About 85 Percent of USANA's Philippine Associates Quit and The Hidden Information in USANA's Regional Data.

USANA Health Sciences made a couple blunders in the last couple days which I believe reveals an 85% dropout figure for the Philippines market which is not being disclosed to shareholders. USANA wrote a press release on November 12, 2013 regarding typhoon Haiyan. The following is a quote from that press release, which is referenced directly from USANA's website (and still there as I write this):

"We have an incredible USANA family of more than 175,000 strong in the Philippines," said Dan Macuga, USANA chief communications officer. "Their courage and goodness inspires our global team. That's why we feel it so important to help them and all those suffering in the aftermath of Super Typhoon Haiyan." - USANA Investor Relations

I wrote about this 175,000 number on my blog a couple days ago and low an behold USANA tried to change the press release some news organizations got by changing one of their own quotes! Some news agencies now have the same press release but with the following change:

"We have an incredible USANA family, 25,000 Distributors strong in the Philippines," said Dan Macuga, USANA chief communications officer. "Their courage and goodness inspires our global team. That's why we feel it so important to help them and all those suffering in the aftermath of Super Typhoon Haiyan." - Prnewswire

How is it that USANA can change a QUOTE that one of their executives made? It's a quote for goodness sake. I want to thank USANA for making two fantastic mistakes.

1. USANA revealed that the total number of distributors they have recruited in the Philippines over the last 5 years is around 175,000.
2. USANA reveals that there are only 25,000 active associates currently in the Philippines.

So 85% of the Philippine USANA distributors no longer purchase USANA product or participate in the business opportunity. My previous estimate two days ago was 17,000 active associates or a 90% dropout figure.

Here is the key information shareholders should understand here:

If the Philippines has 25,000 active associates, and the East Asia Pacific region has 60,000 active associates, then that means only 35,000 active associates can account for Australia, New-Zealand, Singapore, Malaysia, and Thailand.

Let me show the last time USANA disclosed active associate numbers by the territory: - USANAWatchDog Blog

Active distributors in East Asia Pacific for Second Quarter 2010 (3 years ago)

Australia and New-Zealand =18,000

Singapore = 5,000

Malaysia = 14,000

Philippines = 7,000

Thailand = Non-existent

This totals to 44,000 active associates.

Fast forward to today: Active distributors in East Asia Pacific for Second Quarter 2013 (today)

USANA states in their SEC filing that East Asia Pacific has 60,000 active associates.

Australia and New-Zealand =14,000 *

Singapore = 3,000 *

Malaysia = 12,000 *

Philippines = 25,000 (recently revealed in press release)

Thailand = 4,000 *

* My guestimate in order to make the numbers add up to the reported 60,000 for the region.

Since USANA no longer discloses active associate numbers for each market they are in, investors are left in the dark about the true operations of USANA. The markets were grouped into “regions” and began only reporting regional numbers.

Based on my guestimate, the following represents the percent change over the last 3 years for those markets:

Australia and New-Zealand = 22% DECLINE

Singapore = 40% DECLINE

Malaysia = 14% DECLINE

Philippines = 257% INCREASE

Thailand = new market

USANA's True Health Foundation Donates $20,000 to Victims in Philippines after Typhoon Haiyan Hit. USANA Also Reveals 175,000 Associates In Philippines.

USANA Health Sciences announced in a press release on November 12, 2013 that they donated $20,000 through their True Health Foundation to help the victims of typhoon Haiyan that decimated the Philippines. This is a good thing and I have no problem with that. In fact, I want to commend USANA on their donation. However, USANA made one very interesting statement.

"We have an incredible USANA family of more than 175,000 strong in the Philippines," said Dan Macuga, USANA chief communications officer. "Their courage and goodness inspires our global team. That's why we feel it so important to help them and all those suffering in the aftermath of Super Typhoon Haiyan." - USANA Press Release

Dan Macuga just revealed that USANA has 175,000 associates in the Philippines since they opened there in early 2009. Would USANA care to disclose the current number of "active associates" for their Philippines market? We know it can't be more than the total East Asia Pacific region which they claim has 60,000 active associates as of the end of Q2-2013. I'll remind you that East Asia Pacific is made up of the following territories: Australia, New Zealand, Singapore, Malaysia, the Philippines, and Thailand.

I believe USANA's Philippines active associate numbers for their latest quarter would be somewhere around 17,000. This would reveal that 90% of their associates stopped purchasing USANA product and quit the business opportunity. This should be a clear indication of the real effectiveness of USANA's products, the MLM business model, and how much their associates really love popping the pills. Most of USANA's markets are saturated and unable to recruit more associates than drop out.

Investors and stock analysts should demand that USANA disclose the active associate numbers for each territory rather than just 3 regions. USANA used to disclose that information but no longer feels their shareholders deserve to see the whole picture. Stock analysts have repeatedly asked USANA the number of active Babycare Associates during conference calls and every time USANA refuses to disclose the figures.

It seems USANA would rather operate their publicly traded company in an Enron sort of fashion. Only disclose what doesn't reveal the truth about the numbers.

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.