What changed in this filing

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Item 1A. Risk Factors

2026-02-20 compared with 2025-02-21 · 58 added, 43 removed, 379 unchanged (21% of the section changed)

3 unchanged sentences

Because our Hong Kong operations account for a substantial portion of our overall business, and substantially all of our Hong Kong business is derived from the sale of products to members in China, any material adverse change in our business relating to either Hong Kong or China would likely have a material adverse impact on our overall business.

In 2024 and 2023, approximately 82% and 79% of our revenue was generated in Hong Kong, respectively, and substantially all of our Hong Kong revenues are derived from the sale of products that are delivered to members in China.

In 2025 and 2024, approximately 82% of our revenue was generated in Hong Kong.

Substantially all of our Hong Kong revenues are derived from the sale of products that are delivered to members in China.

This geographic concentration in our business means that events or conditions that could negatively impact this geographic region or our operations in this region, including the current economic challenges facing China and Hong Kong, are having and could in the future have a greater adverse impact upon our overall business and financial results than would be the case with a company having greater geographic diversification.

6 unchanged sentences

It is unclear how changed circumstances in Hong Kong will in the future affect our business, but it is possible that the upheaval in Hong Kong's political and economic affairs or related consequences could adversely affect our future business, results of operations and financial condition.

We experienced negative operating cash flows during the years ended December 31, 2024, 2023 and 2022, and only modest positive operating cash flows during the years ended December 31, 2021 and 2020.

We experienced negative operating cash flows during each of the four years ended December 31, 2022 through 2025, and only modest positive operating cash flows during the years ended December 31, 2021 and 2020.

Unless our operating cash flows improve, this negative financial performance could have a material adverse effect on our business and our stock price.

We experienced negative operating cash flows during the years ended December 31, 2024, 2023 and 2022, and only modest positive operating cash flows during the years ended December 31, 2021 and 2020.

This cash flow performance was primarily due to declines in our revenues being greater than the decreases in expenditures that we could manage.

13 unchanged sentences

The continuing effect of any or all of these events could adversely impact demand for our products, harm our business, results of operations and financial condition.

Changes in government trade and economic policies, including the imposition of tariffs and other restrictive trade policies, and ongoing political and economic disputes between the United States and other jurisdictions, particularly China, may have a negative effect on global economic conditions and our business, financial results and financial condition.

Since President Trump's re-election in 2024, tariffs on imports to the United States have become an increasingly significant component of U.S.

trade policy.

Beginning in the first quarter of 2025, the U.S.

has announced and/or implemented significant new tariffs on imports from a wide range of countries, particularly China, which has prompted retaliatory tariffs by a number of countries and a cycle of further tariffs by both the U.S.

and other countries.

On April 2, 2025, the U.S.

imposed by executive order a 34% reciprocal tariff on Chinese-origin goods.

This was followed by an amended executive order April 8, 2025, raising tariffs to 84% and an April 9, 2025 executive order raising tariffs to 125%.

In response, China raised its duties on imported U.S.

goods to a similar level.

Following negotiations, the U.S.

announced a temporary 90-day reduction in its reciprocal tariff rates from 125% to 10% beginning in May 2025, and China agreed to suspend its retaliatory tariffs during the same period.

The pre-existing 20% U.S.

tariff imposed on all Chinese goods remained in place, along with certain other sector-specific tariffs.

In October 2025, the U.S.

administration announced an additional 100% tariff on all products imported from China in response to certain restrictions imposed by China on rare earth minerals, before announcing an agreement that would, among other things, reduce the general tariff rate on Chinese goods to 47%.

trade policies can change quickly, and the extent and duration of tariffs and other trade barriers are difficult to predict.

These developments, together with the threat of additional tariffs and other restrictive trade policies and the uncertainties they create, may have a material adverse effect on global economic conditions and the stability of global financial markets, and they may significantly reduce global trade and, in particular, adversely affect trade and economic relations between China and the United States.

Specifically, we may incur additional costs in the future in connection with shipments of products into China, particularly from the U.S.

We may not be able to recover these additional costs through a surcharge.

To the extent we are able to contract for products that are currently made in the U.S.

to be manufactured elsewhere in order to mitigate the effect of these tariffs, we may incur additional transition costs including the cost of product reregistration.

Assuming substantial tariffs remain in place, their effect on our future operating results remains uncertain.

Apart from the direct cost of tariffs, the ongoing trade dispute may also have an impact on Chinese discretionary spending and consumer sentiment toward products made or perceived to be made in the U.S., which has had and may continue to have an impact on demand for our products.

Apart from trade policy, tensions between the United States and China have increased in recent years as a result of disputes in other areas including intellectual property, cybersecurity and data privacy.

Tensions became particularly acute following the China legislature’s passage of a national security law in 2020 that changed the way Hong Kong has been governed since the territory was handed over by the United Kingdom to China in 1997.

This law criminalizes secessionist activities, subversion, terrorism, and collusion with a foreign country or with external elements to endanger national security in Hong Kong.

State Department has indicated that the United States no longer considers Hong Kong to have significant autonomy from China, and the United States has enacted sanctions against certain persons related to China's governance of Hong Kong.

China has responded in kind.

These and other recent actions reflect an escalation in political and economic tensions involving the United States, China and Hong Kong, which could harm our business.

A continued deterioration in these political or economic relations or other future unforeseen problems could disrupt our China and Hong Kong business (including our Hong Kong office and employees), adversely affect the distribution of our products, reduce our net sales, increase the cost of conducting our operations, or result in retaliatory actions against U.S.

interests, any of which could have a material adverse effect on our business, results of operations and financial condition.

In addition, any actions by non-U.S.

markets to implement further trade or economic policy changes, including limiting foreign investment or trade, imposing currency controls restricting the international transfer of funds, increasing regulatory scrutiny or taking other actions which impact U.S.

companies' ability to obtain necessary licenses or approvals could negatively impact our business.

Trade and economic policy changes are subject to a number of uncertainties and are only one part of the larger dynamic of political and economic relations amongst countries.

The ultimate reaction of other countries, and the individuals in each of these countries, and the impact of actions on the United States, China, Hong Kong, the global economy and our business, financial condition and results of operations, cannot be predicted at this time.

We are subject to risks relating to product concentration and lack of revenue diversification.

Although we have in recent years expanded our line of products, we derive at least 10% of our total revenue from each of our Premium Noni Juice and Triotein™ products, as well as our line of probiotic products comprised of Enhanced Essential Probiotics and Biotic Trio .

Further, we currently source each of these products from a single supplier.

54 unchanged sentences

Failure to maintain effective internal controls in accordance with the Sarbanes-Oxley Act of 2002 could negatively impact our business and the market price of our common stock.

We are required by federal securities laws to document and test our internal control procedures in order to satisfy the requirements of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), which requires annual management assessments of the effectiveness of internal control over financial reporting.

We are required by federal securities laws to document and test our internal control procedures in order to satisfy the requirements of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), which requires annual management assessments of, and reports on, the effectiveness of internal control over financial reporting.

Effective internal controls are necessary for us to provide reliable financial reports and to effectively prevent fraud.

The SEC’s Sarbanes-Oxley rules require us to include a report by management on the effectiveness of our internal control over financial reporting in our Annual Reports on Form 10-K.

Although we review internal control over financial reporting in order to ensure compliance with the SEC’s Sarbanes-Oxley rules, if we fail to maintain effective internal control over financial reporting, we could be required to take costly and time-consuming corrective measures to remedy any number of deficiencies, significant deficiencies or material weaknesses, be required to restate the affected historical financial statements, be subjected to investigations and/or sanctions by federal and state securities regulators, and be subjected to civil lawsuits by stockholders.

For instance, as described in “Item 9A.

- Controls and Procedures” in our Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2018, we identified a material weakness in our internal control over financial reporting as of December 31, 2018.

Management, with oversight from the Audit Committee, implemented a plan to remediate this material weakness and completed remediation during 2019.

While the existence of this material weakness did not result in a restatement of previously issued interim or annual consolidated financial statements, we incurred substantial costs and utilized meaningful resources to remediate the material weakness during 2019.

For instance, we incurred substantial costs in 2019 to remediate an identified material weakness in our internal control over financial reporting.

Any future failure to maintain effective internal control over financial reporting could result in the foregoing identified consequences and could cause investors to lose confidence in our reported financial information and in our company and could cause a decline in the market price of our common stock.

10 unchanged sentences

Our members may terminate their services with us at any time and, like most direct selling organizations, we have a high rate of attrition.

We had 5% fewer active members at December 31, 2024 as compared to the end of 2023, and 16% fewer active members at the end of each of 2023 and 2022 as compared to the end of the previous year.

We had 14% fewer active members at December 31, 2025 as compared to the end of 2024, and 5% fewer active members at the end of 2024 as compared to the end of 2023.

These losses in the number of active members were a significant factor contributing to the decrease in our recent year-over-year sales.

35 unchanged sentences

An increase in the amount of compensation paid to members would reduce profitability.

We incur significant expense in the payment of compensation to our members, which represented approximately 41% and 42% of net sales during each of 2024 and 2023, respectively.

We incur significant expense in the payment of compensation to our members, which represented approximately 41% of net sales during each of 2025 and 2024.

We compensate our members by paying commissions, bonuses, and certain awards and prizes.

8 unchanged sentences

In addition, we are subject to the risk in some jurisdictions of being responsible for social security and similar taxes with respect to our members.

Legal, Regulatory, Tax, Currency and Trade Policy Risks

Legal, Regulatory, Tax and Currency Risks

Our business in China is subject to compliance with a myriad of applicable laws and regulations, and any actual or alleged violations of those laws or government actions otherwise directed at us could have a material adverse impact on our business and the value of our company.

5 unchanged sentences

Chinese members may elect to participate in either or both of the Chinese entity and the Hong Kong entity.

We previously submitted a preliminary application for a direct selling license in China, but in 2019 a Chinese governmental authority recommended that we withdraw our application.

We previously submitted a preliminary application for a direct selling license in China, but withdrew our application in 2019 upon the recommendation of a Chinese governmental authority.

We expect to reapply for a direct selling license in China when we believe that circumstances are again ripe for doing so.

21 unchanged sentences

Any determination that our operations or activities, or the activities of our individual members, employee sales representatives, or importers of record are not in compliance with applicable laws and regulations could result in the imposition of substantial fines, extended interruptions of business, restrictions on our future ability to obtain business licenses or expand into new locations, changes to our business model, the termination of required licenses to conduct business, or other actions, any of which could materially harm our business, results of operations and financial condition.

Changes in government trade and economic policies, including the imposition and threatened imposition of tariffs and other restrictive trade policies, and ongoing political and economic disputes between the United States and other jurisdictions, particularly China, may have a negative effect on global economic conditions and our business, financial results and financial condition.

The United States has in recent years enacted tariffs on certain items.

Further, with President Trump's re-election in 2024, significant increases in tariffs on foreign imports into the United States have been proposed or, the case of imports from China imposed.

In response, a number of our markets, particularly China, have implemented tariffs on U.S.

imports or otherwise imposed non-tariff barriers such as slow-walking custom clearance of American-made products.

trade policies can change quickly, and the extent and duration of tariffs and other trade barriers are difficult to predict.

These developments, together with the threat of new tariffs and other restrictive trade policies and the uncertainties they create, may have a material adverse effect on global economic conditions and the stability of global financial markets, and they may significantly reduce global trade and, in particular, adversely affect trade and economic relations between China and the United States.

Tensions between the United States and China have increased in recent years as a result of disputes in areas including trade policy, intellectual property, cybersecurity and data privacy.

This law criminalizes secessionist activities, subversion, terrorism, and collusion with a foreign country or with external elements to endanger national security in Hong Kong.

China has responded in kind.

These and other recent actions reflect an escalation in political and economic tensions involving the United States, China and Hong Kong, which could harm our business.

interests, any of which could have a material adverse effect on our business, results of operations and financial condition.

In addition, any actions by non-U.S.

companies' ability to obtain necessary licenses or approvals could negatively impact our business.

Trade and economic policy changes are subject to a number of uncertainties and are only one part of the larger dynamic of political and economic relations amongst countries.

Direct-selling laws and regulations may prohibit or severely restrict our direct sales efforts and cause our revenue and profitability to decline, and regulators could adopt new regulations that harm our business.

16 unchanged sentences

Specifically, the Cyber Security Law provides that companies adopt a multi-level protection scheme under which network operators are required to perform obligations of security protection to ensure that the network is free from interference, disruption or unauthorized access, and prevent network data from being disclosed, stolen or tampered with.

Amendments to the Cyber Security Law that took effect on January 1, 2026 increase penalties and enforcement measures for certain violations and may heighten our potential exposure and compliance costs.

In addition, on June 10, 2021, the Standing Committee of the National People's Congress of China promulgated the Data Security Law, which took effect in September 2021.

3 unchanged sentences

The PIPL expands data protection compliance obligations to cover the processing of personal information of persons by organizations and individuals in China, and the processing of personal information of persons in China, outside of China if such processing is for purposes of providing products and services to, or analyzing and evaluating the behavior of, persons in China.

The PIPL also provides that critical information infrastructure operators and personal information processing entities that process personal information meeting a volume threshold are also required to store in China personal information generated or collected in China, and to pass a security assessment for any export of such personal information.

In addition, China has recently adopted implementing regulations and measures, including regulations on network data security management and cross-border data transfers, as well as sector-specific and regional rules and catalogues relating to “important data,” which further refine and in some cases expand data security, classification and cross-border transfer requirements and increase the complexity of the regulatory regime.

Hong Kong also has its data privacy legislation that regulates the collection, use and handling of personal data.

19 unchanged sentences

There can be no assurance that we will be able to successfully defend or resolve any such litigation, claims or governmental proceedings or inquiries, or that the significant money, time and effort spent in defending these matters, or any related adverse publicity, will not adversely affect our business, results of operations and financial condition.

Currency exchange rate fluctuations could lower our revenue and net income.

Currency exchange rate fluctuations could lower our revenue and profitability.

In 2025, 96% of our revenue was recorded by subsidiaries located outside of North America.

55 unchanged sentences

New regulations governing the marketing and sale of nutritional supplements could harm our business.

There has been an increasing movement in the United States and other markets to increase the regulation of dietary supplements, which could impose additional restrictions or requirements in the future.

In the United States, for example, some legislators and industry critics continue to push for increased regulatory authority by the FDA over nutritional supplements.

There has been a movement in recent years in some markets to increase the regulation of dietary supplements or to revisit the interpretation of existing regulations, either of which could impose additional restrictions or requirements in the future.

While the regulatory framework for dietary supplements in the United States remains largely unchanged, the industry is subject to ongoing policy discussions regarding oversight, enforcement priorities, and consumer protection.

Future regulatory interpretations or enforcement approaches could affect how dietary supplements are marketed or distributed.

Our business could be harmed if more restrictive legislation is successfully introduced and adopted in the future.

27 unchanged sentences

Foreign Corrupt Practices Act (“FCPA”), which generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business as well as requiring companies and their intermediaries to maintain accurate books and records.

In recent years there has been a substantial increase in anti-bribery law enforcement activity by the U.S.

In the past decade there has been a substantial increase in anti-bribery law enforcement activity by the U.S.

Department of Justice (the “DOJ”) and the SEC relating to certain countries in which we have business, including China.

For example, in 2017, a U.S.

based direct selling company announced that it was the target of an investigation being conducted by the SEC to determine whether certain activities related to the direct selling company's operations in China violated the FCPA.

Also, in 2017, another U.S.

based direct selling company announced that it had initiated a voluntary probe of its operations in China to determine if violations of the FCPA had occurred.

For example, in August 2020, a U.S.-based direct selling company entered into a deferred prosecution agreement in connection with criminal charges brought by the DOJ relating to alleged payments and benefits paid to Chinese officials, and settled related SEC charges at the same time, incurring over $120 million in fines and disgorgement of profits.

Our policies mandate compliance with anti-bribery laws by our employees and agents, including the requirements to maintain accurate information and internal controls.

71 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 1A. Risk Factors