What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-03-13 compared with 2025-03-14 · 157 added, 192 removed, 766 unchanged (31% of the section changed)

42 unchanged sentences

Short-term investments (including $ 0 and $ 11,128 associated with variable interest entity at December 31, 2025 and December 31, 2024, respectively)

28,343 26,343

Accounts receivable, net of allowance for bad debt of $ 758 and $ 392 at December 31, 2024 and December 31, 2023, respectively

Accounts receivable, net of allowance for bad debt of $ 581 and $ 758 at December 31, 2025 and December 31, 2024, respectively (including $ 4 and $ 0 associated with variable interest entity at December 31, 2025 and December 31, 2024, respectively)

36,402 26,736

8 unchanged sentences

Operating right-of-use assets 40,299 40,628

Deferred tax assets

Other non-current assets (including $ 68 and $ 34 associated with variable interest entity at December 31, 2025 and December 31, 2024, respectively)

8 unchanged sentences

Income taxes payable (including $ 0 and $ 3 associated with variable interest entity at December 31, 2025 and December 31, 2024, respectively)

Deferred revenue (including $ 0 and $ 116 associated with variable interest entity at December 31, 2024 and December 31, 2023, respectively)

Deferred revenue

Long-term debt, current portion (including $ 12,941 and $ 1,179 associated with variable interest entity at December 31, 2025 and December 31, 2024, respectively)

12 unchanged sentences

stockholders’ equity

Preferred stock, $ 0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding, as of December 31, 2024 and December 31, 2023

Preferred stock, $ 0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding, as of both December 31, 2025 and December 31, 2024

Common stock, $ 0.001 par value, 100,000,000 shares authorized, 20,122,505 and 19,962,131 shares issued and outstanding, respectively, as of December 31, 2025, and 20,059,505 and 20,036,505 shares issued and outstanding, respectively, as of December 31, 2024

Additional paid in capital 90,939 89,457

Treasury stock, $ 0.001 par value, 23,000 shares as of both December 31, 2024 and December 31, 2023

Treasury stock, 0.001 par value, 160,374 and 23,000 shares as of December 31, 2025 and December 31, 2024 respectively

( 3,246 ) ( 248 )

18 unchanged sentences

77,371 71,530

Impairment expense and loss, net, on disposal of machinery

(Gain) loss, net, on disposal of machinery and impairment expense

( 493 ) 2,752

Total operating expenses 130,722 126,568

2 unchanged sentences

Rental income (including $ 1,516 and $ 1,038 associated with variable interest entity for the year ended December 31, 2025 and 2024, respectively)

Oth er income (expenses), net

Gain on foreign currency transactions

Interest income (including $ 470 and $ 606 a ssociated with variable interest entity for the year ended December 31, 2024 and 2023, respectively)

Other income, net

(Loss) gain on foreign currency transactions

( 1,543 ) 520

Interest income (including $ 586 and $ 470 associated with variable interest entity for the year ended December 31, 2025 and 2024, respectively)

Interest expense (including $ 1,966 and $ 2,062 associated with variable interest entity for the year ended December 31, 2025 and 2024, respectively)

30 unchanged sentences

Exercise of stock options 39,473 — — — 725 — 725 — 725

6,860 — — — 123 — 123 — 123

Distributions to shareholders, net of tax withholding

Global Wells noncontrolling membership interest redemption — — — — — ( 316 ) ( 316 ) ( 2,893 ) ( 3,209 )

Refund of Global Wells members' tax withholding payments

— — — — — 18 18 102 120

Noncontrolling interest tax withholding — — — — — — — ( 94 ) ( 94 )

Net income — — — — — 29,975 29,975 849 30,824

4 unchanged sentences

Issuance of common stock upon vesting of restricted stock units 46,800 — — — — — — — —

Repurchases of common stock, including excise tax

— — ( 137,374 ) ( 2,998 ) — — ( 2,998 ) — ( 2,998 )

Stock-based compensation — — — — 1,182 — 1,182 — 1,182

Exercise of stock options 16,200 — — — 300 — 300 — 300

Global Wells noncontrolling membership interest redemption — — — — — ( 316 ) ( 316 ) ( 2,893 ) ( 3,209 )

Refund of Global Wells members' tax withholding payments

— — — — — 18 18 102 120

Global Wells membership interest tax withholding — — — — — ( 14 ) ( 14 ) ( 363 ) ( 377 )

Net income — — — — — 31,478 31,478 1,186 32,664

15 unchanged sentences

Write-off of inventories

Impairment of deposits — 549

Write-off of vendor prepayment — 1,124

Impairment of operating right-of-use asset — 1,993

Loss, net, on disposal of machinery and equipment

Amortization of loan fees (including $ 62 and $ 57 associated with variable interest entity for the year ended December 31, 2024 and 2023, respectively)

(Gain) loss, net, on disposal of property and equipment ( 493 ) 759

Amortization of loan fees (including $ 62 associated with variable interest entity for both the year ended December 31, 2025 and 2024)

Accrued interest on certificates of deposit (including $ 0 and $ 50 associated with variable interest entity for the year ended December 31, 2025 and 2024, respectively)

( 50 ) ( 155 )

Stock-based compensation 1,182 2,065

2 unchanged sentences

Government grant income (including $ 33 and $ 187 associated with variable interest entity for the year ended December 31, 2025 and 2024, respectively)

( 70 ) ( 360 )

(Increase) decrease in operating assets

Accounts receivable (including $ 32 and $ 6 a ssociated with variable interest entity for the year ended December 31, 2024 and 2023, respectively)

Accounts receivable (including $ 4 and $ 32 associated with variable interest entity for the year ended December 31, 2025 and 2024, respectively)

( 9,834 ) 559

Inventories ( 11,947 ) ( 942 )

Prepaid expenses and other current assets (including $ 23 and $ 109 a ssociated with variable interest entity for the year ended December 31, 2024 and 2023, respectively)

Prepaid expenses and other current assets (including $ 255 and $ 23 associated with variable interest entity for the year ended December 31, 2025 and 2024, respectively)

( 1,343 ) 2,776

1 unchanged sentence

Increase (decrease) in operating liabilities

Accounts payable (including $ 47 and $ 60 as sociated with variable interest entity for the year ended December 31, 2024 and 2023, respectively)

Accrued expenses (includin g $ 102 and $ 34 as sociated with variable interest entity for the year ended December 31, 2024 and 2023, respectively)

Accounts payable (including $ 53 and $ 47 associated with variable interest entity for the year ended December 31, 2025 and 2024, respectively)

7,791 ( 260 )

Accrued expenses (including $ 46 and $ 102 associated with variable interest entity for the year ended December 31, 2025 and 2024, respectively)

Related party payable 1,542 ( 2,176 )

Income taxes payable (including $ 0 and 3 associated with variable interest entity for the year ended December 31, 2025 and 2024, respectively)

Deferred revenue (including $ 0 and $ 49 a ssociated with variable interest entity for the year ended December 31, 2024 and 2023, respectively)

( 281 ) ( 330 )

Deferred revenue ( 29 ) ( 281 )

Operating lease liabilities ( 10,254 ) ( 6,679 )

( 6,679 ) ( 4,642 )

Other liabilities

Other liabilities (including $ 66 and $ 0 associated with variable interest entity for the year ended December 31, 2025 and 2024, respectively)

Net cash provided by operating activities $ 33,815 $ 47,982

3 unchanged sentences

Proceeds from disposal of property and equipment 1,509 134

Payments for costs incurred from sale of machinery and equipment — ( 186 )

Deposits paid for joint venture investment — ( 2,900 )

Deposits refunded from joint venture investment — 6,900

Deposits refunded from cancelled machinery orders

Deposits paid for property and equipment ( 3,749 ) ( 3,134 )

Purchases of publicly-traded equity securities ( 451 ) 29

Proceeds from disposal of publicly-traded equity securities 503 —

Purchases of short-term investments (including $ 7,982 and $ 18,078 associated with variable interest entity for the year ended December 31, 2025 and 2024, respectively)

2 unchanged sentences

44,643 48,856

Net cash used in investing activities

Net cash provided by (used in) investing activities

$ 25,399 $ ( 5,855 )

Cash flows from financing activities

Proceeds from long-term debt (including $ 0 and 8,000 associated with variable interest entity for the year ended December 31, 2024 and 2023, respectively)

Payments for lender fees — ( 61 )

Payments on long-term debt (including $ 12,717 and $ 1,122 associated with variable interest entity for the year ended December 31, 2025 and 2024, respectively)

( 12,717 ) ( 1,122 )

Tax withholding on vesting of restricted stock units — ( 18 )

Payments for lender fees ( 147 ) —

Proceeds from line of credit 4,500 —

Repayments on line of credit ( 4,500 ) —

Proceeds from exercise of common stock options 300 725

Repurchases of common stock

Dividends paid to shareholders ( 36,100 ) ( 31,016 )

Distributions to shareholders, net of tax withholding (including $ 0 and $ 2,295 associated with variable interest entity for the year ended December 31, 2024 and 2023, respectively)

Payment for Global Wells noncontrolling membership interest redemption (including $ 2,010 and $ 0 associated with variable interest entity for the year ended December 31, 2024 and 2023, respectively)

Payment of Global Wells membership interest tax withholding (including $ 362 and $ 0 associated with variable interest entity for the year ended December 31, 2025 and 2024, respectively)

Payment of Global Wells noncontrolling membership interest redemption (including $ 0 and $ 2,010 associated with variable interest entity for the year ended December 31, 2025 and 2024, respectively)

Refund of Global Wells members' tax withholding payments (including $ 0 and $ 120 associated with variable interest entity for the year ended December 31, 2025 and 2024, respectively)

Payment of Global Wells noncontrolling membership interest redemption gain tax withholding (including $ 879 and $ 0 associated with variable interest entity for the year ended December 31, 2025 and 2024, respectively)

Net cash used in financing activities $ ( 52,918 ) $ ( 33,619 )

$ ( 33,619 ) $ ( 16,170 )

Net increase in cash and cash equivalents $ 6,296 $ 8,508

$ 8,508 $ 7,035

Cash and cash equivalents

Beginning of period $ 31,584 $ 23,076

$ 23,076 $ 16,041

End of period $ 37,880 $ 31,584

$ 31,584 $ 23,076

Supplemental disclosures of non-cash investing and financing activities:

Transfers from deposits to property and equipment $ 3,785 $ 3,708

$ 3,708 $ 10,463

Non-cash purchases of property and equipment $ 962 $ 122

Non-cash disposal of property and equipment $ 480 $ —

Non-cash excise tax on share repurchases $ 12 $ —

Supplemental disclosures of cash flow information:

Cash paid for income taxes $ 9,136 $ 10,969

$ 10,969 $ 11,765

Cash paid for interest $ 1,910 $ 2,031

4 unchanged sentences

Lollicup USA Inc.

(“Lollicup”) was incorporated in 2001 in California.

(“Lollicup”) was incorporated in 2001 in California and in October 2025 redomesticated to the State of Texas.

Karat Packaging Inc.

(“Karat Packaging”) was incorporated in 2018 in Delaware and became the parent company for Lollicup (collectively, the “Company”) through a share exchange with the shareholders of Lollicup.

The Company's are listed on the NASDAQ Global Market under the symbol "KRT".

The Company's common stock is listed on the NASDAQ Global Market under the symbol "KRT".

The Company is a manufacturer and distributor of single-use disposable products used in a variety of restaurant and foodservice settings.

7 unchanged sentences

In addition, the Company operates seven other distribution centers located in Puyallup, Washington;

Summerville, South Carolina;

Branchburg, New Jersey;

2 unchanged sentences

Mesa, Arizona;

and Sugar Land, Texas.

As described in Note 22 — Subsequent Events , the Company entered into a lease agreement on March 3, 2025 for an additional distribution center in Chino, California.

Sugar Land, Texas, and Chino, California.

Summary of Significant Accounting Policies

19 unchanged sentences

This segment consists of manufacturing and distribution of a broad portfolio of single-use products that are used to serve food and beverages and are available in plastic, paper, biopolymer-based, and other compostable forms.

It also consists of the distribution of certain specialty food and beverage products, such as syrup, boba, and coffee drinks, as well as restaurant

and warehouse supplies.

The Company’s long-lived assets are all located in the United States, and its revenues are almost entirely generated in the United States.

It also consists of the distribution of certain specialty food and beverage products, such as syrup, boba, and coffee drinks, as well as restaurant and warehouse supplies.

The Company’s long-lived assets are almost all located in the United States, and its revenues are almost entirely generated in the United States.

Earnings per Share:

32 unchanged sentences

Deposits are payments made for machinery and equipment as well as construction and improvement for the Company’s facilities.

During the year ended December 31, 2023, the Company recorded an impairment charge of $ 523,000 related to the cancellation of certain non-refundable equipment purchase commitments that it had previously paid deposits towards.

There were no deposit impairment charges recorded for the year ended December 31, 2024.

There were no deposit impairment charges recorded for the year ended December 31, 2025 and 2024.

Impairment of Long-lived Assets:

1 unchanged sentence

If such events or circumstances exist, an impairment test is performed which comprises of two steps.

The first step compares the carrying

amount of the asset to the sum of expected undiscounted future cash flows.

The first step compares the carrying amount of the asset to the sum of expected undiscounted future cash flows.

If the sum of expected undiscounted future cash flows exceeds the carrying amount of the asset, no impairment is taken.

If the sum of expected undiscounted future cash flows is less than the carrying amount of the asset, a second step is warranted and an impairment loss is measured as the amount by which the carrying amount of the asset exceeds its fair value calculated using the present value of estimated net future cash flows.

For the year ended December 31, 2025, management concluded that no impairment of long-lived assets

was required.

During the year ended December 31, 2024, the Company recorded an impairment charge against its operating right-of-use ("ROU") assets of $ 1,993,000 .

See Note 13 — Leases for further information about this impairment charge.

For the year ended December 31, 2023, management concluded that an impairment of long-lived assets was not required.

Business Combination and Goodwill:

9 unchanged sentences

Government Grants:

Both Lollicup and Global Wells had received certain government grants (the "Grants"), totaling $ 1,500,000 and $ 1,302,000 , respectively, as of December 31, 2023.

The Grants were provided to facilitate the Company's acquisition of land in Rockwall, Texas and the subsequent construction and operation of a facility (the “Facility”) in order to promote local business activity.

Both Lollicup and Global Wells had received certain government grants (the "Grants"), provided to facilitate the Company's acquisition of land in Rockwall, Texas and the subsequent construction and operation of a facility (the “Facility”) in order to promote local business activity.

The Grants comprised of $ 1,800,000 monetary grants and $ 1,002,000 non-monetary grants in the form of discount on the purchase price of the land acquisition price.

As of December 31, 2024, the Company had $ 70,000 in other current liabilities and $ 2,372,000 in other non-current liabilities related to the Grants on the consolidated balance sheet.

The Grants were subject to specific conditions, including maintaining a minimum tax value for the facility in Rockwall, Texas for five calendar years through 2024 (the “Required Period”), continuing operations at the Facility during the Required Period, employing a minimum number of full-time equivalent employees with a minimum average annual gross wage during the Required Period, and refraining from engaging in a pattern or practice of unlawful employment of aliens during the Required Period.

The Company determined the Grants to be grants related to assets, and elected to recognize the grant liability into income over the useful life of the Facility once the Grants had been received and there was reasonable assurance that both entities would comply with all grant conditions through the end of the Required Period.

For the year ended December 31, 2024, the Company recorded $ 360,000 of grant income as an offset to general and administrative expenses in the consolidated statement of income and expects that the $ 70,000 in other current liabilities and $ 2,372,000 in other non-current liabilities as of December 31, 2024 related to the Grants on the consolidated balance sheet will be similarly amortized over the remaining useful life of the Facility as an offset against general and administrative expenses in the consolidated statement of income.

For years ended December 31, 2025 and 2024, the Company recorded $ 70,000 and $ 360,000 of grant income, respectively, as an offset to general and administrative expenses in the consolidated statement of income and expects that $ 70,000 in other current liabilities and $ 2,302,000 in other non-current liabilities as of December 31, 2025 related to the Grants on the consolidated balance sheet will be similarly amortized over the remaining useful life of the Facility as an offset against general and administrative expenses in the consolidated statement of income.

Variable Interest Entities:

9 unchanged sentences

In 2018, Lollicup entered into an operating lease with Global Wells (the “Texas Lease”).

In 2020, the Company entered into another operating lease with Global Wells (the “New Jersey Lease”).

In 2020, the Company entered into another

operating lease with Global Wells (the “New Jersey Lease”).

On June 26, 2025, the Company renewed the New Jersey Lease with Global Wells, extending the lease term for an additional five years to August 31, 2030.

Upon entering into the Texas Lease with Lollicup on March 23, 2018, it was determined that Lollicup holds current and potential rights that give it the power to direct activities of Global Wells that most significantly impact Global Wells’ economic performance, the ability to receive significant benefits, and the obligation to absorb potentially significant losses, resulting in Lollicup having a controlling financial interest in Global Wells.

6 unchanged sentences

See Note 9 — Long Term Debt for a description of the two term loans that Global Wells had with financial institutions as of December 31, 2025.

Share Repurchases:

On November 5, 2025, the Company's Board of Directors approved a share repurchase program (the "Share Repurchase Program") of up to $ 15,000,000 of its common stock.

Under the Share Repurchase Program, the Company may repurchase shares through open market transactions, through privately negotiated transactions, or pursuant to a trading plan separately adopted in the future, subject to the requirements of the Securities Exchange Act of 1934, as amended.

The Company records the shares repurchased as treasury stock based on the amount paid to repurchase its shares.

Direct costs incurred to acquire treasury stock are treated like stock issue costs and added to the cost of the treasury stock.

See Note 10 — Stockholder's Equity for further information about the Share Repurchase Program.

Revenue Recognition:

4 unchanged sentences

(in thousands)

National and regional chains $ 90,244 $ 89,655

Distributors 234,932 228,316

Chains and distributors * $ 370,556 $ 329,448

Online 75,286 70,130

1 unchanged sentence

$ 467,743 $ 422,633

• National and regional chains revenue:

National and regional chains revenue is derived from chain restaurants, supermarkets, and other businesses with locations across multiple states or cities.

Revenue from transactions with national and regional chains is recognized at a point in time upon transfer of control of promised products to customers.

Transfer of control typically occurs when the title and risk of loss passes to the customer.

• Distributors revenue:

Distributors revenues are derived from national and regional distributors across the U.S.

that purchase the Company’s products for resale and distribution to other businesses such as restaurants, supermarkets, offices, and schools.

Revenue from distributions is recognized at a point in time upon transfer of control of promised products to customers.

* During the three months ended June 30, 2025, the Company reclassified one customer from the retail to the chains and distributors channel, and reclassified the corresponding net sales amounts of approximately $ 4,272,000 for the year ended December 31, 2024, to conform to the current period presentation.

The reclassification had no effect on previously reported consolidated net sales for the year ended December 31, 2024.

• Chains and distributors revenue:

National and regional chains revenue is derived from chain restaurants, supermarkets, and other businesses with multiple locations.

Distributors revenue is derived from distributors across the U.S.

that purchase the Company’s products for resale and distribution to restaurants, supermarkets, and other businesses.

Chain accounts often order through their distribution partners.

Revenue from transactions with chains and distributors is recognized at a point in time upon transfer of control of promised products to customers.

Transfer of control typically occurs when the title and risk of loss passes to the customer.

• Online revenue:

Online revenue is derived from the Company's online storefront on www.lollicupstore.com and through the Company's mobile app, as well as other e-commerce platforms including Amazon, Walmart, eBay, and TikTok with customers largely consisting of small businesses such as small mom-and-pop restaurants, coffee houses, bubble tea cafes, pizza parlors, and frozen yogurt shops.

Online revenue is derived from the Company's online storefront on www.lollicupstore.com, and through the Company's mobile app, as well as other third-party e-commerce platforms with customers largely consisting of small businesses such as small mom-and-pop restaurants, coffee houses, bubble tea cafes, pizza parlors, and frozen yogurt shops.

Revenue from online transactions is recognized at a point in time upon transfer of control of promised products to customers.

Transfer of control typically occurs when the title and risk of loss passes to the customer.

Transfer of control typically occurs when the title and risk of loss passes to the

For online sales on third-party e-commerce platforms, the Company is the principal in the three-party arrangement and control of the products remains with the Company until transferring to the end customer or upon return from the end customer.

1 unchanged sentence

• Retail revenue:

Retail revenue is derived primarily from regional and local businesses, small mom-and-pop restaurants, coffee houses, bubble tea cafes, pizza parlors, and frozen yogurt shops.

Revenue from retail transactions is

recognized at a point in time upon transfer of control of promised products to customers.

Retail revenue is derived primarily from regional and local restaurants, small mom-and-pop restaurants, coffee houses, bubble tea cafes, pizza parlors, and frozen yogurt shops.

Revenue from retail transactions is recognized at a point in time upon transfer of control of promised products to customers.

Transfer of control typically occurs when the title and risk of loss passes to the customer.

1 unchanged sentence

During the year ended December 31, 2024, the Company's revenue and cost of goods sold were understated by approximately $ 700,000 and $ 400,000 , respectively, for products that had been shipped and recorded as revenue and costs of goods sold in 2023 but not delivered until 2024.

In the prior periods, the Company had assessed the impact of the lag between shipping and delivery to the previously-issued quarterly and annual financial statements, and concluded that the impact on its overall financial statements, including net sales, cost of goods sold, accounts receivable, inventories and customer deposits was immaterial.

In addition to product sales, the Company also generates revenue from logistics services which is the transportation and delivery of shipping containers from ports to local retail customers.

1 unchanged sentence

As control transfers over time, revenue is recognized based on the extent of progress towards completion of the performance obligation.

Logistics services revenue was $ 5,483,000 and $ 4,382,000 for the year ended December 31, 2024, and 2023, respectively.

Logistics services revenue was $ 4,661,000 and $ 5,483,000 for the year ended December 31, 2025, and 2024, respectively, and was classified under retail in net sales disaggregated by customer type table above.

The transaction price is the amount of consideration to which the Company expects to be entitled to in exchange for transferring goods to the customer.

4 unchanged sentences

The Company’s contract liabilities consist primarily of rebates, sales incentives, cooperative advertising, and deferred revenue.

As of December 31, 2024 and 2023, the rebates, sales incentives and cooperative advertising were not significant to the financial statements.

As of December 31, 2025 and 2024, the Company had accrued $ 1,133,000 and $ 377,000 , respectively, related to rebates, sales incentives, and cooperative advertising, included in accrued expenses in the consolidated balance sheets .

Deferred revenue is included in current liabilities in the consolidated balance sheets.

14 unchanged sentences

ASC 740-10 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

This accounting standard also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and

This accounting standard also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes in the accompanying consolidated statement of income.

7 unchanged sentences

Year Ended December 31,

Keary Global Ltd.

Wen Ho Industrial Co.

Keary Global Group, Ltd.

(“Keary Global”) and its affiliate, Keary International, Ltd.

("Keary International") – related parties

* Amounts represented less than 10% of total purchases.

Amounts due to the following vendors at December 31, 2025 and 2024, respectively, that exceed 10 percent of total accounts payable are as follows:

3 unchanged sentences

Fuling Technology Co., Ltd.

Wen Ho Industrial Co., Ltd * 14 %

* Amounts payable represented less than 10% of total accounts payable.

15 unchanged sentences

The Company has financial instruments classified within the fair value hierarchy, which consist of the following:

• At December 31, 2025, the Company had money market accounts classified as Level 1 and certificates of deposit classified as Level 2 within the fair value hierarchy.

• At December 31, 2024, the Company had money market accounts and investments in publicly-traded equity securities classified as Level 1 and certificates of deposit classified as Level 2 within the fair value hierarchy.

• At December 31, 2023, the Company had money market accounts and certificates of deposit classified as Level 1 and Level 2, respectively, within the fair value hierarchy.

The short-term investments as of December 31, 2024 and 2023 comprised of certificates of deposit with an original maturity of longer than 3 months and are reported at their carrying value as current assets on the consolidated balance sheets.

The short-term investments as of December 31, 2024 comprised of certificates of deposit with an original maturity of longer than 3 months and are reported at their carrying value as current assets on the consolidated balance sheets.

As all certificates of deposit will be due within 3 months as of December 31, 2025, these certificates of deposit have been included in cash and cash equivalents line on the consolidated balance sheets.

The carrying value of these short-term investments approximate fair value as they were purchased near or on the respective balance sheet dates.

3 unchanged sentences

Cash equivalents $ 3,699 $ 24,696 $ —

Short-term investments — 28,343 —

Publicly-traded equity securities 31 — —

Fair value, December 31, 2025

5 unchanged sentences

Short-term investments — 28,343 —

Publicly-traded equity securities 31 — —

Fair value, December 31, 2024

1 unchanged sentence

The Company has not elected the fair value option as presented by ASC 825, Fair Value Option for Financial Assets and Financial Liabilities , for the financial assets and liabilities that are not otherwise required to be carried at fair value.

Under ASC 820, material financial assets and liabilities not carried at fair value, including accounts receivable, accounts payable, related-party payable, accrued expenses, other payables and borrowings under promissory notes and Line of Credit (as defined below), are reported at their carrying value.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, related-party payable, accrued expenses, and other payable at December 31, 2024 and 2023 approximated fair value because of the short maturity of these instruments.

Under ASC 820, material financial assets and liabilities not carried at fair value, including accounts receivable, accounts payable, related-party payable, accrued expenses, other current liabilities and borrowings under promissory notes and Line of Credit (as defined below), are reported at their carrying value.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, related-party payable, accrued expenses, and other current liabilities at December 31, 2025 and 2024 approximated fair value because of the short

maturity of these instruments.

The following is a summary of the carrying amount and estimated fair value of the $ 23,000,000 and $ 28,700,000 term loans that mature in September 2026 and July 2027, respectively (the "2026 Term Loan" and "2027 Term Loan," respectively):

18 unchanged sentences

Foreign Currency:

The Company includes gains or losses from foreign currency transactions, such as those resulting from the settlement of foreign receivables or payables, in the consolidated statements of income.

The Company recorded a foreign currency gain of $ 520,000 and $ 103,000 for the years ended December 31, 2024 and 2023, respectively.

The Company includes gains or losses from foreign currency transactions, such as those resulting from the settlement of foreign payables, in the consolidated statements of income.

The Company recorded a foreign currency loss of $ 1,543,000 and foreign currency gain of $ 520,000 for the years ended December 31, 2025 and 2024, respectively.

Stock-Based Compensation:

18 unchanged sentences

In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards, as a result, the Company will adopt new or revised accounting standards on the relevant dates in which adoption of such standards is required for private companies.

In March 2023, the FASB issued updated ASU 2023-01 Lease (Topic 842):

Common Control Arrangements .

The new guidance amends ASC 842 to require all lessees, including public business entities, to amortize leasehold improvements associated with common control leases over their useful life to the common control group.

The Company adopted this new standard on January 1, 2024, by prospectively amortizing all new leasehold improvements recognized on or after the adoption date.

The adoption of this new standard did not have a material impact on the Company's financial statements.

In November 2023, the FASB issued ASU 2023-07 Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

The new guidance requires enhanced disclosure of significant expenses that are regularly reported to the chief operating decision maker and the nature of segment expense information used to manage operations.

The Company adopted this new standard for its annual period beginning January 1, 2024.

The adoption of this new standard resulted in additional required disclosures, described further in Note 21 — Segment Report.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

10 unchanged sentences

The application of this new guidance is not expected to have a material impact on the Company’s consolidated balance sheets, statements of income or cash flows, as the guidance pertains to disclosures only.

In December 2025, the FASB issued ASU 2025-11 Interim Reporting (Topic 270):

Narrow-Scope Improvements .

The new guidance creates a comprehensive list of interim disclosures required under US GAAP and incorporates a disclosure principle that requires disclosures at interim periods when an event or change that has a material effect on an entity has occurred since the previous year end.

The new guidance is effective for all public companies for interim reporting periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The Company will adopt the new standard in its interim reporting period beginning after December 15, 2027, and is currently evaluating the impacts of the new guidance on its disclosures within the condensed consolidated financial statements.

The following financial information includes assets and liabilities of Global Wells and are included in the accompanying consolidated balance sheets, except for those that eliminate upon consolidation:

4 unchanged sentences

Short-term investments — 11,128

Accounts receivable, net

Prepaid expenses and other current assets 790 535

4 unchanged sentences

Accrued expenses 535 489

Deferred revenue

Due to Lollicup USA Inc.

5 unchanged sentences

Total liabilities $ 37,707 $ 51,094

During the year ended December 31, 2023 , Global Wells made a pro rata distribution of its earnings of $ 3,956,000 , net of all applicable withholding taxes, to its four members.

Lollicup received $ 504,000 , net of applicable withholding taxes, which was eliminated in the consolidated financial statements.

During the year ended December 31, 2024 , Global Wells and one of its members entered into a membership interest redemption agreement.

See Note 2 — Summary of Significant Accounting Policies for further discussion on the redemption.

Joint Venture

On April 6, 2022, the Company entered into a joint venture agreement (the "JV Agreement") to establish a new corporation, Bio Earth, to build a bagasse factory in Taiwan.

The JV Agreement stipulated an investment by the Company of approximately $ 6,500,000 for a 49 % interest in Bio Earth.

During the year ended December 31, 2022, the Company made payments of $ 5,876,000 and received a refund of $ 1,876,000 under the JV agreement.

During the three months ended March 31, 2023, the Company made additional payments of $ 2,900,000 and received a refund of $ 900,000 under the JV Agreement.

On May 8 2023, the Company entered into a Share Transfer Agreement (the "Share Transfer Agreement"), with approval of the Board of Directors, to sell all of its equity interest in Bio Earth to Keary Global for a total consideration of approximately $ 6,100,000 (the "Share Transfer"), representing the total net deposits made by the Company of $ 6,000,000 under the JV Agreement as discussed above and interest accruing at 5 % per annum.

Keary Global and its affiliate, Keary International are both owned or controlled by Jeff Yu, brother of the Company's Chief Executive Officer, Alan Yu.

Concurrent with the Share Transfer Agreement, the Company also entered into an agreement with Keary Global, Bio Earth and Happiness Moon Co., Ltd.

(“Happiness Moon”) pursuant to which (i) Lollicup agreed to transfer all Bio Earth shares, as well as its rights and obligations under the JV Agreement to Keary Global, (ii) Happiness Moon and Bio Earth agree to foregoing and (iii) Bio Earth shall manage the regulatory and registration requirements related to the Share Transfer.

As of the end of the second quarter of 2023, the Company had completed the Share Transfer to Keary Global and received the total consideration of $ 6,100,000 in full.

See Note 16 — Related Party Transactions for further discussion on the Company's business activities with Keary Global.

Inventories consist of the following:

9 unchanged sentences

The Company incurred inventory adjustments and write-offs of $ 917,000 and $ 1,458,000 for the year ended December 31, 2025 and 2024, respectively.

Included within the amount for the year ended December 31, 2023 was a $ 1,710,000 write-off of raw materials, as the Company disposed of certain machinery and equipment in executing the strategy to scale back production in certain locations.

Inventory adjustments and write-offs are included in cost of goods sold on the accompanying consolidated statements of income.

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The Company is required to comply with certain financial covenants, including a minimum current ratio, minimum debt to earnings before interest, taxes, depreciation and amortization ("EBITDA") ratio and a minimum fixed charge coverage ratio.

As of both December 31, 2025 and 2024, the Company was in compliance with the financial covenants under the Line of Credit.

On March 3, 2025, the Company amended the Line of Credit.

Prior to March 14, 2023, interest accrued at the annual rate of prime less 0.25 % with a minimum floor of 3.25 %.

The amendment on March 14, 2023, among other things, (1) extended the maturity date to March 14, 2025, and (2) revised the interest on any Line of Credit borrowings to an annual rate of one month term Secured Overnight Financing Rate ("SOFR") plus 2.50 %, with a SOFR floor of 1.0 %.

The Line of Credit also includes a standby letter of credit sublimit, which was amended and increased to $ 5,000,000 from $ 2,000,000 on June 20, 2023.

Prior to March 3, 2025, the revolving loan facility had a maximum borrowing capacity of $ 40,000,000 and interest accrued at an annual rate of one month term Secured Overnight Financing Rate ("SOFR") plus 2.50 %, with a SOFR floor of 1.00 %.

The amendment on March 3, 2025 among other things, (1) extended the maturity date to March 14, 2027, (2) reduced the maximum borrowing capacity of the revolving loan facility to $ 20,000,000 , and (3) revised the interest on any Line of Credit borrowings to an annual rate of one month term SOFR plus 2.25 %, with a SOFR floor of 1.00 %.

On March 17, 2025, August 21, 2025, and October 3, 2025, the Company entered into three separate amendments of the Line of Credit, increasing the standby letter of credit sub-limit, respectively, from $ 5,000,000 to $ 7,500,000 , from $ 7,500,000 to $ 10,000,000 , and from $ 10,000,000 to $ 15,000,000 .

The Company had no borrowings outstanding under the Line of Credit as of both December 31, 2025 and 2024.

1 unchanged sentence

As of December 31, 2025, and 2024, the maximum remaining amount that could be borrowed under the Line of Credit was $ 7,687,000 and $ 36,187,000 , respectively.

As of both December 31, 2024 and 2023, the Company was in compliance with the financial covenants under the Line of Credit.

As described in Note 22 — Subsequent Events, on March 3, 2025, the Company amended the Line of Credit again, which among other things, (1) extended the maturity date to March 14, 2027, (2) reduced the revolving loan facility to $ 20,000,000 , and (3) revised the interest on any Line of Credit borrowings to an annual rate of one month term SOFR plus 2.25 %, with a SOFR floor of 1.00 %.

Accrued Expenses

9 unchanged sentences

Accrued property tax 1,190 1,150

Accrued shipping expenses

Accrued shipping expense

Accrued sales discount expense 1,133 374

8 unchanged sentences

Principal and interest payments of $ 116,000 are due monthly throughout the term of the loan, with the remaining principal balance due at maturity.

On December 18, 2025, the Company made an early payment of $ 8,000,000 to reduce the remaining principal balance due at maturity, with total monthly payments remaining the same for the remainder of the loan term.

The loan is collateralized by substantially all of Global Wells’ assets and is guaranteed by Global Wells and one of the Company’s stockholders.

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Interest accrues at a fixed rate of 4.375 % per annum.

Prior to August 1, 2023, principal and interest payments of $ 104,000 are due monthly.

Prior to August 1, 2023, principal and interest payments of $ 104,000 were due monthly.

Beginning August 1, 2023, monthly principal and interest payments increased to $ 144,000 for the remainder of the loan term, with the remaining principal balance due at maturity.

On September 5, 2025, the Company made an early payment of $ 3,500,000 to reduce the remaining principal balance due at maturity, with total monthly payments remaining the same for the remainder of the loan term.

The loan is collateralized by substantially all of Global Wells’ assets and is guaranteed by one of the Company’s stockholders.

7 unchanged sentences

(in thousands)

2026 $ 12,959

The Company was in compliance with all of its financial covenants as of both December 31, 2025 and 2024.

The 2026 Term Loan matures on September 30, 2026.

As of December 31, 2025, the entire remaining balance of $ 12,258,000 is included in the long-term debt, current portion on the consolidated balance sheet.

The Company intends to repay the 2026 Term Loan at maturity using cash and cash equivalents of $ 37,880,000 as of December 31, 2025.

Stockholder’s Equity

The Company’s Certificate of Incorporation authorize both common and preferred stock.

The Company’s Certificate of Incorporation authorizes both common and preferred stock.

The total number of shares of all classes of stock authorized for issuance is 110,000,000 shares, par value of $ 0.001 , with 10,000,000 designated as preferred stock and 100,000,000 designated as common stock.

Each holder of common stock and preferred stock shall be entitled to one vote per share held.

On November 5, 2025, the Company’s Board of Directors approved the Share Repurchase Program of up to $ 15,000,000 of its common stock.

Under the Share Repurchase Program, the Company may repurchase shares through

open market transactions, through privately negotiated transactions, or pursuant to a trading plan separately adopted in the future, subject to the requirements of the Securities Exchange Act of 1934, as amended.

The Share Repurchase Program has no set expiration date, and may be suspended, modified or discontinued at any time.

During the year ended December 31, 2025, the Company repurchased approximately $ 2,986,000 of its common stock at an average per share cost of $ 21.74 .

As of December 31, 2025, the Company had approximately $ 12,014,000 of remaining authorization for purchases under the Share Repurchase Program.

During the years ended December 31, 2025 and 2024, the Company paid out special and regular quarterly dividend totaling $ 36,100,000 and $ 31,016,000 , respectively.

13 unchanged sentences

For the years ended December 31, 2025 and 2024, the Company recognized a total of $ 1,182,000 and $ 2,065,000 in stock-based compensation expense, respectively.

The Company recognizes stock-based compensation over the vesting period, which is generally between two to three years for both the restricted stock units and stock options.

The Company recognized a net tax liability of $ 19,000 and net tax benefit of $ 187,000 from compensation expense related to stock options and restricted stock units during the years ended December 31, 2024 and 2023, respectively.

The Company recognizes stock-based compensation over the vesting period, which is generally within three years for both the restricted stock units and stock options.

The Company recognized a net tax liability of $ 7,000 and $ 19,000 from compensation expense related to stock options and restricted stock units during the years ended December 31, 2025 and 2024, respectively.

Stock options

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The aggregate intrinsic value is calculated by subtracting the exercise price of the option from the closing price of the Company’s common stock on December 31, 2025, multiplied by the number of shares per each option.

At December 31, 2024, total remaining stock-based compensation cost for unvested stock options under the Plan was approximately $ 2,000 .

The cost is expected to be recognized over a weighted-average period of 0.1 years.

There were no stock options granted during the years ended December 31, 2025 and 2024.

At December 31, 2025, all stock options granted under the Plan were fully vested and exercisable.

Restricted stock units

4 unchanged sentences

5,346 $ 16.71

Vested ( 75,133 ) 11.13

Forfeited ( 1,667 ) 10.00

( 31,550 ) 27.54

Unvested at December 31, 2024

1 unchanged sentence

Vested ( 46,800 ) 28.38

( 2,500 ) $ 29.38

Unvested at December 31, 2025

43,500 $ 28.53

On March 12, 2024, the Company's Compensation Committee of the Board of Directors approved a grant totaling 91,000 restricted stock units to certain key employees.

The grant date fair value of these restricted stock units was $ 2,674,000 .

The restricted stock units vest at various times between May 2024 and May 2026.

On May 7, 2024, the Company's Compensation Committee of the Board of Directors approved a grant totaling 6,000 restricted stock units to each independent director of the Board of Directors.

The grant date fair value of these restricted stock units was $ 169,000 .

The restricted stock units vest at various times between May 2025 and May 2026.

At December 31, 2025, total remaining stock-based compensation cost for unvested restricted stock units under the Plan was approximately $ 301,127 .

The cost is expected to be recognized over a weighted-average period of 1.0 year.

The cost is expected to be recognized over a weighted-average period of 0.5 years.

Earnings Per Share

19 unchanged sentences

Diluted earnings per share $ 1.56 $ 1.49

For the years ended December 31, 2024 and 2023 a total of 4,803 and 213,599 shares of potentially dilutive shares, respectively, have been excluded in the diluted earnings per share calculation due to their anti-dilutive impact on earnings per share.

For the years ended December 31, 2025 and 2024 a total o f 161 and 4,803 shares of potentially dilutive shares, respectively, have been excluded in the diluted earnings per share calculation due to their anti-dilutive impact on earnings per share.

The Company primarily leases manufacturing facilities, distribution centers, and office spaces with lease terms expiring through 2031.

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Global Wells has been the landlord under an operating lease agreement with an unrelated party since September 2020.

During both the years ended December 31, 2024 and 2023, Global Wells recognized rental income from this tenant of $ 739,000 .

As discussed in Note 22 — Subsequent Events, on February 28, 2025, the lease agreement between Global Wells and the tenant was terminated and effective March 1, 2025, Global Wells entered into a new six-year operating lease agreement with a different unrelated party, which ends February 28, 2031 and is expected to generate rental income of $ 1,128,000 per annum over the next five years.

Impairment Expense and Loss, Net, on Disposal of Machinery and Equipment

In February 2023, the Company started to execute a strategy to increase imports and scale back manufacturing in certain locations.

The Company reached an agreement with two unrelated third-party vendors in Taiwan to sell them certain of its manufacturing machinery and equipment.

The Company also cancelled certain equipment purchase commitments that it had previously paid deposits towards, and disposed of certain machinery and equipment through abandonment.

As discussed in Note 14 — Leases, the Company recorded a non-cash impairment of a ROU asset resulting from the sublease of its City of Industry warehouse in California in the year ended December 31, 2024.

The following table represents impairment expense and loss, net, on disposal of machinery:

Year Ended December 31,

(in thousands)

Loss, net, on disposal of machinery in scaling back manufacturing

Loss, net, on disposal of machinery within normal course of business

Loss, net, on disposal

Impairment of ROU asset

Impairment of deposits

Total impairment expense and loss, net, on disposal of machinery

$ 2,752 $ 2,525

On February 28, 2025, the lease agreement between Global Wells and the tenant was terminated and effective March 1, 2025, Global Wells entered into a new six-year operating lease agreement ending on February 28, 2031 with a different unrelated party that generates monthly rental payments from $ 87,000 to $ 101,000 .

During the year ended December 31, 2025, and 2024, Global Wells recognized rental income of $ 1,064,000 and $ 739,000 , respectively, and expected rental income of $ 1,128,000 per annum over the next five years .

Related Party Transactions

2 unchanged sentences

In addition to being a stockholder, Keary Global and Keary International are inventory suppliers and purchasing agents for the Company overseas.

The Company has entered into ongoing purchase and supply agreements with Keary Global.

The Company has an ongoing agreement (the "Procurement Agreement") with Keary Global, which was amended and restated on June 26, 2025 to clarify the responsibilities of both parties under the Procurement Agreement.

At December 31, 2025 and 2024, the Company has accounts payable due to Keary Global and Keary International of $ 4,672,000 and $ 3,130,000 , respectively.

Purchases for the years ended December 31, 2025 and 2024 from this related party were $ 33,237,000 and $ 35,109,000 , respectively.

See Note 4 — Joint Venture for discussion on the Share Transfer Agreement with Keary Global.

On June 26, 2025, the Company renewed the New Jersey Lease with Global Wells, extending the lease term for an additional five years to August 31, 2030.

Under this lease renewal, monthly base lease payments range from $ 122,000 to $ 140,000 after an initial rent abatement period.

Employee Benefits

7 unchanged sentences

State 1,934 2,048

13,642 10,763

Federal 2,117 ( 3,428 )

10 unchanged sentences

Accruals and deferred expenses

Research and development credit

Inventory 1,452 1,137

21 unchanged sentences

Provision for income taxes $ 10,358 $ 9,871

The Company may be audited by the Internal Revenue Service and various state tax authorities.

Disputes may arise with these tax authorities involving issues of the timing and amount of deductions and allocations of income and expenses among various tax jurisdictions because of differing interpretations of tax laws and regulations.

The Company evaluates its exposures associated with the tax filing positions and, while it believes its positions comply with applicable laws, may record liabilities based upon estimates of the ultimate outcome of these matters and the guidance provided in ASC 740.

As of December 31, 2024 and 2023, the Company does not have any unrecognized tax benefit.

On July 4, 2025, the President signed H.R.

1, the “One Big Beautiful Bill Act,” into law.

The legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including the restoration of immediate expensing of domestic research and development expenditures, reinstatement of 100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense.

These changes, primarily timing differences with no net impact, were incorporated in the income tax provision for the year ended December 31, 2025.

The Company remains subject to IRS examination for the 2022 through 2024 tax years.

Additionally, the Company files multiple state and local income tax returns and remains subject to examination in various of these jurisdictions for the 2020 through 2023 tax years.

Additionally, the Company files multiple state and local income tax returns and remains subject to examination in various jurisdictions for the 2021 through 2024 tax years.

The Company continues to work with the IRS relating to the 2016 and 2017 tax years and does not expect a material impact to the financial statements.

In October 2025, the Company received a notice from the IRS that its 2023 federal income tax return was selected for examination.

As of both December 31, 2025 and 2024, the Company did not have any unrecognized tax benefit.

ASC 740, Income Taxes , provides for the recognition of deferred tax assets if realization of these assets is more-likely-than-not.

In evaluating the Company’s ability to recover its deferred tax assets, the Company considers all available positive and negative evidence, including its operating results, ongoing tax planning and forecasts of future taxable income

on a jurisdiction-by-jurisdiction basis.

Based upon the level of historical taxable income, at this time, the Company determined that sufficient positive evidence existed to conclude that it is more likely than not there will be full utilization of the deferred tax assets in each jurisdiction.

1 unchanged sentence

Commitments and Contingencies

On October 5, 2023, the Company received a final and binding judgment from the Taiwan Supreme Court, dismissing its claim filed in 2020 against one of its Taiwanese vendors to return a prepayment of $ 1,123,500 due to the vendor's failure to deliver products under the contract.

As a result, the Company recorded a write-off of the prepayment, which is included in general and administrative expense in the consolidated statement of income for the year ended December 31, 2023.

In May 2023, the Company received a Notice of Investigations and Interim Measures stating that U.S.

2 unchanged sentences

On February 5, 2024, CBP issued its Notice of Determination concluding that the manufacturing procedures performed by the manufacturer in Taiwan, which the Company imported certain thermal paper products from, did not constitute substantial transformation.

As of December 31, 2023, the Company had a reserve of $ 2,738,000 , representing the total estimated probable loss on all thermal paper imports under the investigation period minus payments already made.

On March 19, 2024, the Company initiated an appeal process by submitting a request for an administrative review of the initial determination issued by CBP.

On June 11, 2024, CBP completed the administrative review and upheld its initial conclusion.

The Company accrued interest of $ 313,000 during the year ended December 31, 2024, related to the estimated total probable loss, increasing the total reserve to $ 3,051,000 as of December 31, 2024.

In February 2025, the Company started to receive bills related to certain of its thermal paper shipments received during 2022.

The Company is in the process of protesting the received bills with CBP, and is also evaluating other appeal options.

In February 2025, the Company started to receive bills related to certain of its thermal paper shipments.

During the year ended December 31, 2025, the Company submitted protests of certain bills received with CBP and made total payments of $ 1,909,000 related to certain shipments under the investigation.

The Company is also evaluating other appeal options.

Payments on bills received will be due upon the resolution of the protests, currently expected to occur within the next 12 months.

The Company maintains a liability reserve representing the total estimated probable loss from the investigation plus accrued interest.

As of December 31, 2025 and 2024, the Company had a total reserve of $ 1,720,000 and $ 3,051,000 , respectively, representing bills received from CBP, including protested bills.

The amount of the final payments could vary significantly from the estimated liability reserve.

The Company is a party to, and certain of its property is the subject of, various other pending claims and legal proceedings that routinely arise in the ordinary course of its business.

Management believes that the outcome of such litigation and claims, should they arise in the future, is not likely to have a material effect on the Company’s financial position or results of income.

The Company is a party to, and certain of its property is the subject of, various pending claims, government investigations and legal proceedings that routinely arise in the ordinary course of its business.

Management believes that

the outcome of such litigation and claims, should they arise in the future, is not likely to have a material effect on the Company’s financial position or results of operations.

Secondary Offering

On September 12, 2023, certain selling stockholders completed a secondary public offering of shares of the Company's common stock.

On June 12, 2025, certain executive officers and stockholders of the Company (the "selling stockholders") completed a secondary public offering of shares of the Company's common stock.

The Company did not receive any of the proceeds from the sale of these shares by the selling stockholders.

The Company incurred offering transaction costs of $ 453,000 , which were recognized in general and administrative expense in the consolidated statement of income for the year ended December 31, 2023 .

The Company incurred offering transaction costs of $ 214,000 for the year ended December 31, 2025, which were recognized in general and administrative expense in the consolidated statements of income.

Segment Report

19 unchanged sentences

Stock-based compensation 1,182 2,065

Secondary offering costs — 453

Impairment expense and loss, net, on disposal of machinery 2,752 2,525

ROU asset impairment expense — 1,993

Secondary offering transaction costs 214 —

(Gain) loss, net, on disposal of property and equipment ( 493 ) 759

Interest expense 2,055 2,123

1 unchanged sentence

Other segment expenses* 11,685 10,976

10,976 11,215

Interest income 2,210 2,299

4 unchanged sentences

Consolidated net income 32,664 30,824

* Other segment expenses includes property taxes, insurance expenses, office expenses, and utilities.

The Company’s long-lived assets are all located in the United States, and its revenues are almost entirely generated in the United States.

The accounting policies of the reportable segment are the same as those described in Note 2 — Summary of Significant Accounting Policies .

Additionally, the total segment assets are the same as the consolidated total assets reported on the consolidated balance sheets.

* Other segment expenses include property taxes, insurance expenses, office expenses, bad debt expenses, and utilities.

There are no changes in the basis of segmentation or measurement of segment profit or loss since December 31, 2024.

The Company’s long-lived assets are almost entirely located in the United States, and similarly its revenues are almost entirely generated in the United States as well.

Additionally, the segment assets are the same as the assets reported on the condensed consolidated balance sheets.

Subsequent Events

On February 13, 2025, the Company's Board of Directors declared a quarterly cash dividend of $ 0.45 per share on the Company's common stock, which was paid on February 28, 2025 to shareholders of record at the close of business on February 24, 2025.

On February 20, 2025, the Company received a notice of entry of judgment in which the court confirmed the arbitration award filed by the landlord of the Company's Chino, California facility.

As a result, the Company remeasured the lease liability and the right-of-use asset for this lease extension with the term expiring July 31, 2029, reflecting the change of estimate in the annual rent escalation.

The remeasurement resulted in an increase of lease liability and the right-of-use asset of $ 1,360,000 and $ 1,250,000 , respectively, as of December 31, 2024.

On February 28, 2025, the operating lease agreement between Global Wells, as the landlord, and an unrelated party, as the tenant, was terminated.

Effective March 1, 2025, Global Wells entered into a new six-year operating lease agreement with a different unrelated party.

See Note 14 — Leases for further discussion on the new operating lease agreement.

On March 3, 2025, the Company amended the Line of Credit again, which among other things, (1) extended the maturity date to March 14, 2027, (2) reduced the revolving loan facility to $ 20,000,000 , and (3) revised the interest on any Line of Credit borrowings to an annual rate of one month term SOFR plus 2.25 %, with a SOFR floor of 1.00 %.

On March 3, 2025, subsequently amended on March 6, 2025, the Company entered into a 52 -month lease agreement with G&O Chino Property, a California general partnership, commencing on April 1, 2025 for a second 187,000 square-foot distribution facility in Chino, California.

The term of the lease expires July 31, 2029 and requires monthly base payments ranging from $ 205,000 to $ 231,000 with certain rent abatement periods .

On February 5, 2026, the Company's Board of Directors declared a regular quarterly cash dividend of $ 0.45 per share on the Company's common stock, which was paid on or about February 27, 2026 to the stockholders of record at the close of business on February 20, 2026.

On February 20, 2026, the United States Supreme Court issued a ruling against certain tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA").

Following the Supreme Court’s decision, the U.S.

presidential administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non- IEEPA tariffs .

There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and the ultimate availability, timing, and amount of any potential refunds of such tariffs.

The Company continues to monitor and evaluate these developments and assess their potential impact on its business, financial condition, and results of operations.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data