NATURAL HEALTH TRENDS CORP

Previous wording

As of June 30, 2026, we were conducting business through 26,000 active members, compared to 26,650 at December 31, 2025 and 29,260 at June 30, 2025. We consider a member “active” if they have placed at least one product order with us during the preceding year. Our priority is to focus our resources in our most promising markets, which we consider to be Greater China and countries where our existing members have the connections to recruit prospects and sell our products, such as Southeast Asia, India, South America and Europe.

Current wording

As of September 30, 2026, we were conducting business through 27,040 active members, compared to 26,650 at December 31, 2025 and 28,030 at September 30, 2025. We consider a member “active” if they have placed at least one product order with us during the preceding year. Our priority is to focus our resources in our most promising markets, which we consider to be Greater China and countries where our existing members have the connections to recruit prospects and sell our products, such as Southeast Asia, India, South America and Europe.

Previous wording

China has been and continues to be our most important business development project. We operate an e-commerce direct selling platform in Hong Kong that in the first six months of 2026 generated approximately 83% of our revenue, substantially all of which was derived from the sale of products that are delivered to members in China. Through a separate Chinese entity, we also operate an e-commerce retail platform in China. We believe that neither of these activities require a direct selling license in China, which we do not currently hold. 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. If we are ultimately able to obtain a direct selling license in China, we believe that the incentives inherent in the direct selling model in China would incrementally benefit our existing business. We do not expect that any increased sales in China derived from obtaining a direct selling license would initially be material and, in any event may be partially offset by the higher fixed costs associated with the establishment and maintenance of required service centers, branch offices, manufacturing facilities, certification programs and other legal requirements. We are unable to predict whether and when we will be successful in obtaining a direct selling license to operate in China, and if we are successful, when we will be permitted to conduct direct selling operations and whether such operations would be profitable.

Current wording

China has been and continues to be our most important business development project. We operate an e-commerce direct selling platform in Hong Kong that in the first nine months of 2026 generated approximately 83% of our revenue, substantially all of which was derived from the sale of products that are delivered to members in China. Through a separate Chinese entity, we also operate an e-commerce retail platform in China. We believe that neither of these activities require a direct selling license in China, which we do not currently hold. 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. If we are ultimately able to obtain a direct selling license in China, we believe that the incentives inherent in the direct selling model in China would incrementally benefit our existing business. We do not expect that any increased sales in China derived from obtaining a direct selling license would initially be material and, in any event may be partially offset by the higher fixed costs associated with the establishment and maintenance of required service centers, branch offices, manufacturing facilities, certification programs and other legal requirements. We are unable to predict whether and when we will be successful in obtaining a direct selling license to operate in China, and if we are successful, when we will be permitted to conduct direct selling operations and whether such operations would be profitable.

Previous wording

Beginning in the first quarter of 2025, the U.S. engaged in a series of escalating tariff actions with a wide range of countries, particularly China. On April 2, 2025, for example, 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%. The state of trade discussions between the U.S. and China (and between the U.S. and other nations) remains dynamic and unpredictable.

Current wording

Beginning in the first quarter of 2025, the U.S. engaged in a series of escalating tariff actions with a wide range of countries, particularly China. On April 2, 2025, for example, the U.S. imposed by executive order a 34% “reciprocal” tariff on Chinese-origin goods, in addition to existing “fentanyl” related tariffs of 20%. This was followed by an amended executive order April 8, 2025, raising reciprocal tariffs to 84% and an April 9, 2025 executive order raising reciprocal 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 reduce 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 a planned 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, avoid the threatened 100% tariffs and reduce the average tariff rate on Chinese goods to an estimated 47%. Following the U.S. Supreme Court decision in February 2026 invalidating both the reciprocal and fentanyl tariffs imposed under IEEPA, a temporary 10% global tariff followed but expired in July 2026, when a 12.5% “forced labor” tariff took effect on most Chinese goods, on top of older surviving tariffs of 7.5% to 25%, with higher rates up to 100% on some products. In September 2026, the U.S. Treasury Secretary indicated that the U.S. and China have extended their trade truce until January 2027. The state of trade discussions between the U.S. and China (and between the U.S. and other nations) remains dynamic and unpredictable.

Previous wording

The Company’s recent financial results, particularly beginning in the second quarter of fiscal 2025, have been negatively affected by negative consumer sentiment and economic uncertainty in the Company’s largest market. If substantial tariffs remain in place, or new tariffs are implemented, the Company may see the effect of higher duties on restocking in 2026. The likely short-term impact of the tariffs is difficult to predict with any certainty, however. We may need to impose a surcharge on products sold into China, and the imposition of such a surcharge may have a further negative effect on sales volumes into China. In the longer term, the Company has taken steps to transition production of certain of its products currently manufactured in the United States to other jurisdictions, including in Asia, in order to mitigate the effect of U.S. and reciprocal tariffs. If successfully implemented, this transition may result in savings in logistics, freight and manufacturing cost, but may also carry certain short-term expenses, including the cost of reregistration of products in certain jurisdictions. The Company is actively evaluating its options and the impact of trade policy changes on future quarters remains uncertain. In addition, it is difficult to predict the further effect of general consumer sentiment in China toward the Company’s products as a result of the trade policies adopted by the United States and China, which has already impacted the Company’s financial results. See Part II, “Item 1A. Risk Factors” in Part II of this Quarterly Report on Form 10-Q.

Current wording

The Company’s recent financial results, particularly since the second quarter of fiscal 2025, have been negatively affected by negative consumer sentiment and economic uncertainty in the Company’s largest market. If substantial tariffs remain in place, or new tariffs are implemented, the Company may see the effect of higher duties on restocking in subsequent quarters. The likely short-term impact of the tariffs is difficult to predict with any certainty, however. We may need to impose a surcharge on products sold into China, and the imposition of such a surcharge may have a further negative effect on sales volumes into China. In the longer term, the Company has taken steps to transition production of certain of its products currently manufactured in the United States to other jurisdictions, including in Asia, in order to mitigate the effect of U.S. and reciprocal tariffs. The Company continues to evaluate its options and the impact of trade policy changes on future quarters remains uncertain. In addition, it is difficult to predict the further effect of general consumer sentiment in China toward the Company’s products as a result of the trade policies adopted by the United States and China, which has already impacted the Company’s financial results. See Part II, “Item 1A. Risk Factors” in Part II of this Quarterly Report on Form 10-Q.

Previous wording

Chinese regulatory uncertainty. On May 29, 2026, China’s State Administration for Market Regulation (SAMR) released for public comment a draft revision to China’s Regulations on Prohibition of Pyramid Selling. The draft appears designed to strengthen China’s anti-pyramid-selling enforcement framework, particularly with respect to online pyramid-selling activity, interagency coordination, fund monitoring, internet platform responsibilities, increased penalties, and personal liability for responsible individuals. While relevant to the regulatory environment for direct selling and distributor-related business models in China, the action does not by itself indicate that China has reopened new direct-selling license approvals or materially liberalized direct-selling regulation. However, the draft revision signals a level of increased scrutiny by Chinese regulators that may be applied to our direct selling platform in Hong Kong, through which products are delivered to members in China, or to our e-commerce retail platform in China. The increased uncertainty created by the draft revision has negatively impacted our sales in the second quarter, and may lead to a need to restructure our activities further in the region, to apply for a direct selling license, or to take other steps to address any resulting requirements or regulatory risks.

Current wording

Chinese regulatory uncertainty. On May 29, 2026, China’s State Administration for Market Regulation (SAMR) released for public comment a draft revision to China’s Regulations on Prohibition of Pyramid Selling. The draft appears designed to strengthen China’s anti-pyramid-selling enforcement framework, particularly with respect to online pyramid-selling activity, interagency coordination, fund monitoring, internet platform responsibilities, increased penalties, and personal liability for responsible individuals. While relevant to the regulatory environment for direct selling and distributor-related business models in China, the action does not by itself indicate that China has reopened new direct-selling license approvals or materially liberalized direct-selling regulation. However, the draft revision signals a level of increased scrutiny by Chinese regulators that may be applied to our direct selling platform in Hong Kong, through which products are delivered to members in China, or to our e-commerce retail platform in China. The increased uncertainty created by the draft revision has negatively impacted our sales in the second and third quarters, and may lead to a need to restructure our activities further in the region, to apply for a direct selling license, or to take other steps to address any resulting requirements or regulatory risks.

Previous wording

Independent Member Activities.** **During the second quarter of 2026, certain independent members, including certain sales leaders, engaged in conduct that violated our policies, procedures and professional code of conduct. This conduct disrupted portions of our independent member network and adversely affected net sales and operating performance during the quarter. We have taken disciplinary action and implemented other measures to protect our business and independent member network. We continue to monitor the matter and take appropriate action. We are currently unable to predict the extent to which this matter may affect our business or results of operations in future periods.

Current wording

Independent Member Activities.** **During the second quarter of 2026, certain independent members, including certain top sales leaders in Hong Kong, our largest market, engaged in conduct that violated our policies, procedures and professional code of conduct, including policies that prohibit the recruitment of other members into a competing business. This conduct disrupted portions of our independent member network and adversely affected net sales and operating performance during the second quarter and continued into the third quarter. We have taken disciplinary action, including the suspension and termination of certain members, and implemented other measures to protect our business and independent member network. Our investigation into the matter is substantially complete, although we will continue to monitor the matter and take appropriate action.

Previous wording

Under our current compensation plan, certain of our commission payouts may be limited to a hard cap dollar amount per week or a specific percentage of total product sales. In some markets, commissions may be further limited. In some markets, we also pay certain bonuses on purchases by up to three generations of personally sponsored members, as well as bonuses on commissions earned by up to seven generations of personally sponsored members. Members can also earn additional income, trips and other prizes in specific time-limited promotions and contests we hold from time to time. Member commissions are dependent on the sales mix and, for the first six months of each of 2026 and 2025, represented 41% of net sales. Occasionally, we make modifications and enhancements to our compensation plan to help motivate members, which can have an impact on member commissions. We may also enter into performance-based agreements for business or market development, which can result in additional compensation to specific members.

Current wording

Under our current compensation plan, certain of our commission payouts may be limited to a hard cap dollar amount per week or a specific percentage of total product sales. In some markets, commissions may be further limited. In some markets, we also pay certain bonuses on purchases by up to three generations of personally sponsored members, as well as bonuses on commissions earned by up to seven generations of personally sponsored members. Members can also earn additional income, trips and other prizes in specific time-limited promotions and contests we hold from time to time. Member commissions are dependent on the sales mix and, for the first nine months of 2026 and 2025, represented 40% and 41% of net sales, respectively. Occasionally, we make modifications and enhancements to our compensation plan to help motivate members, which can have an impact on member commissions. We may also enter into performance-based agreements for business or market development, which can result in additional compensation to specific members.

Previous wording

Net sales were$7.6 million for the three months ended June 30, 2026 compared with $9.8 million for the comparable period a year ago, a decrease of $2.2 million, or 23%. Hong Kong net sales, substantially all of which were derived from the sale of products shipped to members residing in China, decreased $1.7 million, or 21%, over the comparable period a year ago primarily due to the continued negative consumer sentiment as a result of the heightened economic uncertainty caused by the threat of reciprocal and retaliatory tariffs, as well as increased regulatory uncertainty and the disruptions that resulted from certain independent member activities that arose in China during the quarter (see“Business Overview—Recent Developments”). Outside of our Hong Kong business, net sales decreased $504,000, or 28%, over the comparable three-month period a year ago, primarily due to the decreased quarter-over-quarter net sales in the United States and Canada, as well as our Chinese e-commerce retail business.

Current wording

Net sales were$7.6 million for the three months ended September 30, 2026 compared with $9.5 million for the comparable period a year ago, a decrease of $1.9 million, or 20%. Hong Kong net sales, substantially all of which were derived from the sale of products shipped to members residing in China, decreased $1.4 million, or 18%, over the comparable period a year ago. This decline was primarily due to continued consumer pessimism contributing to cautious spending, increased regulatory uncertainty and ongoing disruptions resulting from member misconduct that initially arose in China during the second quarter of 2026 (see “Business Overview—Recent Developments”). Total downline orders by members terminated in the third quarter of 2026 due to their misconduct were approximately $492,000 and $1.3 million for the three months ended September 30, 2026 and 2025, respectively. To address this difficult economic environment, we introduced additional incentives and lower-priced packages, which accounted for most of the revenue decline compared to the same quarter a year ago, but managed to lift the member count and steady the top line compared to the preceding second quarter. Outside of our Hong Kong business, net sales decreased $498,000, or 28%, over the comparable three-month period a year ago, primarily due to the decreased quarter-over-quarter net sales in the United States and Japan, as well as our Chinese e-commerce retail business.

Previous wording

Net sales were $16.8 million for thesix months ended June 30, 2026 compared with $20.6 million for the comparable period a year ago, a decrease of $3.7 million, or 18%. Hong Kong net sales, substantially all of which were derived from the sale of products shipped to members residing in China, decreased $3.2 million, or 19%, over the comparable period a year ago primarily due to the continued negative consumer sentiment as a result of the heightened economic uncertainty caused by the threat of reciprocal and retaliatory tariffs, as well as increased regulatory uncertainty and the disruptions that resulted from certain independent member activities that arose in China during the second quarter of 2026 (see“Business Overview—Recent Developments”). Outside of our Hong Kong business, net sales decreased $514,000, or 15%, over the comparable six-month period a year ago, primarily due to reduction in the United States and Canada, as well as our Chinese e-commerce retail business during the second quarter of 2026. As of June 30, 2026, deferred revenue was $4.2 million, which primarily consisted of $2.7 million pertaining to unshipped product orders and unredeemed product vouchers, as well as $1.5 million in auto ship advances.

Current wording

Net sales were $24.4 million for thenine months ended September 30, 2026 compared with $30.0 million for the comparable period a year ago, a decrease of $5.7 million, or 19%. Hong Kong net sales, substantially all of which were derived from the sale of products shipped to members residing in China, decreased $4.6 million, or 19%, over the comparable period a year ago. This decline was primarily due to continued consumer pessimism contributing to cautious spending, increased regulatory uncertainty and ongoing disruptions resulting from member misconduct that initially arose in China during the second quarter of 2026 (see “Business Overview—Recent Developments”). Outside of our Hong Kong business, net sales decreased $1.0 million, or 20%, over the comparable nine-month period a year ago, primarily due to reduction in the United States, Canada, Japan and Taiwan, as well as our Chinese e-commerce retail business during the second quarter of 2026. As of September 30, 2026, deferred revenue was $3.0 million, which primarily consisted of $1.5 million pertaining to unshipped product orders and unredeemed product vouchers, as well as $1.5 million in auto ship advances.

Previous wording

Gross profit was 75.2% of net sales for the three months ended June 30, 2026 compared with 73.9% of net sales forthe three months ended June 30, 2025. Gross profit was 75.1% of net sales for the six months ended June 30, 2026 compared with 73.8% of net sales forthesix months ended June 30, 2025. The improvement in gross profit margin for both the three- and six-month periods ended June 30, 2026 was primarily due to the transition of our product manufacturing from the United States to East Asia, closer to our main markets, in an effort to reduce tariff uncertainty and streamline logistics.

Current wording

Gross profit was 74.2% of net sales for the three months ended September 30, 2026 compared with 73.7% of net sales forthe three months ended September 30, 2025. Gross profit was 74.8% of net sales for the nine months ended September 30, 2026 compared with 73.8% of net sales forthe nine months ended September 30, 2025. The improvement in gross profit margin for both the three- and nine-month periods ended September 30, 2026 was primarily due to the transition of our product manufacturing from the United States to East Asia, closer to our main markets, in an effort to reduce tariff uncertainty and streamline logistics.

Previous wording

Selling, general and administrative expenses declined by $323,000 to $3.3 million for the three months ended June 30, 2026 as compared with $3.6 million for the three months ended June 30, 2025. The decrease was primarily due to lower employee-related expenses, professional fees, and credit card fees and assessments during the current year period. Selling, general and administrative expenses as a percentage of net sales increased from 36.4% to 42.7% for the three month period ended June 30, 2026 compared with the same quarter last year due to the net sales decline in Hong Kong.

Current wording

Selling, general and administrative expenses declined by $433,000 to $3.2 million for the three months ended September 30, 2026 as compared with $3.6 million for the three months ended September 30, 2025. The decrease was primarily due to lower employee-related expenses, professional fees, and facility costs during the current year period. Selling, general and administrative expenses as a percentage of net sales increased from 38.0% to 42.0% for the three month period ended September 30, 2026 compared with the same quarter last year due to the net sales decline in Hong Kong.

Previous wording

Selling, general and administrative expenses declined by $561,000 to $6.8 million for the six months ended June 30, 2026 as compared with $7.3 million for the six months ended June 30, 2025. The decrease was primarily due to lower employee-related expenses, professional fees, event costs, and credit card fees and assessments during the current year period. Selling, general and administrative expenses as a percentage of net sales increased from 35.7% to 40.3% for thesix month period ended June 30, 2026 compared with the same period last year due to the net sales decline in Hong Kong.

Current wording

Selling, general and administrative expenses declined by $1.0 million to $9.9 million for the nine months ended September 30, 2026 as compared with $10.9 million for the nine months ended September 30, 2025. The decrease was primarily due to lower employee-related expenses, professional fees, facility costs, and credit card fees and assessments during the current year period. Selling, general and administrative expenses as a percentage of net sales increased from 36.5% to 40.8% for thenine month period ended September 30, 2026 compared with the same period last year due to the net sales decline in Hong Kong.

Previous wording

Other income was $190,000 for the three months ended June 30, 2026 compared with $348,000 in the same period a year ago. Other income was $485,000 for thesix months ended June 30, 2026 compared with $813,000 in the same period a year ago. The decrease was primarily due to less interest income earned during the current year periods.

Current wording

Other income was $112,000 for the three months ended September 30, 2026 compared with $206,000 in the same period a year ago. Other income was $597,000 for the nine months ended September 30, 2026 compared with $1.0 million in the same period a year ago. The decrease was primarily due to less interest income earned during the current year periods.

Previous wording

An income tax benefit of $2,000 was recognized during the three months ended June 30, 2026. No tax provision or benefit was recognized during the three months ended June 30, 2025. An income tax benefit of $27,000 and $2,000 was recognized during the six months ended June 30, 2026 and 2025, respectively. The tax benefit during the three- and six-month periods ended June 30, 2026 and 2025 primarily resulted from estimates for foreign income inclusions, such as Net CFC Tested Income (“NCTI”) and Subpart F income, and our year-to-date consolidated income (loss) through June 30, 2026 and 2025, respectively, as well as prior year foreign return to provision true-ups.

Current wording

Income tax expense of $67,000 and $142,000 was recognized during the three months ended September 30, 2026 and 2025, respectively. Income tax expense of $40,000 and $140,000 was recognized during the nine months ended September 30, 2026 and 2025, respectively. The tax expense during the three- and nine-month periods ended September 30, 2026 and 2025 primarily resulted from estimates for income taxes on consolidated operating results through September 30, 2026 and 2025, as well as foreign income inclusions, such as Net CFC Tested Income (“NCTI”) and Subpart F income, and prior year foreign return to provision true-ups.

Previous wording

At June 30, 2026, our cash, cash equivalents and marketable securities totaled $18.6 million. Total cash, cash equivalents and marketable securities decreased by $10.3 million from December 31, 2025 to June 30, 2026 primarily due to the repurchase of shares of our common stock and dividends paid during the first six months of 2026. We consider all highly liquid investments with original maturities of three months or less, when purchased, to be cash equivalents. As of June 30, 2026, we had $14.4 million in available-for-sale investments classified as either cash equivalents or marketable securities. In addition, cash and cash equivalents included $2.7 million held in banks located within China subject to foreign currency controls.

Current wording

At September 30, 2026, our cash, cash equivalents and marketable securities totaled $17.6 million. Total cash, cash equivalents and marketable securities decreased by $11.3 million from December 31, 2025 to September 30, 2026 primarily due to the repurchase of shares of our common stock and dividends paid during the first nine months of 2026, as well as cash used in operations. We consider all highly liquid investments with original maturities of three months or less, when purchased, to be cash equivalents. As of September 30, 2026, we had $13.9 million in available-for-sale investments classified as either cash equivalents or marketable securities. In addition, cash and cash equivalents included $2.6 million held in banks located within China subject to foreign currency controls.

Previous wording

As of June 30, 2026, the ratio of current assets to current liabilities was 2.0 to 1.0 and we had $11.8 million of working capital. Working capital as of June 30, 2026 decreased $8.7 million compared to our working capital as of December 31, 2025.

Current wording

As of September 30, 2026, the ratio of current assets to current liabilities was 2.1 to 1.0 and we had $11.6 million of working capital. Working capital as of September 30, 2026 decreased $8.9 million compared to our working capital as of December 31, 2025.

Previous wording

Cash used in operations was$2.2 million for the first six months of 2026 compared with $5.2 million for the first six months of 2025. Income tax paid during April 2025 for the repatriation tax on the deemed repatriation of deferred foreign income was $5.1 million. Disregarding this payment, cash used in operations was $97,000 during the first six months of 2025. The decline in operating cash flows for the first six months of 2026 is primarily due to the net sales decline in Hong Kong compared with the same period last year.

Current wording

Cash used in operations was$3.3 million for the first nine months of 2026 compared with $5.0 million for the first nine months of 2025. Income tax paid during April 2025 for the repatriation tax on the deemed repatriation of deferred foreign income was $5.1 million. Disregarding this payment, cash provided by operations was $16,000 during the first nine months of 2025. The decline in operating cash flows for the first nine months of 2026 is primarily due to the net sales decline in Hong Kong compared with the same period last year.

Previous wording

Cash flows provided by investing activities totaled $12.4 million during thefirst six months of 2026 compared with $6.6 million during the first six months a year ago. During the first six months of 2026, we purchased $8.7 million in marketable securities with original maturities greater than three months, and as such, reflect these purchases as an investing activity. These purchases of marketable securities were offset by $21.6 million of proceeds received from maturities of marketable securities.

Current wording

Cash flows provided by investing activities totaled $9.8 million during thefirst nine months of 2026 compared with $12.5 million during the first nine months a year ago. During the first nine months of 2026, we purchased $14.5 million in marketable securities with original maturities greater than three months, and as such, reflect these purchases as an investing activity. These purchases of marketable securities were offset by $24.8 million of proceeds received from maturities of marketable securities.

Previous wording

Cash flows used in financing activities totaled $7.6 million during the firstsix months of 2026 compared with $4.6 million during the first six months a year ago. On February 17, 2026, we entered into a share repurchase agreement to repurchase 2,935,227 shares of common stock, representing approximately 25.5% of our outstanding shares, from the George K. Broady 2012 Irrevocable Trust and the Eleanor Jane Broady 2012 Irrevocable Trust at a price of $2.00 per share, for aggregate consideration of approximately $5.9 million. Additionally, we declared and paid cash dividends of $0.10 per common share, or $1.7 million, in 2026 and $0.20 per common share, or $4.6 million, in 2025. Any future cash dividends will be at the sole discretion of the Company’s Board of Directors, and will depend on our financial condition, results of operations, capital requirements and other factors considered relevant by the Board of Directors.

Current wording

Cash flows used in financing activities totaled $7.6 million during the first nine months of 2026 compared with $6.9 million during the first nine months a year ago. On February 17, 2026, we entered into a share repurchase agreement to repurchase 2,935,227 shares of common stock, representing approximately 25.5% of our outstanding shares, from the George K. Broady 2012 Irrevocable Trust and the Eleanor Jane Broady 2012 Irrevocable Trust at a price of $2.00 per share, for aggregate consideration of approximately $5.9 million. During September 2026, we purchased a total of 28,022 shares of common stock on the open market for an aggregate purchase price of approximately $27,000, plus transaction costs. Additionally, we declared and paid cash dividends of $0.10 per common share, or $1.7 million, during the first two quarters of 2026 and $0.20 per common share, or $6.9 million, during each of the first three quarters of 2025. We did not declare a dividend in the third quarter of 2026. Any future cash dividends will be at the sole discretion of the Company’s Board of Directors, and will depend on our financial condition, results of operations, capital requirements and other factors considered relevant by the Board of Directors.

Previous wording

In 2016, the Board of Directors authorized an increase to the Company’s stock repurchase program first approved in 2015 from $15.0 million to $70.0 million. Any repurchases will be made in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Exchange Act. For all or a portion of the authorized repurchase amount, the Company may enter into one or more plans that are compliant with Rule 10b5-1 of the Exchange Act that are designed to facilitate these purchases. The stock repurchase program does not require the Company to acquire a specific number of shares, and may be suspended from time to time or discontinued. The repurchase of our shares on February 17, 2026 was effected pursuant to our previously authorized $70.0 million share repurchase program. As of June 30, 2026, $15.9 million of the $70.0 million stock repurchase program remained available for future purchases, inclusive of estimated tax.

Current wording

In 2016, the Board of Directors authorized an increase to the Company’s stock repurchase program first approved in 2015 from $15.0 million to $70.0 million. Any repurchases will be made in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Exchange Act. The Company may enter into one or more pre-arranged trading plans that are compliant with Rule 10b5-1 of the Exchange Act that are designed to facilitate these purchases. The stock repurchase program does not require the Company to acquire a specific number of shares, and may be suspended from time to time or discontinued. The repurchase of our shares on February 17, 2026 was effected pursuant to this share repurchase program. As of September 30, 2026, $15.9 million of the $70.0 million stock repurchase program remained available for future purchases, inclusive of estimated tax.