What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-20 compared with 2025-02-21 · 244 added, 93 removed, 601 unchanged (36% of the section changed)

2 unchanged sentences

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm ( CBIZ CPAs P.C.

, PCAOB ID No.

Report of Independent Registered Public Accounting Firm (Marcum LLP, PCAOB ID No.

1 unchanged sentence

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Stockholders’ Equity

5 unchanged sentences

Opinion on the Financial Statements

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

(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.

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

(the “Company”) as of December 31, 2025, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, based on our audit, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year then ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Notes 2 and 7 to the financial statements, the Company adopted ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”).

We have also audited the adjustments to the 2024 financial statements to retrospectively adjust the disclosures for the adoption of ASU 2023-09 in 2025.

In our opinion, such retrospective adjustments are appropriate and have been properly applied.

We were not engaged to audit, review, or apply any procedures to the 2024 financial statements of the Company other than with respect to these retrospective adjustments, and accordingly, we do not express an opinion or any other form of assurance on the 2024 financial statements taken as a whole.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

2 unchanged sentences

We determined that there are no critical audit matters.

/s/ CBIZ CPAs P.C.

CBIZ CPAs P.C.

We have served as the Company’s auditor since 2017 (such date takes into account the acquisition of the attest business of Marcum LLP by CBIZ CPAs P.C.

effective November 1, 2024).

Los Angeles, CA

February 20, 2026

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of

Natural Health Trends Corp.

Opinion on the Financial Statements

We have audited, before the effects of the retrospective adjustments to the disclosures for the adoption of ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”) as discussed in Notes 2 and 7 to the consolidated financial statements, the accompanying consolidated balance sheet of Natural Health Trends Corp.

(the “Company”) as of December 31, 2024, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”) (the 2024 financial statements before the effects of the adjustments discussed in Notes 2 and 7 to the financial statements are not presented herein).

In our opinion the financial statements, before the effects of the retrospective adjustments to the disclosures for the adoption of ASU 2023-09 as discussed in Notes 2 and 7 to the financial statements, present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to audit, review, or apply any procedures to the retrospective adjustments to the disclosures for the adoption of ASU 2023-09 as discussed in Notes 2 and 7 to the financial statements and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied.

Those retrospective adjustments were audited by CBIZ CPAs P.C.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

Accordingly, we express no such opinion.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

/s/ Marcum LLP

We have served as the Company’s auditor since 2017.

We have served as the Company’s auditor from 2017 through 2025.

Los Angeles, CA

7 unchanged sentences

Marketable securities

22,060 30,407

Other current assets

18 unchanged sentences

13,688 20,799

Income taxes payable

Deferred tax liability

17 unchanged sentences

Treasury stock, at cost;

1,466,339 and 1,462,641 shares at December 31, 2024 and 2023, respectively

1,466,339 shares at December 31, 2025 and 2024

( 24,397 ) ( 24,397 )

8 unchanged sentences

Year Ended December 31,

$ 39,776 $ 42,963

Cost of sales

10,523 11,178

29,253 31,785

Operating expenses:

Commissions expense

16,302 17,571

Selling, general and administrative expenses

14,759 15,513

Total operating expenses

31,061 33,084

Loss from operations

( 1,808 ) ( 1,299 )

Other income, net

Income before income taxes

Income (loss) before income taxes

Income tax provision

Net income per common share:

Net income (loss)

$ ( 882 ) $ 572

Net income (loss) per common share:

$ ( 0.08 ) $ 0.05

Weighted-average number of common shares outstanding:

11,496 11,467

11,496 11,490

See accompanying notes to consolidated financial statements.

NATURAL HEALTH TRENDS CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In Thousands)

Year Ended December 31,

Net income (loss)

$ ( 882 ) $ 572

Other comprehensive income (loss), net of tax:

1 unchanged sentence

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

Comprehensive income

Comprehensive income (loss)

$ ( 365 ) $ 340

See accompanying notes to consolidated financial statements.

9 unchanged sentences

— — — — — 572 — — — 572

Reissuance of treasury shares

— — — — ( 1,629 ) — — 97,900 1,629 —

Restricted stock forfeiture

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— — — — — — ( 218 ) — — ( 218 )

Unrealized gains on available-for-sale securities

Unrealized losses on available-for-sale securities

— — — — — — ( 14 ) — — ( 14 )

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— — — — — ( 882 ) — — — ( 882 )

Restricted stock forfeiture

— — — — 61 — — ( 3,698 ) ( 61 ) —

Share-based compensation

4 unchanged sentences

— — — — — — 501 — — 501

Unrealized losses on available-for-sale securities

Unrealized gains on available-for-sale securities

— — — — — — 16 — — 16

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CASH FLOWS FROM OPERATING ACTIVITIES:

Adjustments to reconcile net income to net cash used in operating activities:

Net income (loss)

$ ( 882 ) $ 572

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation and amortization

Net accretion of marketable securities

( 375 ) ( 441 )

Share-based compensation

3 unchanged sentences

Other current assets

1,224 ( 113 )

( 640 ) ( 421 )

Accounts payable

( 341 ) ( 94 )

Income taxes payable

( 4,902 ) ( 3,862 )

Accrued commissions

( 111 ) ( 19 )

Other accrued expenses

1 unchanged sentence

Amounts held in eWallets

( 445 ) ( 672 )

Operating lease liabilities

( 1,142 ) ( 1,151 )

Other current liabilities

( 279 ) ( 62 )

Net cash used in operating activities

( 5,997 ) ( 3,367 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

( 68 ) ( 57 )

Purchases of marketable securities

( 50,742 ) ( 70,431 )

Proceeds from maturities of marketable securities

Net cash used in investing activities

58,958 40,413

Net cash provided by (used in) investing activities

8,148 ( 30,075 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Dividends paid

( 9,210 ) ( 9,213 )

Net cash used in financing activities

( 9,210 ) ( 9,213 )

Effect of exchange rates on cash, cash equivalents and restricted cash

Net decrease in cash, cash equivalents and restricted cash

( 6,747 ) ( 42,650 )

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period

13,567 56,217

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period

SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid for income taxes, net

$ 6,820 $ 13,567

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

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Cash and Cash Equivalents

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

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

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, 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, 2025, there was $ 603,000 in bank accounts located in the Hong Kong in excess of insured limits.

As of December 31, 2025, cash and cash equivalents included $ 2.9 million held in bank accounts located in China subject to foreign currency controls.

22 unchanged sentences

The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

The Company has evaluated its tax positions and determined that there are no significant uncertain tax positions for the current year or years prior.

The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution.

21 unchanged sentences

The Company also enters into performance-based agreements for business or market development, which may result in additional compensation to specific members.

Net Income Per Common Share

Net Income (Loss) Per Common Share

Diluted net income per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents.

4 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, but in 2019 a Chinese governmental authority recommended that the Company withdraw its application.

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

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.

12 unchanged sentences

Although no single member accounted for 10% or more of net sales, the loss of a key member or that member’s network could have an adverse effect on the Company’s net sales and financial results.

The Company’s Premium Noni Juice and Triotein™ products each account for at least 10% of the Company’s total revenue as well as the Company's line of probiotic products comprised of Enhanced Essential Probiotics and Biotic Trio .

The Company currently sources each of these products from a single supplier.

6 unchanged sentences

Recent Accounting Pronouncements

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 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 ):

Improvements to Income Tax Disclosures , which enhances the transparency and decision usefulness of income tax disclosures.

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 financial statements.

The amendments in ASU 2023 - 09 are effective for annual periods beginning after December 15, 2024.

The Company has adopted this guidance on a retrospective basis, which did not have an impact on its financial position, results of operations, or cash flows, although it did result in expanded disclosures which are included in Note 7 of the Company's consolidated financial statements.

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

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As of December 31, 2025 and 2024, the Company had $ 4.1 million and $ 4.9 million, respectively, of contract liabilities where performance obligations have not yet been satisfied.

The increase in contract liabilities from December 31, 2023 to December 31, 2024 is primarily due to $ 4.9 million of cash received for unshipped product orders and unredeemed product vouchers during the year ended December 31, 2024 offset by $ 4.4 million of revenue recognized during the year ended December 31, 2024 that was included in contract liabilities at December 31, 2023.

The decrease in contract liabilities from December 31, 2024 to December 31, 2025 is primarily due to $ 4.1 million of cash received for unshipped product orders and unredeemed product vouchers during the year ended December 31, 2025 offset by $ 5.0 million of revenue recognized during the year ended December 31, 2025 that was included in contract liabilities at December 31, 2024.

As of December 31, 2023, the Company had contract liabilities totaling $ 4.4 million which was recognized as revenue during 2024.

11 unchanged sentences

The Company does not provide certain disclosures about unsatisfied performance obligations for contracts with an original expected length of one year or less.

NET INCOME PER COMMON SHARE

The following table illustrates the computation of basic and diluted net income per common share for the periods indicated (in thousands, except per share data):

NET INCOME (LOSS) PER COMMON SHARE

The following table illustrates the computation of basic and diluted net income (loss) per common share for the periods indicated (in thousands, except per share data):

Year Ended December 31,

Basic net income per common share:

Net income available to common stockholders

Basic net income (loss) per common share:

Net income (loss) available to common stockholders

$ ( 882 ) 11,496 $ ( 0.08 ) $ 572 11,467 $ 0.05

1 unchanged sentence

Non-vested restricted stock

Diluted net income per common share:

Net income available to common stockholders plus assumed dilution

Diluted net income (loss) per common share:

Net income (loss) available to common stockholders plus assumed dilution

$ ( 882 ) 11,496 $ ( 0.08 ) $ 572 11,490 $ 0.05

In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.

As such, non-vested restricted stock totaling 8,063 shares were not included for 2025.

BALANCE SHEET COMPONENTS

3 unchanged sentences

Cash equivalents

13,533 56,178

Restricted cash

9 unchanged sentences

Leasehold improvements

Construction in progress

Property and equipment, at cost

12 unchanged sentences

FAIR VALUE MEASUREMENTS

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.

As of December 31, 2025, cash and cash equivalents and marketable securities include the Company’s investments in money market funds, 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 .

11 unchanged sentences

Adjusted Cost

Gross Unrealized Gains (Losses)

Gross Unrealized Losses

Money market funds

11 unchanged sentences

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 and the Cayman Islands.

In January 2026, the Company executed an agreement to sublease a portion of its corporate office space in Rolling Hills Estates, California for the duration of the lease term, effective February 1, 2026.

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

The Richmond and Metuchen locations have terms expiring in 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, India, Colombia and the Cayman Islands.

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

None of the Company’s third -party logistics contracts contain a lease, as the Company does not have the right to access the warehouses or move its inventories at will.

In August 2025, the Company entered into a binding offer to lease 5,300 square feet of office space in Hong Kong to replace its existing corporate office space in Hong Kong.

The lease is expected to commence on March 1, 2026 with a term expiring February 28, 2031.

Monthly base rent is HKD 141,500 ($ 18,000 ) for years one through three and HKD 149,500 ($ 19,000 ) for years four and five, with base-rent-free periods from March 1, 2026 through April 30, 2026 and from August 1, 2029 through September 30, 2029.

In addition, the Company will pay a monthly management fee of HKD 43,979 ( 6,000 ).

The lease provides the Company with an early termination right upon not less than three months’ prior written notice, exercisable at any time from March 1, 2029 through February 28, 2031.

The related right-of-use asset and lease liability will be recognized on the Company’s consolidated balance sheet at the lease commencement date in accordance with FASB ASC Topic 842, Leases .

The components of lease cost were as follows (in thousands):

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For all asset classes, the Company elected not to recognize assets or liabilities at the acquisition date for leases that, at the acquisition date, have a remaining lease term of 12 months or less.

Additionally, for all asset classes, the Company choose not to separate nonlease components from lease components and instead account for the combined lease and nonlease components associated with that lease component as a single lease component.

The components of income before income taxes consist of the following (in thousands):

Additionally, for all asset classes, the Company has chosen not to separate nonlease components from lease components and instead accounts for the combined lease and nonlease components associated with that lease component as a single lease component.

The components of income (loss) before income taxes consist of the following (in thousands):

Year Ended December 31,

$ ( 727 ) $ ( 993 )

Income before income taxes

Income (loss) before income taxes

$ ( 567 ) $ 620

The components of the income tax provision consist of the following (in thousands):

2 unchanged sentences

$ 39 $ ( 24 )

Total current taxes

state and local

Total current tax expense

Deferred taxes:

Total deferred taxes

$ ( 100 ) $ ( 83 )

state and local

Total deferred tax expense

Total income tax expense:

$ ( 61 ) $ ( 107 )

state and local

Income tax provision

A reconciliation of the reported income tax provision to the provision that would result from applying the domestic federal statutory tax rate to pretax income is as follows (in thousands):

A reconciliation of the reported income tax provision to the provision that would result from applying the domestic federal statutory tax rate to pretax income (loss) is as follows (in thousands):

Year Ended December 31, 2025

Income tax at federal statutory rate

Year Ended December 31, 2024

Income tax at U.S.

federal statutory tax rate

$ ( 119 ) 21.0 % $ 130 21.0 %

Domestic federal:

Nontaxable and nondeductible items

Section 162(m) limitation

Subpart F inclusion

— — % 58 9.4 %

Stock-based compensation

Other permanent differences

24 ( 4.2 )% 26 4.2 %

3 ( 0.5 )% 3 0.5 %

Cross-border tax laws

Subpart F inclusion

78 ( 13.8 )% 43 6.9 %

foreign income inclusions

— — % ( 18 ) ( 2.9 )%

Domestic state and local income taxes, net of federal effect

9 ( 1.6 )% 10 1.6 %

Foreign tax effects:

Cayman Islands

( 143 ) 25.2 % ( 348 ) ( 56.1 )%

Nontaxable and nondeductible items

4 ( 0.7 )% ( 18 ) ( 2.9 )%

Rate differential

( 43 ) 7.6 % ( 34 ) ( 5.5 )%

Rate differential

70 ( 12.3 )% ( 5 ) ( 0.8 )%

Change in tax rate

89 ( 15.7 )% — — %

Net operating loss expiration

86 ( 15.2 )% — — %

Change in valuation allowance

Foreign rate differential

45 ( 7.9 )% 5 0.8 %

Other reconciling items

Nontaxable and nondeductible items

28 ( 4.9 )% 73 11.8 %

Rate differential

( 1 ) 0.2 % ( 9 ) ( 1.5 )%

Nontaxable and nondeductible items

93 ( 16.4 )% 113 18.2 %

Rate differential

( 26 ) 4.6 % ( 37 ) ( 6.0 )%

Change in valuation allowance

( 13 ) 2.3 % — — %

— — % 12 1.9 %

( 18 ) 3.2 % ( 9 ) ( 1.5 )%

Rate differential

( 13 ) 2.3 % ( 10 ) ( 1.6 )%

Change in valuation allowance

42 ( 7.4 )% 32 5.2 %

Rate differential

( 38 ) 6.7 % ( 8 ) ( 1.3 )%

Change in valuation allowance

95 ( 16.8 )% 30 4.8 %

( 22 ) 3.9 % 8 1.3 %

100 ( 17.6 )% — — %

Other foreign jurisdictions

( 15 ) 2.6 % 1 0.2 %

Income tax provision

$ 315 ( 55.6 )% $ 48 7.7 %

Income before income taxes and the statutory tax rate for each country that materially contributed to the foreign rate differential presented above is as follows (in thousands):

22 unchanged sentences

Net deferred tax assets

The effective income tax rate for the year ended December 31, 2024 includes estimates for foreign income inclusions such as global intangible low-taxed income (“GILTI”) and Subpart F income.

The effect of permanent differences in 2024 and 2023 is mainly due to compensation-related limitations under Internal Revenue Code Section 162 (m).

The effective income tax rate for the year ended December 31, 2025 is driven by foreign rate differentials and the increase in valuation allowance on the Company's foreign net operating losses.

It also includes estimates for foreign income inclusions such as global intangible low-taxed income (“GILTI”) and Subpart F income, as well as prior year foreign return to provision true-ups.

The effect of permanent differences in 2025 and 2024 is mainly due to compensation-related limitations under Internal Revenue Code Section 162 (m) and stock-based compensation expense.

As of December 31, 2025, the Company does not have a valuation allowance against its U.S.

deferred tax assets.

The Company analyzed all sources of available income and determined that they are more likely than not to realize the tax benefits of their deferred assets.

As of December 31, 2024 , the Company has a valuation allowance against deferred taxes in certain foreign jurisdictions with an overall net operating loss.

The Company analyzed all sources of available income and determined that it is more likely than not to realize the tax benefits of their deferred assets.

As of December 31, 2025, the Company has a valuation allowance against deferred tax assets in the form of net operating loss carryforwards in certain foreign jurisdictions.

The valuation allowance will be reduced at such time as management believes it is more likely than not that the deferred tax assets will be realized.

5 unchanged sentences

At December 31, 2025 , the Company has foreign net operating loss carryforwards of approximately $ 3.2 million in various jurisdictions with various expirations.

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.

In April 2025, the Company paid the final installment of $ 5.1 million 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 $ 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.

8 unchanged sentences

The Company is not aware of any jurisdictions that are currently examining any income tax returns of the Company.

Cash paid during the year for incomes taxes, net of refunds, were as follows (in thousands):

Year Ended December 31,

$ 4,954 $ 3,799

state and local

Cash paid for income taxes, net

$ 4,921 $ 3,958

COMMITMENTS AND CONTINGENCIES

9 unchanged sentences

On February 6, 2023, the Company granted 97,900 shares of restricted common stock to certain of its employees.

The shares vest in equal parts on a quarterly basis over the next three years and are subject to forfeiture in the event of an employee's termination of service to the Company under specified circumstances.

The shares vested in equal parts on a quarterly basis over the next three years and were subject to forfeiture in the event of an employee's termination of service to the Company under specified circumstances.

No shares of restricted common stock remained outstanding as of December 31, 2025.

The following table summarizes the Company’s restricted stock activity under the 2016 Plan:

7 unchanged sentences

( 28,676 ) $ 4.84

( 3,698 ) $ 4.84

Nonvested at December 31, 2025

28,676 $ 4.84

Share-based compensation expense of $ 132,000 and $ 145,000 was recognized during 2025 and 2024, 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

2 unchanged sentences

The vesting of phantom shares is subject to such vesting conditions as the Compensation Committee may specify in a grantee’s award agreement.

Grantees of phantom shares shall not by virtue of their receipt of phantom shares have any ownership rights in shares of the Company’s common stock.

Grantees of phantom shares do not by virtue of their receipt of phantom shares have any ownership rights in shares of the Company’s common stock.

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).

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

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

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.

In order for the time-based vesting condition to be satisfied for each vesting period, the grantee must remain 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 be satisfied.

The initial performance vesting condition will be designated by the Compensation Committee and will apply to all future performance periods, unless the Compensation Committee elects to change the performance vesting condition on a prospective basis.

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

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

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

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.

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 was designated by the Compensation Committee and applied to all future performance periods.

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

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

Of the phantom shares awarded in 2023, 186,320 phantom shares vested and 26,617 were forfeited.

On April 1, 2025, awards for 223,307 phantom shares were granted to the Company’s employees and its non-employee directors.

Each award has a vesting period of two years, with 12.5 % of the award eligible to vest in each of the eight calendar quarters during the vesting period, beginning with the second quarter of 2025, subject to satisfaction of the conditions outlined below.

For awards to vest as to a particular quarter, the employee or director must be continuously employed by (or in the case of directors, providing services to) the Company for the entire quarter.

The awards are subject to a maximum payment value of $ 12.00 per phantom share, and the grantees are not entitled to any dividend or dividend equivalent payments with respect to the awards.

As a condition to the grant of the awards to each employee grantee, the grantee agreed not to sell or otherwise transfer any shares of the Company’s common stock held by him or her until all phantom shares subject to the award are vested or forfeited.

One-half of the award eligible to vest in each calendar quarter (the “Financial Results-Based Award”, representing 6.25 % of the aggregate award amount) will vest if the service condition is met for the quarter and if the Company attains positive operating profit for the quarter of at least $ 150,000 .

If these conditions are not met, the Financial Results-Based Award for the quarter will be forfeited.

The other half of the award eligible to vest in each calendar quarter (the “Stock Appreciation-Based Award”, or 6.25 % of the aggregate award amount) will vest if the service condition is met for the quarter and if two additional conditions are satisfied:

(a) a stock appreciation condition, which will be satisfied if the average closing price of the Company’s common stock over the last month of the applicable quarter exceeds the average closing price of the Company’s common stock over the last month of the previous calendar year;

and (b) an additional financial performance condition, which will be satisfied if the Company attains positive operating profit for the quarter of at least $ 300,000 .

If the stock appreciation condition is not met for the applicable quarter, the Stock Appreciation-Based Award for the quarter will be forfeited.

If the stock appreciation condition is met for this portion of the award but the additional financial performance condition is not met for the quarter, the Stock Appreciation-Based Award for the quarter will not be forfeited but will be carried forward to a future quarter during the two -year vesting period of the award.

Any portion of an award carried forward may vest at the end of a subsequent quarter during the two -year vesting period if the Company’s operating profit for that quarter exceeds by $ 150,000 the sum of (a) the amount necessary to satisfy the Financial Results-Based Award for the quarter (i.e.

$ 150,000 ), (b) the additional amount, if any, used to satisfy the additional financial performance condition for a Stock Appreciation-Based Award that vests for the quarter (i.e., $ 150,000 if the current quarter’s Stock Appreciation-Based Award vests, or $0 if it does not vest) and (c) the additional amount, if any used to satisfy the vesting conditions of any other carried-forward awards to which this test is previously applied.

Of the phantom shares awarded in 2025, 83,739 phantom shares were forfeited and 139,568 shares remain unvested as of December 31, 2025.

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

The grant date of each vesting increment will be established when the Company and the grantees reach a mutual understanding of the key terms and conditions of an award, which is the date upon which each performance vesting condition is communicated to the grantees.

Compensation expense is recognized over the requisite service period if it is probable that the performance vesting condition will be achieved.

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 $ 475,000 and $ 551,000 during 2024 and 2023, respectively.

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

No compensation expense was recognized related to the cash settlement of such shares during 2025.

STOCKHOLDERS’ EQUITY

12 unchanged sentences

Foreign Currency Translation Adjustments

Unrealized Losses on Available-For-Sale Investments

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

Balance, December 31, 2024

$ ( 1,275 ) $ ( 26 ) $ ( 1,301 )

Other comprehensive loss

( 218 ) ( 14 ) ( 232 )

Other comprehensive income

Balance, December 31, 2025

8 unchanged sentences

The Company is not required to purchase any product under the agreement, and the agreement may be terminated under certain circumstances with no notice.

The agreement terminates March 31, 2025, after which it shall be automatically renewed for successive one -year terms unless notice is given by either party at least 90 days in advance of the expiration of the then-current term.

The agreement was set to terminate on March 31, 2025;

however, as neither party provided the required 90 -day advance notice, it has automatically renewed for an additional one -year term in accordance with its provisions.

EMPLOYEE BENEFIT PLANS

8 unchanged sentences

The Company sells products to a member network that operates in a seamless manner from market to market, except for the China market where it sells to some consumers through an e-commerce retail platform, and the Russia and Kazakhstan market where the Company’s engagement of a third -party service provider results in a different economic structure than its other markets.

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.

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 Unit”).

30 unchanged sentences

Other income, net

Income before income taxes

Income (loss) before income taxes

$ ( 567 ) $ 620

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

46 unchanged sentences

$ 2,022 $ 2,688

SUBSEQUENT EVENT

SUBSEQUENT EVENTS

On February 2, 2026, the Board of Directors declared a quarterly cash dividend of $ 0.10 on each share of common stock outstanding.

1 unchanged sentence

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.

On February 17, 2026, the Company entered into a share repurchase agreement to repurchase 2,935,227 shares of its common stock, representing approximately 25.5 % of the Company’s outstanding shares, from the George K.

Broady 2012 Irrevocable Trust and the Eleanor Jane Broady 2012 Irrevocable Trust at a purchase price of $ 2.00 per share, or an aggregate purchase price of approximately $ 5.9 million.

The repurchase, funded from the Company’s existing cash on hand, was completed pursuant to the Company’s previously authorized share repurchase program.

Following completion of the transaction, the Company has 8,577,848 shares of common stock outstanding.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

1 unchanged sentence

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