10-Q/A

UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2011

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: 0-26272

NATURAL HEALTH TRENDS CORP.

(Exact name of registrant as specified in its charter)

Delaware	59-2705336
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

2603 Oak Lawn Avenue

5th Floor

Dallas, Texas  75219

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code:  (972) 241-4080

Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ¨  No þ

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for shorter period that the registrant was required to submit and post such files). Yes þ  No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer ¨                                                                           Accelerated filer ¨

Non-accelerated  filer  o                                                                           Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No þ

At November 7, 2011, the number of shares outstanding of the registrant’s common stock was 11,326,323 shares.

Explanatory Note

The purpose of this Form 10-Q/A to Natural Health Trend Corp.'s quarterly report on Form 10-Q for the quarter ended September 30, 2011, filed with the Securities and Exchange Commission on November 14, 2011 (the “Form 10-Q”), is solely to furnish Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S–T.

No other changes have been made to the Form 10-Q.  This Amendment speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date and does not modify or update in any way disclosures made in the original Form 10-Q.

Pursuant to rule 406T of Regulation S–T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Act of 1934, as amended, and otherwise are not subject to liability under those sections.

Item 6.         EXHIBITS

Exhibit Number	Exhibit Description
31.1	Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance
101.SCH**	XBRL Taxonomy Extension Schema
101.CAL**	XBRL Taxonomy Extension Calculation
101.DEF**
101.LAB**	XBRL Taxonomy Extension Labels
101.PRE**	XBRL Taxonomy Extension Presentation

** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	NATURAL HEALTH TRENDS CORP.
Date: November 21, 2011	/s/ Timothy S. Davidson
	Timothy S. Davidson
	Senior Vice President and Chief Financial Officer
	(Principal Financial Officer)

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Note 3 - Stock-Based Compensation

3 Months Ended

Sep. 30, 2011

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

3. STOCK-BASED COMPENSATION

Stock-based compensation expense totaled approximately $38,000 and $22,000 for the three months ended September 30, 2010 and 2011, respectively, and approximately $140,000 and $57,000 for the nine months ended September 30, 2010 and 2011, respectively.  No tax benefits were attributed to the stock-based compensation because a valuation allowance was maintained for substantially all net deferred tax assets.

The following table summarizes the Company’s stock option activity:

	Shares		Wtd. Avg. Exercise Price		Wtd. Avg. Remaining Contractual Life		Aggregate Intrinsic Value1
Outstanding at December 31, 2010		22,500	$	1.80
Cancelled, forfeited or expired		–		–
Outstanding at September 30, 2011		22,500		1.80		0.1	$	–
Vested and expected to vest at September 30, 2011		22,500		1.80		0.1		–
Exercisable at September 30, 2011		22,500		1.80		0.1		–

1 Aggregate intrinsic value is defined as the positive difference between the current market value and the exercise price and is estimated using the closing price of the Company’s common stock on the last trading day of the periods ended as of the dates indicated (in thousands).

No stock options vested during the nine months ended September 30, 2010 and 2011.  As of September 30, 2011, no unrecognized stock-based compensation expense related to stock options is remaining.  All stock options outstanding at September 30, 2011 have an exercise price of $1.80 per share.

The following table summarizes the Company’s restricted stock activity:

	Shares			Wtd. Avg. Price at Date of Issuance
Outstanding at December 31, 2010		114,613		$	0.45
Granted		600,000			0.36
Vested		(185,137	)		0.38
Forfeited		(18,748	)		0.69
Outstanding at September 30, 2011		510,728			0.36

On May 12, 2011, the Company granted 600,000 shares of restricted stock under the 2007 Equity Incentive Plan to its executive officers, directors, and certain key employees.  The restricted stock vests quarterly on a pro rata basis over a three-year period.

As of September 30, 2011, total unrecognized stock-based compensation expense related to non-vested restricted stock was approximately $202,000, which is expected to be recognized over a weighted-average period of 2.4 years.

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Note 2 - Summary of Significant Accounting Policies

3 Months Ended

Sep. 30, 2011

Significant Accounting Policies [Text Block]

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and all of its majority-owned subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period.

The most significant accounting estimates inherent in the preparation of the Company’s financial statements include estimates associated with obsolete inventory and the fair value of acquired intangible assets, including goodwill, as well as those used in the determination of liabilities related to sales returns and income taxes.  Various assumptions and other factors prompt the determination of these significant estimates.  The process of determining significant estimates is fact specific and takes into account historical experience and current and expected economic conditions.  The actual results may differ materially and adversely from the Company’s estimates.  To the extent that there are material differences between the estimates and actual results, future results of operations will be affected.

Reclassification

Certain balances have been reclassified in the prior year consolidated financial statements to conform to current year presentation.

Income Taxes

The Company recognizes income taxes under the liability method of accounting for income taxes.  Deferred income taxes are recognized for differences between the financial reporting and tax bases of assets and liabilities at enacted statutory tax rates in effect for the years in which the differences are expected to reverse.  Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be ultimately realized.

     The Company and its subsidiaries file income tax returns in the United States, various states, and foreign jurisdictions.  The Company is no longer subject to U.S. federal income tax examinations for years prior to 2007, and is no longer subject to state income tax examinations for years prior to 2006.  No jurisdictions are currently examining any income tax returns of the Company or its subsidiaries.

Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued expenses, approximate fair value because of their short maturities.  The carrying amount of the noncurrent restricted cash approximates fair value since, absent the restrictions, the underlying assets would be included in cash and cash equivalents.

Accounting standards specify a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable.  Observable inputs reflect data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions.  These two types of inputs have created the following fair-value hierarchy:

●     Level 1 – quoted prices in active markets for identical assets or liabilities;

●     Level 2 – inputs, other than the quoted prices in active markets, that are observable either directly or indirectly;

●     Level 3 – unobservable inputs based on the Company’s own assumptions.   

Accounting standards permit companies, at their option, to choose to measure many financial instruments and certain other items at fair value.  The Company has elected to not fair value existing eligible items.

Revenue Recognition

Product sales are recorded when the products are shipped and title passes to independent distributors.  Product sales to distributors are made pursuant to a distributor agreement that provides for transfer of both title and risk of loss upon our delivery to the carrier that completes delivery to the distributors, which is commonly referred to as “F.O.B. Shipping Point.”  The Company primarily receives payment by credit card at the time distributors place orders.  Amounts received for unshipped product are recorded as deferred revenue.  The Company’s sales arrangements do not contain right of inspection or customer acceptance provisions other than general rights of return.

Actual product returns are recorded as a reduction to net sales.  The Company estimates and accrues a reserve for product returns based on its return policies and historical experience.

Enrollment package revenue, including any nonrefundable set-up fees, is deferred and recognized over the term of the arrangement, generally twelve months.  Enrollment packages provide distributors access to both a personalized marketing website and a business management system.  No upfront costs are deferred as the amount is nominal.

Shipping charges billed to distributors are included in net sales.  Costs associated with shipments are included in cost of sales.

Various taxes on the sale of products and enrollment packages to distributors are collected by the Company as an agent and remitted to the respective taxing authority.  These taxes are presented on a net basis and recorded as a liability until remitted to the respective taxing authority.

Selling, General and Adminstrative Expenses

During 2011 the Company successfully negotiated and entered into agreements with certain legacy and on-going vendors to settle prior outstanding payable balances.  The impact of such agreements to settle outstanding payable balances was $220,000 and $482,000 less than carrying value during the three and nine months ended September 30, 2011, respectively, which was immediately recognized as a credit to selling, general and administrative expenses upon settlement.

Income Per Share

Basic income per share is computed by dividing net income applicable to common stockholders by the weighted-average number of common shares outstanding during the period.  Diluted income per share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents, consisting of non-vested restricted stock and shares that might be issued upon the exercise of outstanding stock options and warrants and the conversion of preferred stock.

The dilutive effect of non-vested restricted stock, stock options and warrants is reflected by application of the treasury stock method.  Under the treasury stock method, the amount the employee must pay for exercising stock options, the amount of compensation cost for future service that the Company has not yet recognized, and the amount of tax benefit that would be recorded in additional paid-in capital when the award becomes deductible are assumed to be used to repurchase shares.  The potential tax benefit derived from exercise of non-qualified stock options has been excluded from the treasury stock calculation as the Company is uncertain that the benefit will be realized.

The following tables illustrate the computation of basic and diluted income per share for the periods indicated (in thousands, except per share data):

	Three Months Ended September 30,
	2010								2011
	Loss (Numerator)			Shares (Denominator)		Per Share Amount			Income (Numerator)		Shares (Denominator)		Per Share Amount
Basic EPS:
Net income (loss) attributable to common stockholders of Natural Health Trends	$	(746	)		10,536	$	(0.07	)	$	1,629		10,732	$	0.15
Effect of dilutive securities:
Non-vested restricted stock					–							166
Diluted EPS:
Net income (loss) attributable to common stockholders of Natural Health Trends plus assumed conversions	$	(746	)		10,536	$	(0.07	)	$	1,629		10,898	$	0.15

	Nine Months Ended September 30,
	2010								2011
	Loss (Numerator)			Shares (Denominator)		Per Share Amount			Income (Numerator)		Shares (Denominator)		Per Share Amount
Basic EPS:
Net income (loss) attributable to common stockholders of Natural Health Trends	$	(2,092	)		10,480	$	(0.20	)	$	1,818		10,669	$	0.17
Effect of dilutive securities:
Non-vested restricted stock					–							30
Diluted EPS:
Net income (loss) attributable to common stockholders of Natural Health Trends plus assumed conversions	$	(2,092	)		10,480	$	(0.20	)	$	1,818		10,699	$	0.17

In periods where losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.  In periods where income is reported, certain non-vested restricted stock is anti-dilutive upon applying the treasury stock method since the amount of compensation cost for future service results in the hypothetical repurchase of shares exceeding the actual number of shares to be vested.  Other common stock equivalents are also anti-dilutive since the average market price of the related common stock for the period exceeds the exercise price.

The following securities were not included for the time periods indicated as their effect would have been anti-dilutive:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2010		2011		2010		2011
Options to purchase common stock		27,500		22,500		27,500		22,500
Warrants to purchase common stock		3,704,854		3,704,854		3,704,854		3,704,854
Non-vested restricted stock		339,296		–		412,112		20,415
Convertible preferred stock		138,400		138,400		138,400		138,400

Options and warrants to purchase 22,500 and 3,704,854 shares of common stock, respectively, were outstanding at September 30, 2011.  Such options expire on November 17, 2011.  The warrants have expirations through April 21, 2015.

Recently Issued and Adopted Accounting Pronouncements

In September 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-08, Intangibles—Goodwill and Other (Topic 350) — Testing Goodwill for Impairment, to allow entities to use a qualitative approach to test goodwill for impairment.  ASU 2011-08 permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.  If it is concluded that this is the case, it is necessary to perform the currently prescribed two-step goodwill impairment test.  Otherwise, the two-step goodwill impairment test is not required.  ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 31, 2011.  Early adoption is permitted.  The Company is currently evaluating the impact of adopting ASU 2011-08 on its consolidated financial statements.

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220)—Presentation of Comprehensive Income, to require an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements.  ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of equity.  ASU 2011-05 is effective for interim and annual financial periods beginning after December 15, 2011.  Early adoption is permitted.  The Company does not expect adoption of this standard to have a material impact on its consolidated financial statements.

In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. ASU 2011-04 provides a consistent definition of fair value and ensures that the fair value measurement and disclosure requirements are similar between U.S. GAAP and International Financial Reporting Standards. ASU 2011-04 changes certain fair value measurement principles and enhances the disclosure requirements particularly for level 3 fair value measurements. This guidance will be effective for interim and annual reporting periods beginning after December 15, 2011, and will be applied prospectively. The Company is currently evaluating the impact of adopting ASU 2011-04, but believes there will be no significant impact on its consolidated financial statements.

Other recently issued accounting pronouncements did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

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Consolidated Balance Sheets (USD $) In Thousands	Sep. 30, 2011	Dec. 31, 2010
Current assets:
Cash and cash equivalents	$ 1,727	$ 648
Restricted cash	496	422
Accounts receivable	91	105
Inventories, net	1,105	751
Other current assets	576	639
Total current assets	3,995	2,565
Property and equipment, net	131	203
Goodwill	1,764	1,764
Intangible assets, net	0	200
Restricted cash	217	225
Other assets	237	406
Total assets	6,344	5,363
Current liabilities:
Accounts payable	2,452	3,115
Income taxes payable	325	330
Accrued distributor commissions	1,031	723
Other accrued expenses	1,086	1,792
Deferred revenue	1,458	1,029
Deferred tax liability	177	178
Advance from related party	123	4
Other current liabilities	1,046	1,013
Total current liabilities	7,698	8,184
Commitments and contingencies	0	0
Natural Health Trends stockholders’ deficit:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; 1,761,900 shares designated Series A convertible preferred stock, 138,400 shares issued and outstanding at December 31, 2010 and September 30, 2011, aggregate liquidation value of $308	124	124
Common stock, $0.001 par value; 50,000,000 shares authorized; 10,725,899 and 11,306,323 shares issued and outstanding at December 31, 2010 and September 30, 2011, respectively	11	11
Additional paid-in capital	80,471	80,414
Accumulated deficit	(81,813)	(83,643)
Accumulated other comprehensive income (loss):
Foreign currency translation adjustments	(39)	366
Total Natural Health Trends stockholders’ deficit	(1,246)	(2,728)
Noncontrolling interest	(108)	(93)
Total stockholders’ deficit	(1,354)	(2,821)
Total liabilities and stockholders’ deficit	$ 6,344	$ 5,363

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Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ 1,821	$ (2,083)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization of property and equipment	81	367
Amortization of intangibles	200	600
Stock-based compensation	57	140
Loss on disposal of property and equipment		35
Deferred income taxes	(1)
Changes in assets and liabilities:
Accounts receivable	12	(1)
Inventories, net	(362)	201
Other current assets	72	499
Other assets	170	423
Accounts payable	(661)	863
Income taxes payable	(15)	(2)
Accrued distributor commissions	318	88
Other accrued expenses	(706)	17
Deferred revenue	418	(1,521)
Other current liabilities	33	(20)
Net cash provided by (used in) operating activities	1,437	(394)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment, net	(7)	1
Decrease (increase) in restricted cash	(72)	80
Net cash provided by (used in) investing activities	(79)	81
CASH FLOWS FROM FINANCING ACTIVITIES
Advance from related party	233
Repayment to related party	(114)
Dividend paid to noncontrolling interest		(62)
Net cash provided by (used in) financing activities	119	(62)
Effect of exchange rates on cash and cash equivalents	(398)	(476)
Net increase (decrease) in cash and cash equivalents	1,079	(851)
CASH AND CASH EQUIVALENTS, beginning of period	648	1,552
CASH AND CASH EQUIVALENTS, end of period	$ 1,727	$ 701

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Note 1 - Nature of Operations and Basis of Presentation

3 Months Ended

Sep. 30, 2011

Business Description and Basis of Presentation [Text Block]

1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Nature of Operations

Natural Health Trends Corp. (the “Company”), a Delaware corporation, is an international direct-selling and e-commerce company headquartered in Dallas, Texas. Subsidiaries controlled by the Company sell personal care, wellness, and “quality of life” products under the “NHT Global” brand.  In most markets, we sell our products to an independent distributor network that either uses the products themselves or resells them to consumers.

Our majority-owned subsidiaries have an active physical presence in the following markets:  North America; Greater China, which consists of Hong Kong, Taiwan and China; Russia; South Korea; Japan; and Europe, which consists of Italy and Slovenia.  In July 2009, the Company activated an engagement with a service provider in Russia to provide storage, distribution and order processing services.

Basis of Presentation

The unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.  As a result, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted.  In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of the Company’s financial information for the interim periods presented.  The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the fiscal year.  These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our 2010 Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (SEC) on November 14, 2011.

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Consolidated Balance Sheets (Parentheticals) (USD $) In Thousands, except Share data	Sep. 30, 2011	Dec. 31, 2010
Preferred stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Preferred stock, aggregate liquidation value (in Dollars)	$ 308
Common stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	11,306,323	10,725,899
Common stock, shares outstanding	11,306,323	10,725,899
Total [Member]
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares designated Series A convertible preferred stock	5,000,000	5,000,000
Series A Convertible Preferred Stock [Member]
Preferred stock, shares authorized	1,761,900	1,761,900
Preferred stock, shares designated Series A convertible preferred stock	1,761,900	1,761,900
Preferred stock, shares issued	138,400	138,400
Preferred stock, shares outstanding	138,400	138,400

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Document And Entity Information	9 Months Ended
	Sep. 30, 2011	Nov. 07, 2011
Document and Entity Information [Abstract]
Entity Registrant Name	NATURAL HEALTH TRENDS CORP
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		11,326,323
Amendment Flag	false
Entity Central Index Key	0000912061
Entity Current Reporting Status	No
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Sep. 30, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q3

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Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Per Share data	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Net sales	$ 10,562	$ 5,216	$ 22,945	$ 17,384
Cost of sales	2,536	1,565	6,042	5,075
Gross profit	8,026	3,651	16,903	12,309
Operating expenses:
Distributor commissions	4,166	2,081	8,642	6,313
Selling, general and administrative expenses (including stock-based compensation expense of $38 and $22 during the three months ended September 30, 2010 and 2011, respectively, and $140 and $57 during the nine months ended September 30, 2010 and 2011, respectively)	2,613	2,194	6,479	7,586
Depreciation and amortization	23	249	281	967
Total operating expenses	6,802	4,524	15,402	14,866
Income (loss) from operations	1,224	(873)	1,501	(2,557)
Other income, net:
Gain on foreign exchange	428	141	355	421
Interest income	1		3	7
Interest expense	(13)	(1)	(14)	(11)
Other	9	24	12	69
Total other income, net	425	164	356	486
Income (loss) before income taxes	1,649	(709)	1,857	(2,071)
Income tax provision	16	29	36	12
Net income (loss)	1,633	(738)	1,821	(2,083)
Plus: Net (income) loss attributable to the noncontrolling interest		(4)	9	3
Net income (loss) attributable to Natural Health Trends	1,633	(742)	1,830	(2,080)
Preferred stock dividends	(4)	(4)	(12)	(12)
Net income (loss) attributable to common stockholders of Natural Health Trends	$ 1,629	$ (746)	$ 1,818	$ (2,092)
Income (loss) per share of Natural Health Trends – basic and diluted (in Dollars per share)	$ 0.15	$ (0.07)	$ 0.17	$ (0.20)
Weighted-average number of shares outstanding – basic (in Shares)	10,732	10,536	10,669	10,480
Weighted-average number of shares outstanding – diluted (in Shares)	10,898	10,536	10,699	10,480

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Note 6 - Related Party Transactions

3 Months Ended

Sep. 30, 2011

Related Party Transactions Disclosure [Text Block]

6. RELATED PARTY TRANSACTIONS

George Broady, a director of the Company and owner of more than 5% of its outstanding common stock, advanced $2,500 on January 13, 2011, and $30,000 on March 14, 2011 to settle certain claims against the Company.  The aggregate amount of these advances, plus a $4,000 advance on December 17, 2010, totaling $36,500 was repaid on August 8, 2011. 

Additionally, Mr. Broady advanced $100,000 to the Company on February 28, 2011 and an additional $100,000 on March 14, 2011.  The Company has agreed to pay Mr. Broady interest of 9% per annum on the aggregate amount of the advances.  The Company repaid Mr. Broady principal of approximately $128,000 during the third and fourth quarters of 2011, and expects to repay the balance of the principal and interest before the end of 2011.

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Note 5 - Contingencies

3 Months Ended

Sep. 30, 2011

Commitments and Contingencies Disclosure [Text Block]

5.      CONTINGENCIES

Legal Matters

On or about January 4, 2010, Steve Francisco sued the Company’s subsidiary, NHT Global, Inc., in the Superior Court for Orange County, California, in Case No. 30-2010-00333395, styled Steve Francisco, Starsearch International, LLC, and Healthlik Resources, LLC v. NHT Global, Inc., eKaire.com, Inc. and Does 1 through 20.  Mr. Francisco sought damages for the alleged breach of a prior settlement agreement under which NHT Global had agreed to pay Mr. Francisco payments of not less than $10,000 and not more than $30,000 per month unless and until Mr. Francisco violated NHT Global’s policies and procedures.  On March 12, 2009, NHT Global had terminated payments to Mr. Francisco for violating the policies and procedures.  Mr. Francisco sought recovery of $100,000 in damages accrued through the date of filing of the lawsuit and an order requiring NHT Global to continue making the monthly payments required by the settlement agreement, as well as an accounting, attorneys’ fees and costs.  Mr. Francisco’s lawsuit also sought payment of certain promissory notes in the aggregate amount of $102,000 made by eKaire.com, Inc., a former subsidiary no longer affiliated with the Company, who separately answered the lawsuit.  Trial of this lawsuit was set for February 14, 2011.  On February 14, 2011, the parties announced to the court that they had reached an oral settlement agreement that was pending documentation.  On or about March 8, 2011, NHT Global, Inc. and the plaintiffs in this lawsuit signed a Confidential Settlement Agreement and Mutual Release, containing a mutually agreeable, confidential settlement of the case.

On or about June 9, 2010, the Company vacated the premises it leased at 2050 Diplomat Drive, Dallas, Texas, so that it could be leased to a new tenant.  The landlord, CLP Properties Texas, LP (the “Landlord”), terminated the lease as of June 17, 2010 and entered into a lease with a new tenant.  On or about August 17, 2010, the Company received the Landlord’s written demand for payment of $413,000 for unpaid rent and other charges due under the lease through June 17, 2010.  On September 30, 2010, CLP Properties Texas, LP, sued the Company in the 116th Judicial District Court, Dallas County, Texas, in Cause No. 10-13043, styled CLP Properties Texas, LP v. Natural Health Trends Corp. The lawsuit alleged breach of the lease and sought actual damages, interest, costs and attorneys’ fees.  The Company answered with a general denial, and gave notice to the Landlord that it intended to assert an affirmative defense of failure to mitigate damages.  On or about June 2, 2011, the parties signed a Settlement Agreement under which the Company agreed to pay the Landlord $50,000 by June 3, 2011 and an additional $75,000 by September 15, 2011.  These amounts were timely paid, and the lawsuit was dismissed with prejudice.

Currently, there is no other litigation pending against the Company other than as disclosed in the paragraphs above. From time to time, the Company may become a party to litigation and subject to claims incident to the ordinary course of the Company’s business. Although the results of such litigation and claims in the ordinary course of business cannot be predicted with certainty, the Company believes that the final outcome of such matters will not have a material adverse effect on the Company’s business, results of operations or financial condition. Regardless of outcome, litigation can have an adverse impact on the Company because of defense costs, diversion of management resources and other factors.

Consumer Indemnity

As required by the Door-to-Door Sales Act in South Korea, the Company maintains insurance for consumer indemnity claims with a mutual aid cooperative by possessing a mutual aid contract with Mutual Aid Cooperative & Consumer (the “Cooperative”).  The contract secures payment to distributors in the event that the Company is unable to provide refunds to distributors.  Typically, requests for refunds are paid directly by the Company according to the Company’s normal Korean refund policy, which requires that refund requests be submitted within three months.  Accordingly, the Company estimates and accrues a reserve for product returns based on this policy and its historical experience.  Depending on the sales volume, the Company may be required to increase or decrease the amount of the contract.  The maximum potential amount of future payments the Company could be required to make to address actual distributor claims under the contract is equivalent to three months of rolling sales.  At September 30, 2011, non-current other assets include KRW 100 million (USD $85,000) underlying the contract, which can be utilized by the Cooperative to fund any outstanding distributor claims.  The Company believes that the likelihood of utilizing these funds to provide for distributors claims is remote.

Registration Payment Arrangements

Pursuant to the agreement with the original investors and the placement agent in the May 2007 financing for the sale of 1,759,307 shares of Series A preferred stock and warrants representing the right to purchase 1,759,307 shares of common stock, the Company is obligated for a specified period of time to maintain the effectiveness of the registration statement that was filed with the SEC covering the resale of the shares of common stock issuable upon the exercise of warrants issued in the financing.  On March 18, 2010, the Company filed a post-effective amendment withdrawing unsold shares from registration.  If the Company fails to file a new registration statement, and maintain its effectiveness , then it may be liable for payment in cash of an amount equal to 2% of the product of $1.70 times the number of shares of Series A preferred stock sold in the financing to the relevant purchasers, or up to approximately $60,000, but only if the quoted closing price of the Company’s common stock exceeds the warrant exercise price of the warrants.  The exercise price of the warrants was $3.80 per share until May 3, 2010, $4.35 per share until November 3, 2011, and currently is $5.00 per share until May 4, 2013, when the warrants expire.

Pursuant to the agreement with the investors in the Company’s October 2007 financing of variable rate convertible debentures having an aggregate face amount of $4,250,000, seven-year warrants to purchase 1,495,952 shares of the Company’s common stock, and one-year warrants to purchase 1,495,952 shares of the Company’s common stock, the Company was obligated to (i) file a registration statement covering the resale of the maximum number of Registrable Securities (as defined) that is permitted by SEC Guidance (as defined) prior to November 18, 2007, (ii) cause the registration statement to be declared effective within certain specified periods of time and (iii) maintain the effectiveness of the registration statement until all Registrable Securities have been sold, or may be sold without volume restrictions pursuant to Rule 144(k) under the Securities Act.  The Company timely filed that registration statement covering the shares of common stock underlying the debentures, which have been redeemed, and the one-year warrants, which have expired.  At the time, the 1,495,952 shares of common stock underlying the seven-year warrants, and 149,595 shares of common stock underlying certain five-year warrants issued to the placement agent in the transaction, were not deemed Registrable Securities and were not included in the registration statement.  If they are subsequently deemed Registrable Securities and we fail to file a new registration statement covering them, then the warrants may be exercised by means of a cashless exercise. The maximum number of shares that could be required to be issued upon exercise of the warrants (whether on a cashless basis or otherwise) is limited to the number of shares indicated on the face of the warrants.

As of September 30, 2011, no contingent obligations have been recognized under registration payment arrangements.

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Consolidated Statements of Operations (Unaudited) (Parentheticals) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Stock-based compensation expense included in selling, general, and administrative expense	$ 22	$ 38	$ 57	$ 140

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Note 4 - Comprehensive Income (Loss) (In Thousands)

3 Months Ended

Sep. 30, 2011

Comprehensive Income (Loss) Note [Text Block]

4.     COMPREHENSIVE INCOME (LOSS) (In Thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2011			2010			2011
Net income (loss)	$	(738	)	$	1,633		$	(2,083	)	$	1,821
Other comprehensive loss, net of tax:
Foreign currency translation adjustment		(123	)		(466	)		(457	)		(405	)
Comprehensive income (loss)		(861	)		1,167			(2,540	)		1,416
Plus:  Comprehensive (income) loss attributable to the noncontrolling interest		(4	)		–			3			9
Comprehensive income (loss) attributable to Natural Health Trends	$	(865	)	$	1,167		$	(2,537	)	$	1,425