NATURAL HEALTH TRENDS CORP

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Data)

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In Thousands, Except Per Share Data)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(In Thousands)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(In Thousands, Except Share Data)

Nine months ended September 30, 2025

Nine months ended September 30, 2024

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In Thousands)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Natural Health Trends Corp., a Delaware corporation (whether ornot including its subsidiaries, the “Company”), is an international direct-selling and e-commerce company. Subsidiaries controlled by the Company sell personal care, wellness, and “quality of life” products under the “NHT Global” brand.

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, Peru and Colombia; Greater China, which consists of Hong Kong, Taiwan and China; Southeast Asia, which consists of Malaysia and Singapore; South Korea; Japan; India; and Europe. The Company also operates in Russia and Kazakhstan through an engagement with a local service provider.

Basis of Presentation

The unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form10-Q and Rule10-01 of Regulation S-X. As a result, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of the Company’s financial information for the interim periods presented. The results of operations of any interim period arenot necessarily indicative of the results of operations to be expected for the fiscal year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s2024 Annual Report on Form10-K filed with the United States Securities and Exchange Commission (SEC) on* February 21, 2025.*

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and all of its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities ofthree months or less when purchased and with insignificant interest rate risk to be cash equivalents. The Company maint ains substantially all of its cash balances at several institutions located in the United States, Hong Kong and China which at times* mayexceed insured limits. As of September 30, 2025*, there was $844,000 in bank accounts located in Hong Kong in excess of insured limits. As of* September 30, 2025*, cash and cash equivalents included$3.0 million held in bank accounts located in China subject to foreign currency controls. The Company hasnot experienced any losses on such accounts. See Note4 for additional information regarding the Company's investments in cash equivalents held in brokerage accounts.

Net Income 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. The dilutive effect of non-vested restricted stock is reflected by application of the treasury stock method. Under the treasury stock method, the amount of compensation cost for future service that the Company hasnot yet recognized, if any, is assumed to be used to repurchase shares.

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):

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 3,877 and 8,337 shares werenot included for thethree andnine months ended* September 30, 2025,*respectively.

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Recent Accounting Pronouncements

In* December 2023,the FASB issued ASU2023*-09, Income Taxes (Topic740*): Improvements to Income Tax Disclosures*, which expands the disclosures required in an entity's income tax rate reconciliation table and requires disclosure of income taxes paid both in the United States and foreign jurisdictions. The amendments in ASU2023-09 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.

In* November 2024,the FASB issued ASU2024*-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures. ASU2024-03 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 didnot or arenot believed by management to have a material impact on the Company’s present or future financial statements.

2. REVENUE

Revenue Recognition

All revenue is recognized when the performance obligations under a contract, including any product vouchers sold on a stand-alone basis in Hong Kong, are satisfied. Product sales are recognized when the products are shipped and title passes to independent members. Product sales to members are made pursuant to a member agreement that provides for transfer of both title and risk of loss upon the Company’s delivery to the carrier that completes delivery to the members, which is commonly referred to as “F.O.B. Shipping Point.” The Company’s sales arrangements donot contain right of inspection or customer acceptance provisions other than general rights of return. These contracts are generally short-term in nature.

Actual product returns are recorded as a reduction to net sales. The Company estimates and accrues a reserve for product returns based on its return policies and historical experience. The reserve is based upon the return policy of each country, which varies from 14 days toone year, and their historical return rates, which range from 1% to 7% of sales. Sales returns were 1% of sales for each of thenine months ended* September 30, 2025and2024*.No material changes in estimates have been recognized during the periods presented. See Note3 for additional information.

The Company has elected to account for shipping and handling activities performed after title has passed to members as a fulfillment cost, and accrues for the costs of shipping and handling if revenue is recognized before the contractually obligated shipping and handling activities occurs. Shipping charges billed to members are included in net sales. Costs associated with shipments are included in cost of sales. Event and training revenue is deferred and recognized as the event or training occurs. Costs of events and member training are included within selling, general and administrative expenses.

Various taxes on the sale of products to members are collected by the Company as an agent and remitted to the respective taxing authority. These taxes are presented on a net basis and recorded as a liability until remitted to the respective taxing authority.

Deferred Revenue

The Company primarily receives payment by credit card at the time members place orders. Amounts received for unshipped product orders and unredeemed product vouchers are considered a contract liability and are recorded as deferred revenue. As of* September 30, 2025* and* December 31, 2024*, the Company had $4.5 million and $4.9 million, respectively, of contract liabilities where performance obligations havenot yet been satisfied. The decrease in contract liabilities from* December 31, 2024* to* September 30, 2025* is primarily due to $4.5 million of cash received for unshipped product orders and unredeemed product vouchers during thenine months ended* September 30, 2025* offset by $4.9 million of revenue recognized during the period 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 thenine months ended* September 30, 2024*. The Company expects to satisfy its remaining performance obligations and recognize the revenue within the nexttwelve months.

Disaggregation of Revenue

The Company sells products to a member network that operates in a seamless manner from market to market, except for the Chinese market where it sells to consumers through an e-commerce retail platform and the Russia and Kazakhstan market where the Company operates through an engagement of athird-party service provider. See Note11 for revenue by market information.

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The Company’s net sales by product and service are as follows (in thousands):

Concentration

No single market other than Hong Kong had net sales greater than10% of total net sales. Sales are made to the Company’s members andno single customer accounted for10% or more of net sales for thethree andnine months ended* September 30, 2025* and2024. However, the Company’s business model can result in a concentration of sales to several different members and their network of members. Althoughno single member accounted for10% 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.

Arrangements with Multiple Performance Obligations

The Company’s contracts with customers* may*include multiple performance obligations. For such arrangements, the Company allocates revenues to each performance obligation based on its relative standalone selling price. The Company generally determines standalone selling prices based on the prices charged for individual products to similar customers.

Practical Expedients

The Company generally expenses sales commissions when incurred because the amortization period would have beenone year or less. These costs are recorded in commissions expense.

The Company doesnot provide certain disclosures about unsatisfied performance obligations for contracts with an original expected length ofone year or less.

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3. BALANCE SHEET COMPONENTS

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

4. FAIR VALUE MEASUREMENTS

As of* September 30, 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 are required to be accounted for in accordance with the FASB ASC320, Investments - Debt and Equity Securities. As such, the Company determined its investments in debt securities held at* September 30, 2025* should be classified as available-for-sale and are 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 carrying amounts of the Company’s financial instruments, including cash and accounts payable, approximate fair value because of their short maturities. The carrying amount of the noncurrent restricted cash approximates fair value since, absent the restrictions, the underlying assets would be included in cash and cash equivalents.

Accounting standards permit companies, at their option, to choose to measure many financial instruments and certain other items at fair value. The Company has elected tonot fair value existing eligible items.

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

1* *FASB Topic820, 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:

Level1:* Quoted market prices in active markets for identical assets or liabilities.*

Level2:* Observable market-based inputs or unobservable inputs that are corroborated by market data.*

Level3:* Unobservable inputs that arenot corroborated by market data.*

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5**. LEASES**

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, India, Colombia and the Cayman Islands. The Company contracts withthird parties for fulfillment and distribution operations in all of its international markets.None of the Company’sthird-party logistics contracts contain a lease, as the Company doesnot 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, 2026with a term expiring February 28, 2031.Monthly base rent is HKD 141,500 for yearsone* throughthree and HKD 149,500 for yearsfour and five, with base-rent-free periods from* March 1, 2026through April 30, 2026and from August 1, 2029through September 30, 2029.In addition, the Company will pay a monthly management fee of HKD 43,979. The lease provides the Company with an early termination right uponnot* less thanthree months’ prior written notice, exercisable at any time from* March 1, 2029through 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 Topic842,* Leases.

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

Cash paid for amounts included in the measurement of operating lease liabilities was $317,000 and $334,000 for thethree months ended* September30,* 2025 and2024, respectively, and $947,000 and $961,000 for thenine months ended* September30,* 2025 and2024, respectively.

The weighted-average remaining lease term and discount rate related to operating leases as of* September 30, 2025* were as follows:

As most of our leases donot provide an implicit rate, the Company used its incremental borrowing rate, or the rate of each of its subsidiaries if available, based on the information available at the lease commencement date to determine the present value of lease payments.

The annual scheduled lease payments of the Company's operating lease liabilities as of* September 30, 2025* were as follows (in thousands):

For all asset classes, the Company electednot to recognize assets or liabilities at the acquisition date for leases that, at the acquisition date, have a remaining lease term of12 months or less. Additionally, for all asset classes, the Company has chosennot 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.

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6**. INCOME TAXES**

The effective income tax rate for thethree andnine months ended* September 30, 2025* 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. As of* September 30, 2025*, the Company doesnot have a valuation allowance against its U.S. deferred tax assets. The Company analyzed all sources of available income and determined that it is more likely thannot to realize the tax benefits of their deferred assets. As of* September 30, 2025*, the Company has a valuation allowance against deferred tax assets in certain foreign jurisdictions with an overall net operating loss. The valuation allowance will be reduced at such time as management believes it is more likely thannot that the deferred tax assets will be realized. Any reductions in the valuation allowance will reduce future income tax provision.

As of* September 30, 2025*, the Company has $390,000 of U.S. federal net operating loss carryforwards. The Company has post-apportioned U.S. state net operating loss carryforwards of $457,000 that begin expiring in2038. At* September 30, 2025*, the Company has foreign net operating loss carryforwards of approximately $2.3 million in various jurisdictions with various expirations.

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 in2017* by the U.S. government.

As a result of capital return activities, the Company determined that a portion of its current undistributed foreign earnings isno longer deemed reinvested indefinitely by its non-U.S. subsidiaries. For state income tax purposes, the Company will continue to periodically reassess the needs of its foreign subsidiaries and update its indefinite reinvestment assertion as necessary. To the extent that additional foreign earnings arenot deemed permanently reinvested, the Company expects to recognize additional income tax provision at the applicable state corporate income tax rate(s). As of* September 30, 2025*, the Company hasnot recorded a state deferred tax liability for earnings that the Company plans to repatriate out of accumulated earnings in future periods because all earnings as of* September 30, 2025* have already been repatriated. Due to the Tax Act, repatriation from foreign subsidiaries will be offset with a dividends received deduction, resulting in little tono impact on federal tax expense. All undistributed earnings in excess of50% of current earnings on an annual basis are intended to be reinvested indefinitely as of* September 30, 2025*.

The Company and its subsidiaries file tax returns in the United States, California, New Jersey, Texas and various foreign jurisdictions. The Company isno longer subject to state income tax examinations for years prior to2019. The Company isnot aware of any jurisdiction that is currently examining any of its income tax returns.

7. COMMITMENTS AND CONTINGENCIES

The Company has employment agreements with certain members of its management team that can be terminated by either the employee or the Company uponfour weeks’ notice. The employment agreements entered into with the management team contain provisions that guarantee the payment of specified amounts in the event of a change in control (together with a termination without cause), as defined, or if the employee is otherwise terminated without cause, as defined, or terminates employment for good reason, as defined.

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8. STOCK-BASED INCENTIVE PLANS

Restricted Stock

In2016, the Company’s stockholders approved the Natural Health Trends Corp.2016 Equity Incentive Plan (the*“2016* Plan”) to replace its2007 Equity Incentive Plan. The2016 Plan allows for the grant of various equity awards including incentive stock options, non-statutory options, stock, stock units, stock appreciation rights and other similar equity-based awards to the Company’s employees, officers, non-employee directors, contractors, consultants and advisors of the Company. Up to 2,500,000 shares of the Company’s common stock (subject to adjustment under certain circumstances)* maybe issued pursuant to awards granted. At September 30, 2025*,1,129,047 shares remained available for issuance under the2016 Plan.

The following table summarizes the Company’s restricted stock activity under the2016 Plan:

Share-based compensation expense of $35*,000* and $34,000 was recognized during thethree months ended* September 30, 2025and2024*, respectively, and $103,000 and $109,000 was recognized during thenine months ended* September**30,* 2025 and2024, respectively. As of* September 30, 2025*, total unrecognized share-based compensation expense related to non-vested restricted stock was $29,000, which is expected to be recognized over a weighted-average period of 0.2 years.

Phantom Equity

In2021, 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* maygrant 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 mayset. The vesting of phantom shares is subject to such vesting conditions as the Compensation Committee mayspecify in a grantee’s award agreement. Grantees of phantom shares donot* 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 often years, after whichno further phantom shares* maybe awarded (although any phantom shares awarded prior to the expiration of such10*-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 vested ineight* 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 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 wasnot 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 in2023, 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 oftwo years, with 12.5% of the award eligible to vest in each of theeight* calendar quarters during the vesting period, beginning with thesecond quarter of2025, 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 arenot 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 agreednot 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 arenot 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 iftwo 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 isnot 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 isnot met for the quarter, the Stock Appreciation-Based Award for the quarter willnot be forfeited but will be carried forward to a future quarter during thetwo-year vesting period of the award. Any portion of an award carried forward* mayvest at the end of a subsequent quarter during thetwo*-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 doesnot 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.

The phantom share awards are accounted for as liabilities in accordance with FASB ASC Topic718, Compensation–Stock Compensationsince they require cash settlement. 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 the vesting of phantom shares, the Company recognized compensation expense related to the cash settlement of such shares of $181,000 and $362,000 during thethree andnine months ended* September* 30, 2024, respectively. No compensation expense was recognized related to the cash settlement of such shares during thenine months ended* September* 30, 2025.

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9. STOCKHOLDERS’ EQUITY

Dividends

The Company declared and paid cash dividends of $0.20 per common share during each of thefirst three quarters of2025 and2024, totaling $6.9 million in eachnine month period. 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

In2016, the Board of Directors authorized an increase to the Company’s stock repurchase programfirst approved in2015 from $15.0 million to $70.0 million. Any repurchases will be made in accordance with all applicable securities laws and regulations, including Rule10b-18 of the Exchange Act. For all or a portion of the authorized repurchase amount, the Company* mayenter intoone* or more plans that are compliant with Rule10b5-1 of the Exchange Act that are designed to facilitate these purchases. The stock repurchase program doesnot require the Company to acquire a specific number of shares, and* maybe suspended from time to time or discontinued. As of September 30, 2025*, $21.9 million of the $70.0 million stock repurchase program remained available for future purchases, inclusive of related estimated income tax.

Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss by component for thefirst nine months of2025 were as follows (in thousands):

10. RELATED PARTY TRANSACTIONS

The Company is a party to a Royalty Agreement and License with Broady Health Sciences, L.L.C., a Texas limited liability company, (“BHS”) regarding the manufacture and sale of a product called ReStor™. George K. 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. Lucy Nduati, a director of the Company, has since2013 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. The Company recognized royalties of $9,000 and $8,000 during thethree months ended* September 30, 2025and2024*, respectively, and $27,000 during each of thenine month periods ended* September**30,* 2025 and2024 under this agreement. The Company isnot required to purchase any product under the agreement, and the agreement* maybe terminated under certain circumstances withno* notice. 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 additionalone-year term in accordance with its provisions.

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11. SEGMENT INFORMATION

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 athird-party service provider results in a different economic structure than its other markets. 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 asingle 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):

1 Our China subsidiary maintains an e-commerce retail platform and doesnot* pay commissions.*

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

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

1 Other inventories and inventory-related deposits pertain to the Company's trading company and arenot* 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):

1 Substantially all of the Company's Hong Kong revenues are derived from the sale of products that are delivered to members in China. See “Item1A.* Risk Factors” in our most recent Annual Report on Form10-K.*

12. SUBSEQUENT EVENT

On* November 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 November 28, 2025to stockholders of record on November**18,* 2025. The 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.

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