Wednesday, August 11, 2010

USANA's Active Associate Per Territory, Evidence of Illegal Recruiting in Mainland China, and Misleading Philippines Associate Figures.

The following table shows the number of reported Active Associates for USANA Health Sciences, Inc. 2nd quarter financial results in 2007 and 2010. Also included is a ratio of the number of USANA active associates to the population for the given territory. The results of this chart reveal what I believe is strong evidence that supports the notion that illegal associate recruiting is taking place in mainland China. I've been saying this for quite a while now, but the SEC needs to investigate this matter.

Territory 06/30/07 07/03/10 USANA Associates Per Citizen
North American Region
United States 63,000 57,000 1 : 5,436
Canada 27,000 26,000 1 : 1,315
Mexico 14,000 12,000 1 : 9,268
SE Asia/Pacific Region
Australia-New Zealand 21,000 18,000 1 : 1,476
Singapore 8,000 5,000 1 : 998
Malaysia 11,000 14,000 1 : 2,022
Philippines 0 7,000 1 : 13,140
E Asia Region
Hong Kong 13,000 52,000 1 : 135
Taiwan 15,000 11,000 1 : 2,095
N Asia Region
Japan 4,000 4,000 1 : 35,855
South Korea 2,000 4,000 1 : 12,190

1. It is very interesting that over the past 3 years Hong Kong gained 39,000 active associates, which is a 300% increase. How is this possible when the rest of USANA's markets did so poorly? And to top it off, Hong Kong has 1 USANA associate for every 135 citizens! This is a huge red flag and should easily prompt an SEC investigation into the illegal recruiting of Chinese Nationals. USANA is forbidden to recruit associates from mainland China because China has banned MLM from operating in their country. Any recruiting of people from mainland China breaks foreign laws. USANA is fully aware of the associates they are recruiting from mainland China. In a leaked USANA internal document from October 2009, USANA admitted that a "large sum" of product ends up in mainland China. USANA has never disclosed this information to shareholders. Besides, according to a long time USANA distributor, over 5 years ago USANA already had some problems with about 1400 of their distributors that were all Chinese Nationals who joined illegally, so it isn't like this would be the first time.

2. Also revealed by this chart is the fact that after three years USANA is losing active associates in most of their territories. Are shareholders aware of just how saturated USANA's markets are? USANA only reports in their SEC filings the active associate results for each region (North American, E. Asia, N. Asia, SE Asia). Investors have no idea how bad each of USANA's markets are doing because they are grouped together as a whole. After three years, US down 6000, Canada down 1000, Mexico down 2000, Australia/New Zealand down 3000, Singapore down 3000, Taiwan down 4000. Japan remains the same. Malaysia went up 3000 and South Korea went up 2000. The Philippines have 7000, but didn't exist 3 years ago. And finally, Hong Kong went up 39,000! Red Flag???

I believe the massive recruiting situation in Hong Kong and this large sum of product that is being sent to mainland China are signs of fraudulent activity. It is also evident that USANA's management is fully aware of the situation since they acknowledge it in their internal document. Without this situation in Hong Kong, USANA's stock would be in the toilet.

3. Another thing to point out are the number of active associates in the Philippines. If stockholders followed USANA's press releases after the Philippines market opened, they would expect the number to be much higher!

USANA Q1-2009
"the addition of 5,000 Associates in the Company’s newest market, the Philippines"


USANA Q2-2009
"Additionally, the Company’s newest market, the Philippines, added 5,000 Associates during the quarter." 

USANA Q3-2009
"Additionally, the Company’s newest market, the Philippines, added 6,000 Associates."

USANA Q4-2009
"Additionally, the Company's newest market, the Philippines, added 4,000 Associates."

USANA quit reporting the Philippines numbers during Q1 and Q2 of 2010, and never mentions any increase or decrease in the Philippines market. So shareholders and distributors are left to believe USANA has at least 20,000 active associates in the Philippines. However, according to my chart above, USANA only has 7,000 active associates in that market! What kind of management runs a publicly traded company with such irregularities like this?

Why is USANA management trying to fool investors? Is it so the stock price will rise? What does the SEC think about all of this? Someone should ask them.

6 comments:

  1. You need to be thanked for the services that you are providing to rational people. The same people that won't fall for Usana's bullshit. The same people who's friends and family are getting hurt because of Usana.

    ReplyDelete
  2. I hope MLM gets banned in our country. They really steal our money away. In fact, they brainwash us.

    ReplyDelete
  3. USANA has been actively recruiting Chinese mainlanders since 2005, when it allows Chinese Mainlanders to sign up as distributors with their Chinese ID and fake Hong Kong address. For more info, email danliangzfr@telus.net

    ReplyDelete
  4. As of Oct 2, 2010, active assoicates in Greater China reached 89,000, (38%). Sales in Greater China reached 32.2% of USANA global sales, ranked first in regional sales. USA sales accounted for 28.3%.

    http://www.marketwatch.com/story/usana-health-sciences-announces-record-third-quarter-2010-financial-results-2010-10-26?reflink=MW_news_stmp

    ReplyDelete
  5. Active associates in Hong Kong reached 70,000 by the end of 2010.

    -- from USANA earning call

    http://seekingalpha.com/article/251794-usana-health-sciences-ceo-discusses-q4-2010-results-earnings-call-transcript?source=yahoo

    "...Notably, active associates in Hong Kong increased 35,000, or 100% over that market’s prior year..."

    ReplyDelete
  6. Thanks for the comments.
    There are good associates and there are cheats in every company.
    Shaun Kwong
    USANA Malaysia

    ReplyDelete

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