbsp;&nbsp;</FONT></TD>
        <TD><FONT size="2">Robert H. Hesse<BR>Interim Chief Executive Officer</font></TD>
</TR>

</table>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
        <TD width="3%"></TD>
        <TD width="97%"></TD>
</TR>
<TR valign="top">
        <TD>&nbsp;</TD>
        <TD><FONT size="2">INSTRUCTION: The form may be signed by an executive officer of the
registrant or by any other duly authorized representative. The name and
title of the person signing the form shall be typed or printed beneath the
signature. If the statement is signed on behalf of the registrant by an
authorized representative (other than an executive officer), evidence of
the representative&#146;s authority to sign on behalf of the registrant shall be
filed with the form.</font></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2"><b>ATTENTION</b></font>

<P align="center"><FONT size="2"><B>Intentional misstatements or
omissions of fact constitute Federal Criminal
Violations (See 18 U.S.C. 1001).</B>
</font>

<P align="center"><FONT size="2"><B>General Instructions</B></font>

<P><FONT size="2">1.&nbsp;This form is required by Rule&nbsp;12b-25
(17 CFR 240.12b-25) of the General Rules and Regulations under the Securities Exchange Act of 1934.
</font>

<P><FONT size="2">2.&nbsp;One signed original and four conformed copies of this form and
amendments thereto must be completed and filed with the Securities and Exchange
Commission, Washington, D.C. 20549, in accordance with Rule&nbsp;0-3 of the General
Rules and Regulations under the Act. The information contained in or filed with
the form will be made a matter of the public record in the Commission files.
</font>

<P><FONT size="2">3.&nbsp;A manually signed copy of the form and amendments thereto shall be filed
with each national securities exchange on which any class of securities of the
registrant is registered.
</font>

<P><FONT size="2">4.&nbsp;Amendments to the notifications must also be filed on Form&nbsp;12b-25 but
need not restate information that has been correctly furnished. The form shall
be clearly identified as an amended notification.
</font>

<P><FONT size="2">5.&nbsp;<i>Electronic filers.</i> This form shall not be used by electronic filers
unable to timely file a report solely due to electronic difficulties. Filers
unable to submit a report within the time period prescribed due to difficulties
in electronic filing should comply with either Rule&nbsp;201 or Rule&nbsp;202 of
Regulation&nbsp;S-T (&#167; 232.201 or &#167; 232.202 of this chapter) or apply for an adjustment in filing
date pursuant to Rule&nbsp;13(b) of Regulation&nbsp;S-T (&#167;
232.13(b) of this chapter).
</font>


<P align="center">
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;A
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net Sales. </I>Net sales were approximately $58.1&nbsp;million for the three months ended September&nbsp;30,
2005 compared to $40.5&nbsp;million for the same period in the prior year, an increase of $17.6&nbsp;million
or 43&nbsp;percent. This increase was largely due to the significant growth in the business based in
Hong Kong. In the third quarter of 2005, the Company&#146;s Hong Kong business recorded approximately
$37.7&nbsp;million of net sales compared with approximately $23.8&nbsp;million a year ago. Furthermore, in
the third quarter of 2005, approximately $2.0&nbsp;million of the net sales increase could be attributed
to distributors purchasing products in anticipation of our opening in the Japanese market. The
remainder of the net sales increase for the third quarter over a year ago was due to Eastern Europe
($1.0&nbsp;million) and South Korea ($0.7&nbsp;million).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Gross Profit. </I>Gross profit was approximately $45.1&nbsp;million or 77.6% of net sales for the three
months ended September&nbsp;30, 2005 compared with approximately $31.6&nbsp;million or 78.1% of net sales for
the same period in the prior year. This increase in the dollar amount of gross profit was
primarily driven by increased sales and a 5% price increase instituted in January&nbsp;2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Distributor Commissions. </I>Distributor commissions were approximately $29.1&nbsp;million or 50.1% of
net sales for the three months ended September&nbsp;30, 2005 compared with approximately $17.4&nbsp;million
or 43.0% of net sales for the same period in the prior year. The increase in distributor
commissions as a percentage of sales over a year ago primarily related to commissions recorded in
the second quarter of 2004 totaling approximately $2.7&nbsp;million for which the associated net sales
of approximately $5.4&nbsp;million was recognized in the third quarter of 2004. These commissions
pertained to products that potentially could be returned under the special return policy the
Company implemented in April&nbsp;2004. As a special measure to establish long-term relationships with
the distributors doing business with our Hong Kong office, the Company did not seek to recover
commissions associated with the products returned.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Selling, General and Administrative Expenses (SG&#038;A). </I>SG&#038;A costs were approximately $15.1
million or 26.0% of net sales for the three months ended September&nbsp;30, 2005 compared with
approximately $8.3&nbsp;million or 20.5% of net sales for the same period in the prior year. In the
third quarter, this increase of approximately $6.8&nbsp;million or 82% was mainly attributable to
additional marketing-related expenses primarily in Eastern Europe ($1.6&nbsp;million) and Hong
Kong/China ($2.3&nbsp;million), preparing the opening of new markets in Mexico and Japan ($1.6&nbsp;million),
and higher professional fees and personnel cost in North America ($1.3&nbsp;million). SG&#038;A costs are
expected to continue to increase for the balance of the year as spending on new markets and
marketing events increase.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net Income. </I>Net income was approximately $119 thousand or 0.2% of net sales for the three
months ended September&nbsp;30, 2005, compared to approximately $5.0&nbsp;million or 12.4% of net sales for
the same period in the prior year. The reduction in profitability was primarily due to an increase
in distributor commissions and SG&#038;A as a percent of sales.
</DIV>


<P align="center" style="font-size: 10pt">
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
