What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-21 compared with 2024-02-28 · 151 added, 81 removed, 543 unchanged (30% of the section changed)

5 unchanged sentences

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Income

Consolidated Statements of Stockholders’ Equity

6 unchanged sentences

We have audited the accompanying consolidated balance sheets of Natural Health Trends Corp.

(the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

(the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”).

In our opinion, based on our audits, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

26 unchanged sentences

$ 13,533 $ 56,178

Marketable securities

Other current assets

62 unchanged sentences

NATURAL HEALTH TRENDS CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands)

2 unchanged sentences

Foreign currency translation adjustments

Unrealized gains on available-for-sale securities

Comprehensive income (loss)

Unrealized gains (losses) on available-for-sale securities

Comprehensive income

See accompanying notes to consolidated financial statements.

9 unchanged sentences

— — — — — 568 — — — 568

Reissuance of treasury shares

— — — — ( 1,629 ) — — 97,900 1,629 —

Restricted stock forfeiture

— — — — 61 — — ( 3,666 ) ( 61 ) —

Share-based compensation

— — — — 161 — — — — 161

Dividends declared, $ 0.80 /share

7 unchanged sentences

— — — — — 572 — — — 572

Reissuance of treasury shares

— — — — ( 1,629 ) — — 97,900 1,629 —

Restricted stock forfeiture

6 unchanged sentences

— — — — — — ( 218 ) — — ( 218 )

Unrealized gains on available-for-sale securities

Unrealized losses on available-for-sale securities

— — — — — — ( 14 ) — — ( 14 )

9 unchanged sentences

Depreciation and amortization

Net accretion of marketable securities

Share-based compensation

14 unchanged sentences

Purchases of property and equipment

Purchases of marketable securities

Proceeds from maturities of marketable securities

Net cash used in investing activities

18 unchanged sentences

The Company’s wholly-owned subsidiaries have an active physical presence in the following markets:

the Americas, which consists of the United States, Canada, Cayman Islands, Mexico and Peru;

the Americas, which consists of the United States, Canada, Cayman Islands, Mexico, Peru and Colombia;

Greater China, which consists of Hong Kong, Taiwan and China;

Southeast Asia, which consists of Malaysia, Singapore and Thailand;

Southeast Asia, which consists of Malaysia and Singapore;

The Company also operates in Russia and Kazakhstan through an engagement with a local service provider.

10 unchanged sentences

Cash and Cash Equivalents

Cash and cash equivalents include the Company’s investments in money market funds, government and municipal debt securities, and corporate debt securities.

The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents.

Debt securities classified as cash equivalents are required to be accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 320, Investments - Debt and Equity Securities .

As such, the Company determined its investments in debt securities held at December 31, 2023 should be classified as available-for-sale and carried at fair value with unrealized gains and losses reported in stockholders’ equity.

The cost of debt securities is adjusted for amortization of premiums and discounts to maturity.

This amortization is included in other income and expense.

Realized gains and losses, as well as interest income, are also included in other income and expense.

The fair values of securities are based on quoted market prices to the extent available or alternative pricing sources and models utilizing market observable inputs.

The Company includes credit card receivables due from certain of its credit card processors in its cash and cash equivalents as the cash proceeds are received within two to five days.

The Company maintains substantially all of its cash balances at several institutions located in the United States, Hong Kong and China which at times may exceed insured limits.

As of December 31, 2023, there was $ 890,000 in bank accounts located in Hong Kong in excess of insured limits.

As of December 31, 2024, there was $ 34,000 and $ 51,000 in bank accounts located in the United States and Hong Kong, respectively, in excess of insured limits.

As of December 31, 2024, cash and cash equivalents included $ 3.6 million held in bank accounts located in China subject to foreign currency controls.

53 unchanged sentences

The Chinese government permits direct selling only by organizations that have a license and has also adopted anti-pyramid selling and multi-level marketing legislation.

The Company previously submitted a preliminary application for a direct selling license in China in August 2015, but in 2019 a Chinese governmental authority recommended that the Company withdraw its application.

The Company understands that the governmental authorities recommended that other companies with pending direct selling license applications also withdraw their applications.

The Company applied to withdraw its application in November 2019, and the governmental authorities approved the withdrawal of its application shortly thereafter.

The Company previously submitted a preliminary application for a direct selling license in China, but in 2019 a Chinese governmental authority recommended that the Company withdraw its application.

The Company operates an e-commerce direct selling platform in Hong Kong and recognizes the revenue derived from sales to both Hong Kong and Chinese members as being generated in Hong Kong.

21 unchanged sentences

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016 - 13, Financial Instruments - Credit Losses (Topic 326 ):

Measurement of Credit Losses on Financial Instruments , which introduced an expected credit loss model for the impairment of financial assets measured at amortized cost basis and added Topic 326 to the FASB Accounting Standards Codification (“ASC”).

In November 2019, the FASB issued ASU 2019 - 11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses .

The amendments to ASU 2019 - 11 clarify, correct and make improvements to Topic 326.

ASU 2016 - 13 as well as the updates in ASU 2019 - 11 were effective for interim and annual periods beginning after December 15, 2022.

The adoption of this 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 ):

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023 - 07, Segment Reporting (Topic 280 ):

Improvements to Reportable Segment Disclosures , which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The amendments in ASU 2023 - 07 will be applied retrospectively and are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of implementing this guidance, but does not expect adoption to have a material impact on its consolidated financial statements.

The amendments in ASU 2023 - 07 require, among other things, disclosure of significant segment expenses that are regularly provided to an entity's chief operating decision maker (“CODM”) and a description of other segment items (the difference between segment revenue less the segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss) by reportable segment, as well as disclosure of the title and position of the CODM, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

Annual disclosures are required for fiscal years beginning after December 15, 2023 and interim periods are required for periods within fiscal years beginning after December 15, 2024.

The Company has adopted this guidance, which did not have an impact on its financial position, results of operations, or cash flows, although it did result in expanded reportable segment disclosures, which are included in Note 13 of the Company's consolidated financial statements.

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

1 unchanged sentence

The amendments in ASU 2023 - 09 will be applied on a prospective basis and are effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of implementing this guidance on its consolidated financial statements.

The Company is currently evaluating the impact of implementing this guidance on its financial statements.

In November 2024, the FASB issued ASU 2024 - 03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures .

ASU 2024 - 03 is intended to improve disclosures about a public business entity's expenses and provide more detailed information to investors about the types of expenses in commonly presented expense captions.

The amendments in this ASU will be applied retrospectively and are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the impact of implementing this guidance.

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 consolidated financial statements.

41 unchanged sentences

Net income available to common stockholders

$ 572 11,467 $ 0.05 $ 568 11,436 $ 0.05

Effect of dilutive securities:

2 unchanged sentences

Net income available to common stockholders plus assumed dilution

$ 572 11,490 $ 0.05 $ 568 11,456 $ 0.05

BALANCE SHEET COMPONENTS

The components of certain balance sheet amounts are as follows (in thousands):

Cash and cash equivalents:

Cash, cash equivalents and restricted cash:

$ 7,925 $ 8,971

Cash equivalents

13,533 56,178

Restricted cash

$ 13,567 $ 56,217

Finished goods

$ 2,770 $ 3,438

Raw materials

Reserve for obsolescence

$ 3,272 $ 4,293

Property and equipment:

6 unchanged sentences

Accumulated depreciation and amortization

( 2,310 ) ( 2,212 )

Other accrued expenses:

2 unchanged sentences

Warehousing, inventory-related and other

$ 1,425 $ 1,170

Deferred revenue:

Unshipped product and unredeemed product vouchers

$ 4,940 $ 4,417

Auto ship advances

$ 6,428 $ 6,166

FAIR VALUE MEASUREMENTS

Investments by category included in cash equivalents at the end of each period were as follows (in thousands):

As of December 31, 2024, cash and cash equivalents and marketable securities include the Company’s investments in money market funds, government and municipal debt securities, and corporate debt securities.

Debt securities classified as cash equivalents are required to be accounted for in accordance with FASB Accounting Standards Codification 320, Investments - Debt and Equity Securities .

As such, the Company determined its investments in debt securities held at December 31, 2024 should be classified as available-for-sale and carried at fair value with unrealized gains and losses reported in stockholders’ equity.

The cost of debt securities is adjusted for amortization of premiums and discounts to maturity.

This amortization is included in other income and expense.

Realized gains and losses, as well as interest income, are also included in other income and expense.

The fair values of securities are based on quoted market prices to the extent available or alternative pricing sources and models utilizing market observable inputs.

Investments by category included in cash equivalents and marketable securities at the end of each period were as follows (in thousands):

December 31, 2024

2 unchanged sentences

Adjusted Cost

Gross Unrealized Gains (Losses)

Adjusted Cost

Gross Unrealized Losses

Adjusted Cost

Gross Unrealized Gains (Losses)

Money market funds

Government and municipal debt securities

$ 2,092 $ — $ 2,092 $ 213 $ — $ 213

Municipal debt securities

3,458 — 3,458 1,426 1 1,427

Corporate debt securities

30,491 ( 26 ) 30,465 45,580 ( 13 ) 45,567

Total investments

$ 36,041 $ ( 26 ) $ 36,015 $ 47,219 $ ( 12 ) $ 47,207

1 FASB Topic 820, Fair Value Measurements, establishes a fair value hierarchy that requires the use of observable market data, when available, and prioritizes the inputs to valuation techniques used to measure fair value in the following categories:

2 unchanged sentences

Unobservable inputs that are not corroborated by market data.

The Company leases 7,300 square feet of corporate office space in Hong Kong with a term expiring in June 2026, and 4,900 square feet of corporate office space in Rolling Hills Estates, California with a term expiring in September 2030.

The Company leases 4,900 square feet of corporate office space in Rolling Hills Estates, California with a term expiring in September 2030, and 7,300 square feet of corporate office space in Hong Kong with a term expiring in June 2026.

To help further develop the market for its products in North America, the Company leases 1,600 square feet of retail space in each of Rowland Heights, California and Richmond, British Columbia, and 2,000 square feet of retail space in Metuchen, New Jersey.

The Rowland Heights, Richmond and Metuchen locations have terms expiring in November 2025, February 2027, and December 2028, respectively.

The Company leases seven branch offices throughout China, and additional office space in Peru, Japan, Taiwan, South Korea, Malaysia, Thailand, India, and the Cayman Islands.

The Company leases seven branch offices throughout China, and additional office space in Peru, Japan, Taiwan, South Korea, Malaysia and the Cayman Islands.

The Company contracts with third parties for fulfillment and distribution operations in all of its international markets.

3 unchanged sentences

Operating leases

$ 1,279 $ 1,298

Short-term leases

Total lease cost

$ 1,422 $ 1,448

Cash paid for amounts included in the measurement of operating leases liabilities was $ 1.3 million for each of 2024 and 2023.

11 unchanged sentences

Year Ended December 31,

$ ( 993 ) $ ( 1,182 )

Income before income taxes

2 unchanged sentences

Current taxes:

$ ( 24 ) $ 73

Total current taxes

5 unchanged sentences

Income tax at federal statutory rate

Effect of permanent differences

Section 162(m) limitation

Subpart F inclusion

Stock-based compensation

Other permanent differences

foreign income inclusions

1 unchanged sentence

Foreign rate differential

Restricted stock shortfall

( 293 ) ( 334 )

Other reconciling items

4 unchanged sentences

Cayman Islands

— % $ 1,535 $ 2,005

16.5 % 745 665

25.0 % ( 124 ) 48

Deferred income taxes consist of the following (in thousands):

4 unchanged sentences

Valuation allowance

( 391 ) ( 302 )

Net deferred tax assets

1 unchanged sentence

Operating lease assets

( 297 ) ( 356 )

Foreign deferreds

( 173 ) ( 135 )

( 35 ) ( 35 )

Total deferred tax liabilities

( 508 ) ( 531 )

Net deferred tax assets

7 unchanged sentences

Any reductions in the valuation allowance will reduce future income tax provision.

As of December 31, 2023 , the Company has zero U.S.

As of December 31, 2024 , the Company has $ 390,000 of U.S.

federal net operating loss carryforwards.

2 unchanged sentences

At December 31, 2024 , the Company has foreign net operating loss carryforwards of approximately $ 2.3 million in various jurisdictions with various expirations.

As of December 31, 2023, income taxes payable for the repatriation tax on the deemed repatriation of deferred foreign income required the U.S.

As of December 31, 2024, income taxes payable for the repatriation tax on the deemed repatriation of deferred foreign income required by the U.S.

Tax Cuts and Jobs Act (the “Tax Act”), enacted in 2017 by the U.S.

government, totaled $ 9.0 million, of which $ 5.1 million is reflected as a noncurrent liability.

government, totaled $ 5.1 million, with the final installment of eight total payments payable in April 2025.

As a result of capital return activities, the Company determined that a portion of its current undistributed foreign earnings is no longer deemed reinvested indefinitely by its non-U.S.

13 unchanged sentences

Restricted Stock

At the Company’s annual meeting of stockholders held on April 7, 2016, the Company’s stockholders approved the Natural Health Trends Corp.

In 2016, the Company’s stockholders approved the Natural Health Trends Corp.

2016 Equity Incentive Plan (the “2016 Plan”) to replace its 2007 Equity Incentive Plan.

7 unchanged sentences

Nonvested at December 31, 2022

97,900 $ 4.84

( 31,914 ) $ 4.84

( 3,666 ) $ 4.84

Nonvested at December 31, 2023

62,320 $ 4.84

( 29,946 ) $ 4.84

( 3,698 ) $ 4.84

Nonvested at December 31, 2024

Share-based compensation expense of $ 161,000 was recognized during 2023.

28,676 $ 4.84

Share-based compensation expense of $ 145,000 and $ 161,000 was recognized during 2024 and 2023, respectively.

As of December 31, 2024 , total unrecognized share-based compensation expense related to non-vested restricted stock was $ 132,000 , which is expected to be recognized over a weighted-average period of 0.6 years.

Phantom Equity

On March 15, 2021, the Company’s Board of Directors approved and adopted a Phantom Equity Plan (the “Phantom Plan”).

In 2021, the Company’s Board of Directors approved and adopted a Phantom Equity Plan (the “Phantom Plan”).

Under the terms of the Phantom Plan, the Board of Directors' Compensation Committee may grant to the Company’s employees, officers, directors, contractors, consultants, or advisors awards of phantom shares entitling grantees the right to receive a cash payment equal to the fair market value of an equal number of shares of the Company’s common stock upon the close of a vesting period, subject to any maximum payment value that the Compensation Committee may set.

2 unchanged sentences

The Phantom Plan shall continue for a period of ten years, after which no further phantom shares may be awarded (although any phantom shares awarded prior to the expiration of such 10 -year period shall be unaffected by the termination of the Phantom Plan).

Also on March 15, 2021, awards for 223,307 phantom shares were granted to the Company’s employees and its non-employee directors.

The phantom shares vested in eight equal three -month vesting increments, subject to the satisfaction of both a time-based vesting condition and a performance vesting condition.

Both of these vesting conditions were deemed satisfied on the grant date for the initial vesting increment, and were satisfied for each of the following three vesting periods in 2021 and the first vesting period in 2022.

The time-based vesting condition was also satisfied for the final three vesting periods in 2022.

In order for the time-based vesting condition to be satisfied for each vesting period, the grantee must have remained continuously employed by, or be otherwise continuously providing services to, the Company through the end of the vesting period, and in order for the performance vesting condition to be satisfied for each performance period, the performance criteria designated by the Compensation Committee must have been satisfied.

The initial performance vesting condition to be applied to measure performance for the period between March 15, 2021 and June 15, 2021 was designated by the Compensation Committee on or before April 14, 2021, and applied to all future performance periods unless the Compensation Committee elected to change the performance vesting condition on a prospective basis.

Future changes to the performance vesting condition must have been made on or before the fifteenth day of any future performance period.

If either vesting condition was not satisfied for a vesting date, then the phantom shares scheduled to vest on such date would be forfeited.

These phantom shares were subject to a maximum payment value of $ 12.00 per phantom share.

An additional award with similar vesting conditions for 9,074 phantom shares was granted on May 14, 2021 to the Company's new non-employee director, while unvested 9,074 phantom shares granted to the Company's departing non-employee director were forfeited on or about the same date.

On each of May 23, 2022, August 31, 2022, and November 25, 2022 the Compensation Committee determined to amend the outstanding awards to provide that the performance criteria shall be deemed satisfied for the three -month performance periods relating to the June 15, 2022, September 15, 2022 and December 15, 2022 vesting dates, respectively.

In making its determination, the Compensation Committee noted that the fact that the performance criteria were not achieved for the relevant performance periods was due to extraordinary business circumstances in China that were clearly beyond the Company’s control.

Of the phantom shares awarded in 2021, 223,307 phantom shares vested, no shares remain unvested, and 9,074 shares were forfeited as of the year ended December 31, 2022.

On February 7, 2023, the Company granted 212,937 phantom shares to certain of the Company’s employees and its non-employee directors.

6 unchanged sentences

These phantom shares are subject to a maximum payment value of $ 12.00 per phantom share.

Of the phantom shares awarded in 2023, 106,468 phantom shares vested and 106,469 remain unvested as of and for the year ended December 31, 2023.

Of the phantom shares awarded in 2023, 186,320 phantom shares vested, no shares remain unvested, and 26,617 were forfeited as of December 31, 2024.

The phantom share awards are accounted for as liabilities in accordance with FASB ASC Topic 718, Compensation - Stock Compensation since they require cash settlement.

2 unchanged sentences

The fair value of the liability incurred is remeasured at the end of each reporting period with any changes in fair value recognized as compensation expense over the requisite service period.

As a result of phantom shares, the Company recognized compensation expense related to the cash settlement of such shares of $ 551,000 and $ 575,000 during each of 2023 and 2022, respectively.

As a result of phantom shares, the Company recognized compensation expense related to the cash settlement of such shares of $ 475,000 and $ 551,000 during 2024 and 2023, respectively.

STOCKHOLDERS’ EQUITY

1 unchanged sentence

The Company is authorized to issue two classes of capital stock consisting of up to 5,000,000 shares of preferred stock, $ 0.001 par value, and 50,000,000 shares of common stock, $ 0.001 par value.

The Company declared and paid cash dividends of $ 0.20 per common share during each quarter of 2023 and 2022, totaling an aggregate of $ 9.2 million and $ 9.1 million during 2023 and 2022, respectively.

The Company declared and paid cash dividends of $ 0.20 per common share during each quarter of 2024 and 2023, totaling an aggregate of $ 9.2 million for each of 2024 and 2023.

Declaration and payment of any future dividends on shares of common stock will be at the sole discretion of the Company’s Board of Directors.

Stock Repurchases

On January 12, 2016, the Board of Directors authorized an increase to the Company’s stock repurchase program first approved on July 28, 2015 from $ 15.0 million to $ 70.0 million.

In 2016, the Board of Directors authorized an increase to the Company’s stock repurchase program first approved in 2015 from $ 15.0 million to $ 70.0 million.

Any repurchases will be made in accordance with all applicable securities laws and regulations, including Rule 10b - 18 of the Exchange Act.

5 unchanged sentences

Foreign Currency Translation Adjustments

Unrealized Gains (Losses) on Available-For-Sale Investments

Unrealized Losses on Available-For-Sale Investments

Balance, December 31, 2023

$ ( 1,057 ) $ ( 12 ) $ ( 1,069 )

Other comprehensive income (loss)

Other comprehensive loss

( 218 ) ( 14 ) ( 232 )

4 unchanged sentences

Broady, a former director of the Company and beneficial owner of more than 5 % of its outstanding common stock, is an indirect owner of BHS.

Broady, also a former director of the Company and daughter of Mr.

Broady, is the President and Chief Executive Officer of BHS.

Lucy Nduati, a director of the Company, has since 2013 served a number of companies controlled by George K.

Broady and other Broady family members in a variety of roles focused on administration, accounting, finance, tax strategy and office management.

Under this agreement (as amended), the Company agreed to pay BHS a royalty based on a price per unit in return for the right to manufacture (or have manufactured), market, import, export and sell this product worldwide by or through multi-level marketing or network marketing.

13 unchanged sentences

Otherwise, the Company believes that all of its other operating segments have similar economic characteristics and are similar in the nature of the products sold, the product acquisition process, the types of customers products are sold to, the methods used to distribute the products, and the nature of the regulatory environment.

Therefore, the Company aggregates its other operating segments (including its Hong Kong operating segment) into a single reporting segment (the “Primary Reporting Segment”).

The Company reviews its net sales and operating income (loss) by operating segment, and reviews its assets and capital expenditures on a consolidated basis and not by operating segment.

As such, net sales and operating income (loss) are presented by reportable segment and assets and capital expenditures by operating segment are not presented.

Segment operating income is adjusted for certain direct costs and commission allocation.

The Company’s operating information by geographic area are as follows (in thousands):

Therefore, the Company aggregates its other operating segments (including its Hong Kong operating segment) into a single reporting segment (the “Primary Reporting Unit”).

The Company’s CODM is its President, who reviews financial information presented on a geographic basis.

The CODM primarily uses net sales, gross profit and operating profit in assessing segment performance and determining the allocation of resources.

The CODM also uses gross profit for evaluating pricing strategy.

The CODM is the primary individual in control of resource allocation, and the allocation determinations are generally made in consultation with senior management, which the CODM is a member.

Segment operating income is adjusted for certain direct costs and commission allocations.

The CODM also regularly reviews inventory information by operating segment in assessing segment performance and determining the allocation of resources.

The Company’s financial information by segment is as follows (in thousands):

Year Ended December 31, 2024

Primary Reporting Segment

Year Ended December 31, 2023

Primary Reporting Unit

Russia and Kazakhstan

Total net sales

Income (loss) from operations:

Primary Reporting Segment

Primary Reporting Unit

Russia and Kazakhstan

Income from operations for reportable segments, net

$ 40,893 $ 1,580 $ 490 $ 42,963 $ 42,209 $ 1,235 $ 480 $ 43,924

Cost of sales

10,658 292 228 11,178 10,699 274 202 11,175

30,235 1,288 262 31,785 31,510 961 278 32,749

Commissions expense 1

17,305 — 266 17,571 18,130 — 284 18,414

Employee-related costs

3,629 950 48 4,627 3,458 900 45 4,403

Facility costs

1,191 155 14 1,360 1,193 175 13 1,381

Other segment items 2

1,494 325 57 1,876 1,662 420 70 2,152

Segment income (loss) from operations

$ 6,616 $ ( 142 ) $ ( 123 ) 6,351 $ 7,067 $ ( 534 ) $ ( 134 ) 6,399

Reconciliation of income before income taxes:

Unallocated corporate expenses

( 7,650 ) ( 8,070 )

Other income, net

Income before income taxes

1 Our China subsidiary maintains an e-commerce retail platform and does not pay commissions .

2 Other segment items include credit card fees and assessments, marketing-related costs, professional fees and other business expenses.

The Company’s segment assets are as follows (in thousands):

December 31, 2024

December 31, 2023

Primary Reporting Unit

Russia and Kazakhstan

Primary Reporting Unit

Russia and Kazakhstan

$ 2,422 $ 159 $ 36 $ 2,617 $ 2,991 $ 147 $ 27 $ 3,165

Other inventories and inventory-related deposits 1

Other assets 2

51,771 64,271

$ 55,359 $ 69,091

1 Other inventories and inventory-related deposits pertain to the Company's trading company and are not specific to any of the Company's operating segments.

2 Other assets primarily include cash, cash equivalents and marketable securities, but also includes all other current and noncurrent assets.

The Company’s net sales by geographic area are as follows (in thousands):

2 unchanged sentences

United States

$ 1,044 $ 1,157

Peru and Colombia

35,106 34,898

Russia and Kazakhstan

1 unchanged sentence

Total net sales

$ 42,963 $ 43,924

1 Substantially all of the Company's Hong Kong revenues are derived from the sale of products that are delivered to members in China.

5 unchanged sentences

Product sales

$ 41,729 $ 42,108

Administrative fees, freight and other

sales returns

( 310 ) ( 198 )

Total net sales

$ 42,963 $ 43,924

Due to system constraints, it is impracticable for the Company to separately disclose sales by product category for the years presented.

The Company’s long-lived assets by geographic area are as follows (in thousands):

The Company’s long-lived tangible assets as well as the Company's operating lease right-of-use assets by geographic area are as follows (in thousands):

Long-lived assets:

United States

$ 1,425 $ 1,754

Other foreign countries

Total long-lived assets

$ 2,688 $ 3,585

SUBSEQUENT EVENT

On February 3, 2025, the Board of Directors declared a quarterly cash dividend of $ 0.20 on each share of common stock outstanding.

The dividend will be payable on March 1, 2024 to stockholders of record on February 20, 2024.

The dividend will be payable on February 28, 2025 to stockholders of record on February 18, 2025.

Declaration and payment of any future dividends on shares of common stock will be at the sole discretion of the Company’s Board of Directors.

2 unchanged sentences

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