{"url_path":"/sec/nus/10-k/2026/item-1a","section_key":"item-1a","section_title":"Item 1A RISK FACTORS","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-02-13","source_url":"https://www.sec.gov/Archives/edgar/data/1021561/0001140361-26-005130-index.html","accession_number":"0001140361-26-005130","cik":"0001021561","ticker":"NUS","issuer_name":"NU SKIN ENTERPRISES, INC.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1021561/0001140361-26-005130-index.html","primary_entity_key":"0001021561","primary_entity_name":"NU SKIN ENTERPRISES, INC."},"word_count":24490,"has_tables":true,"body_markdown":"ITEM 1A.\n\nRISK FACTORS\n\nRisk Factor Summary\n\nWe are providing the following summary of the risk factors contained in this Annual Report on Form 10-K to enhance the readability and accessibility of our risk factor\ndisclosures. We encourage you to carefully review the full risk factors contained after this summary for additional information regarding the material factors that make an investment in our securities speculative or risky. These risks include\nthe following:\n\nRisks Associated with Direct Selling and Our Sales Force\n\n●\n\nChallenges to the form of our network marketing system or to our business practices have harmed and could continue to harm our business.\n\n●\n\nDirect selling laws and regulations vary globally, are subject to interpretation or change, and may prohibit or severely restrict direct selling and cause our revenue and profitability to decline.\n\n●\n\nImproper sales force actions could harm our business.\n\n●\n\nSocial media platforms’ decisions to prohibit, block or decrease the prominence of our sales force’s content could harm our business.\n\n●\n\nIf our business practices or policies or the actions of our sales force are found to be in violation of applicable local regulations regarding foreigners, then we could be sanctioned and/or required to\nchange our business model, which could significantly harm our business.\n\n●\n\nOur sales compensation plans or other incentives could be viewed negatively by some of our sales force, could be restricted by government regulators, and could fail to achieve desired long-term results\nand have a negative impact on revenue.\n\n●\n\nLimits on the amount of sales compensation we pay could inhibit our ability to attract and retain our sales force, negatively impact our revenue and cause regulatory risks.\n\n●\n\nWe may be held responsible for certain taxes, assessments and other requirements relating to the activities of our sales force, which could harm our financial condition and operating results.\n\nRisks Associated with Market Conditions and Competition\n\n●\n\nInability of products, platforms, business opportunities and other initiatives to gain or maintain sales force and market acceptance could harm our business, and trends among older and younger generations\nof customers contribute to this risk.\n\n●\n\nDifficult economic conditions could harm our business.\n\n●\n\nOur markets are intensely competitive, and market conditions and the strengths of competitors may harm our business.\n\n●\n\nAdverse publicity concerning our business, marketing plan, products or people could harm our business and reputation.\n\n●\n\nProduct diversion may have a negative impact on our business.\n\nRisks Associated with Our Operations in Mainland China\n\n●\n\nOur operations in Mainland China are subject to significant government scrutiny, and we could be subject to fines, operational restrictions or other penalties.\n\n●\n\nIf direct selling regulations in Mainland China are modified, interpreted or enforced in a manner that results in negative changes to our business model or the imposition of a range of potential\npenalties, our business could be significantly negatively impacted.\n\n●\n\nOur ability to expand our business in Mainland China could be negatively impacted if we are unable to obtain additional necessary national and local government approvals in Mainland China.\n\n●\n\nIf we are not able to register products for sale in Mainland China, our business could be harmed.\n\nRisks Associated with Epidemics and Other Widespread Crises\n\n●\n\nEpidemics and other crises have negatively impacted our business and may do so in the future.\n\nInternational Risks\n\n●\n\nOur ability to conduct business in international markets may be affected by political, legal, tax and regulatory risks.\n\n●\n\nWe are subject to financial risks as a result of our international operations, including exposure to foreign-currency fluctuations, currency controls and inflation in foreign markets, all of which could\nimpact our financial position and results of operations.\n\n●\n\nChanges to tariff and import/export regulations, and trade disputes between the United States and other jurisdictions have had a negative effect on global economic conditions and could negatively affect\nour business, financial results and financial condition.\n\nHuman Capital Risks\n\n●\n\nIf we are unable to retain our existing sales force and recruit additional people to join our sales force, our revenue may not increase and may even decline.\n\n●\n\nWe depend on our key personnel and Sales Leaders, and the loss of the services provided by any of our executive officers, other key employees or key Sales Leaders could harm our business and results of\noperations.\n\n18\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nRisks Associated with Our Manufacturing and Operations\n\n●\n\nProduction difficulties, quality control problems, inaccurate forecasting, shortages in ingredients, and reliance on our suppliers could harm our business.\n\n●\n\nThe loss of or a disruption in our manufacturing, supply chain and distribution operations, or significant expenses or violations incurred by such operations, could adversely affect our business.\n\n●\n\nOur business could be negatively impacted if we fail to execute our product launch process or ongoing product sales due to difficulty in forecasting or increased pressure on our supply chain, information\nsystems and management.\n\n●\n\nDifficulties managing our entry or growth in certain markets could cause our business and operations to be harmed.\n\n●\n\nSystem failures, capacity constraints and other information technology difficulties could harm our business.\n\n●\n\nAny acquired companies or future acquisitions may expose us to additional risks.\n\nProduct Legal and Regulatory Risks\n\n●\n\nRegulations governing our products, including the formulation, registration, pre-approval, marketing and sale of our products, could harm our business.\n\n●\n\nGovernment regulations and private party actions relating to the marketing and advertising of our products and services may restrict, inhibit or delay our ability to sell our products and harm our\nbusiness.\n\n●\n\nOur operations could be harmed if we or our vendors fail to comply with Good Manufacturing Practices.\n\n●\n\nIf our current or any future device products are determined to be medical devices in a particular geographic market, or if our sales force uses these products for medical purposes or makes improper\nmedical claims, our ability to continue to market and distribute such devices could be harmed, and we could face legal or regulatory actions.\n\n●\n\nWe may incur product liability claims that could harm our business.\n\nLegal, Regulatory and Compliance Risks\n\n●\n\nWe may become involved in legal proceedings and other matters that could adversely affect our operations or financial results.\n\n●\n\nNon-compliance or alleged non-compliance with anti-corruption laws could harm our business.\n\n●\n\nA failure of our internal controls over financial reporting or our regulatory compliance efforts could harm our stock price and our financial and operating results or could result in fines or penalties.\n\nRisks Associated with Taxes, Customs and Debt\n\n●\n\nWe are subject to changes in tax and customs laws, changes in our tax rates, the adoption of new U.S. or international tax legislation or exposure to additional tax liabilities, which could have a\nmaterial and adverse impact on our effective tax rate, operating results, cash flows and financial condition.\n\n●\n\nGovernment authorities may question our tax or customs positions or change their laws in a manner that could increase our effective tax rate or otherwise harm our business.\n\n●\n\nA decline in our business could adversely affect our financial position and liquidity, and our debt covenants could limit our ability to pursue transactions or other opportunities that could be beneficial\nto our business.\n\nIntellectual Property Risks\n\n●\n\nWe may be subject to claims of infringement on the intellectual property rights or trade secrets of others, resulting in costly litigation.\n\n●\n\nIf we are unable to protect our intellectual property rights or our proprietary information and know-how, our ability to compete could be negatively impacted and the value of our products could be\nadversely affected.\n\nData Security and Privacy Risks\n\n●\n\nFailure to maintain satisfactory compliance with certain privacy and data protections laws and regulations, and the integrity of company, employee, sales force, customer or guest data, could\nexpose us to litigation, liability, substantial negative financial consequences and harm to our reputation.\n\n●\n\nThe unauthorized access, use, theft or destruction of our information systems or of data that is stored in our information systems or by third parties on our behalf could impact our\nreputation and brand and expose us to potential liability and loss of revenues.\n\n●\n\nThe use of artificial intelligence could adversely affect our business, results of operations and reputation.\n\nSustainability Risks\n\n●\n\nOur business could be negatively impacted by corporate citizenship and sustainability matters.\n\nRisks Related to Our Common Stock\n\n●\n\nThe market price of our Class A common stock is subject to significant fluctuations due to a number of factors that are beyond our control.\n\nRisk Factors\n\nWe face a number of substantial risks. Our business, financial condition or results of operations could be harmed by any of these risks. The trading price of our common stock could decline due\nto any of these risks, which should be considered together with the other items in this Annual Report on Form 10-K, including Item 1. Business and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.\n\n19\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nRisks Associated with Direct Selling and Our Sales Force\n\nChallenges to the form of our network marketing system or to our business practices have harmed and could continue to harm our business.\n\nWe have been, and may be in the future, subject to challenges and inquiries by government regulators regarding the form of our network marketing system. Legal and regulatory requirements concerning the direct\nselling industry generally do not include “bright line” rules and are inherently fact-based and subject to interpretation. As a result, regulators and courts have discretion in their application of these laws and regulations, and the enforcement\nor interpretation of these laws and regulations by government agencies or courts can change.\n\nDuring the past several years, settlements and other judicial orders between the U.S. Federal Trade Commission (“FTC”) and other direct selling companies, as well as guidance from the FTC, have addressed\ninappropriate earnings and lifestyle claims, problematic compensation structures and the importance of focusing on consumers. These developments have created ambiguity as to the proper interpretation of the law and related court decisions. The\nFTC has been active in its enforcement activities and, in some cases, has taken action that required other multi-level marketing companies to cease engaging in multi-level marketing or to modify their business models. Any adverse rulings or legal\nactions could impact our business if direct selling laws or anti-pyramid laws are interpreted more narrowly or in a manner that results in additional burdens or restrictions on direct selling companies. For example:\n\n●\n\nIn 2021, the FTC sent a notice to more than 1,100 companies, including us, that outlined several practices that the FTC determined to be unfair or deceptive in prior administrative cases. These practices relate to earnings claims,\nother money-making opportunity claims, and endorsements and testimonials. Pursuant to the FTC’s “penalty offense authority,” companies that received the notice are expected to comply with the standards set in the prior administrative\ncases and could incur significant civil penalties if they or their representatives fail to do so.\n\n●\n\nIn 2024, the FTC issued guidance concerning multi-level marketing. The guidance indicates an increasingly restrictive view of multi-level marketing, compensation structures, earnings claims and a company’s protection from liability\nfor claims made by members of its sales force.\n\n●\n\nIn 2025, the FTC issued a Notice of Proposed Rulemaking (“NPR”) and an Advanced Notice of Proposed Rulemaking (“ANPR”) regarding potential rules governing earnings claims for multi-level marketers. The NPR proposes to prohibit\nmulti-level marketers from making deceptive earnings claims, and it would require them to have written substantiation to back up any earnings claims and make that substantiation available to consumers upon request. The ANPR indicates\nthat the FTC is considering additional restrictions on earnings claims and recruiting by multi-level marketers. The NPR and ANPR are part of ongoing rulemaking processes, and the scope, timing and final form of any rules remain\nuncertain.\n\nAlthough we take steps to educate our sales force on proper claims, members of our sales force might make improper claims, or regulators might determine we are making improper claims. Either of these actions could\nlead to an FTC investigation and could harm our business. The FTC’s increased scrutiny of earnings claims, as reflected in the NPR and ANPR, could lead to additional FTC actions regarding improper claims. It could also contribute to new industry\nstandards or new rules that could limit our ability, and the ability of our sales force, to make earnings claims, which could harm our ability to grow our sales force.\n\nIn addition, any FTC proposed rules, guidance or enforcement actions could lead to new industry standards or new rules, or they could limit the levels in the network for which payments can be made, any of which\ncould impact our business and require us to amend our global sales compensation plan. With a majority of our revenue in the United States coming from sales to retail customers and preferred customers, we believe that we can demonstrate consumer\ndemand for our products, but this may not be sufficient under the FTC’s increasingly restrictive view of multi-level marketing and we continue to monitor developments to assess whether we should make any changes to our business or global sales\ncompensation plan. If we are required to make changes due to either rulemaking or an enforcement action against our company, our business could be harmed.\n\nFrom time to time, we also are subject to challenges by private parties in civil actions. We are aware of civil actions against other direct-selling companies in the United States that have resulted in significant\nsettlements, and any civil actions against us could similarly result in significant settlements. Allegations directed at us and our competitors regarding the legality of multi-level marketing in various markets and adverse media reports have also\ncreated intense public scrutiny of us and our industry. Consumer protection groups and organizations (such as the Better Business Bureau and Truth in Advertising) also generate media and regulatory scrutiny of companies in our industry through\nregulatory referrals and other channels of publicity. All of these actions and any future scrutiny of us or our industry could generate negative publicity or further regulatory actions that could result in fines, restrict our ability to conduct\nour business in our various markets, enter into new markets, motivate our sales force and attract consumers.\n\n20\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nDirect selling laws and regulations vary globally, are subject to interpretation or change, and may prohibit or severely restrict direct selling and cause our revenue and profitability to\ndecline.\n\nVarious government agencies throughout the world regulate direct sales practices. Laws and regulations in the United States, Japan, South Korea, Vietnam, India and Mainland China are particularly stringent and\nsubject to broad discretion in enforcement by regulators. These laws and regulations are generally intended to prevent fraudulent or deceptive schemes, often referred to as “pyramid schemes,” that compensate participants primarily for recruiting\nadditional participants without significant emphasis on product sales to consumers. The laws and regulations in our current markets often:\n\n●\n\nimpose requirements related to sign-up, order cancellations, product returns, inventory buy-backs and cooling-off periods for our sales force and consumers;\n\n●\n\nrequire us, or our sales force, to register with government agencies;\n\n●\n\nimpose limits on the amount and type of sales compensation we can pay;\n\n●\n\nimpose reporting requirements; and\n\n●\n\nrequire that our sales force is compensated for selling products and not for recruiting others.\n\nComplying with these widely varying and sometimes inconsistent rules and regulations can be difficult, time-consuming and expensive, and requires significant resources. The laws and regulations governing direct\nselling are modified from time to time, and like other direct selling companies, we are subject from time to time to government inquiries and investigations in our various markets related to our direct selling activities. This can require us to\nmake changes to our business model and aspects of our sales compensation plan in the markets impacted by such changes and investigations. For example, in 2025, the FTC issued a Notice of Proposed Rulemaking (“NPR”) and an Advanced Notice of\nProposed Rulemaking (“ANPR”) regarding potential rules governing earnings claims for multi-level marketers. The NPR proposes to prohibit multi-level marketers from making deceptive earnings claims, and it would require them to have written\nsubstantiation to back up any earnings claims and make that substantiation available to consumers upon request. The ANPR indicates that the FTC is considering additional restrictions on earnings claims and recruiting by multi-level marketers. In\naddition, markets where we currently do business could change their laws or regulations to prohibit direct selling. If we are unable to obtain necessary licenses and certifications within required deadlines or continue business in existing\nmarkets or commence operations in new markets because of these laws, our revenue and profitability may decline. Any delay could negatively impact our revenue.\n\nImproper sales force actions could harm our business.\n\nSales force activities that violate applicable laws, regulations or policies, or that are alleged to do so, have harmed our business and reputation and resulted in government or third-party actions against us, and\nthey could do so in the future.\n\nFor example, in 2014, allegations were made by various media outlets that certain of our sales representatives in Mainland China failed to adequately follow and enforce our policies and regulations. This adverse\npublicity, as well as a government review and actions that we voluntarily took to address the situation, resulted in a significant negative impact on our revenue and the number of Sales Leaders and Customers in the region. Similar or more extreme\nactions by government agencies in Mainland China or other markets in the future could have a significant adverse impact on our business and results of operations.\n\nThe direct selling industry in Japan continues to experience regulatory and media scrutiny, and other direct selling companies have been suspended from sponsoring activities. Japan imposes strict requirements\nregarding how Brand Affiliates approach prospective customers. From time to time, we receive information from consumer centers in certain prefectures about the number of general inquiries and complaints about us and our Brand Affiliates, and we\nalso sometimes receive warnings to reduce such complaints. Based on this information, we continually evaluate and enhance our Brand Affiliate compliance, education and training efforts in Japan. However, we cannot be certain that our efforts will\nsuccessfully prevent regulatory actions against us, including fines, suspensions or other sanctions, or that the company and the direct selling industry will not receive further negative media attention, all of which could harm our business.\n\nExcept in Mainland China, members of our sales force are not employees and act independently of us. The most significant area of risk for such activities relates to improper product claims and claims regarding the\nbusiness opportunity of joining our sales force. For example, in 2021, the FTC sent a notice to more than 1,100 companies, including us, that outlined several practices that the FTC determined to be unfair or deceptive in prior administrative\ncases. These practices relate to earnings claims, other money-making opportunity claims, and endorsements and testimonials. Pursuant to the FTC’s “penalty offense authority,” companies that received the notice are expected to comply with the standards set in the prior administrative cases and could incur significant civil penalties if they or their representatives fail to do so.\n\n21\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nWe implement strict policies and procedures to help ensure our sales force complies with legal requirements. However, given the size of our sales force, we experience problems from time to time. For example,\nproduct claims made by some of our sales force in 1990 and 1991 led to a FTC investigation that resulted in our entering into two consent agreements with the FTC and various agreements with state regulatory agencies. In addition, rulings by the\nSouth Korean Fair Trade Commission and by judicial authorities against us and other companies in South Korea indicate that, if our sales force engages in criminal activity, we may be held liable or penalized for failure to supervise them\nadequately. Our sales force may attempt to anticipate which markets we will open in the future and begin marketing and sponsoring activities in markets where we are not qualified to conduct business. We could face fines, suspensions or other\nlegal action if our sales force violates applicable laws and regulations, and our reputation and brand could be negatively impacted.\n\nIn addition, as our sales force increasingly uses social media and our digital tools to promote our business opportunity and products, this increases the burden on us to monitor compliance of such activities, and\nit increases the risk that such social media content or digital content (such as statements made on social media or within the chat feature of our apps) could contain claims that violate our policies and/or applicable regulations. For example,\ndue to the borderless nature of social media, a claim that is allowed in one market may ultimately reach another market where it is not allowed.\n\nSocial media platforms’ decisions to prohibit, block or decrease the prominence of our sales force’s content could harm our business.\n\nSocial media platforms have decided, and could in the future decide, to prohibit, block or decrease the prominence of our sales force’s content and livestreaming for any reason, or terminate their social media\naccounts, which could harm our business, particularly as our business is becoming increasingly dependent on the use of social and digital platforms to support our direct selling channel.\n\nIn addition, social media platforms may deplatform, suspend, ban, or otherwise restrict access to Nu Skin’s company-operated social media accounts or advertising accounts, or limit our ability to use certain\nplatform features, for a variety of reasons, including alleged violations of platform policies, changes in enforcement practices, automated moderation decisions, or shifts in platform business priorities. Any such actions could reduce our ability\nto communicate with consumers and our sales force, support product launches and initiatives, and protect and promote our brands, which could materially harm our business, reputation and results of operations.\n\nFor example, due to concerns with multi-level marketing, the TikTok and WhatsApp Business platforms’ community guidelines prohibit content related to multi-level marketing. In addition, Pinterest and Facebook\nprohibit ads that promote multi-level marketing opportunities, and Pinterest has also imposed restrictions on weight loss products, claims and photos. Also, Douyin prohibits specific words or claims, particularly relating to health and wellness,\nduring livestreaming. Moreover, some social media platforms reduce visibility of product offers or posts based on pricing, degree of brand awareness or other factors that could apply to our products. Additional social media platforms’ adoption of\nsimilar or stricter policies could significantly hamper our sales force’s ability to promote our products and attract consumers, which could cause our revenue to decline. Restrictions, suspensions or bans of our company accounts or our sales\nforce’s accounts could also disrupt our marketing activities with little or no advance notice and with limited ability to appeal or obtain timely relief. Our reputation could also be harmed if our sales force violates any social media platform’s\ncommunity guidelines.\n\nIf our business practices or policies or the actions of our sales force are found to be in violation of applicable local regulations regarding foreigners, then we could be\nsanctioned and/or required to change our business model, which could significantly harm our business.\n\nOur sales force is required to comply with our residency and work authorization policies and other local legal requirements prior to working in a market. Some markets, including Mainland China, Vietnam and India,\nalso prohibit or restrict participation of overseas personnel or foreigners in direct selling activities. We cannot assure that actions of our sales force will not violate local laws or regulations. If our business practices or policies or the\nactions of our sales force are found to be in violation of applicable regulations as they may be interpreted or enforced, then we could be sanctioned and/or required to change our business model, which could result in adverse publicity and\nsignificantly harm our business.\n\n22\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nOur sales compensation plans or other incentives could be viewed negatively by some of our sales force, could be restricted by government regulators, and could fail to\nachieve desired long-term results and have a negative impact on revenue.\n\nOur sales compensation includes some components that differ from market to market. We modify components of our sales compensation from time to time to keep our sales compensation plans and business models\ncompetitive and attractive to our existing sales force and people interested in joining our sales force, to address changing market dynamics, to provide incentives to our sales force that we believe will help grow our business, to conform to\nlocal regulations and to address other business needs. Because of the size of our sales force and the complexity of our sales compensation plans, it is difficult to predict how such changes will be viewed by our sales force and whether such\nchanges will achieve their desired results. It also is difficult to predict how such changes may impact our ability to attract a larger potential target market of opportunity seekers. Certain changes we have made to our global sales compensation\nplan in the past, which were successful in several markets, did not achieve anticipated results in certain other markets, were not viewed positively by some segments of our sales force, and negatively impacted our business. Similarly, we face the\nrisk that we could fail to make changes to our compensation plans that would be necessary to keep our compensation competitive with the market, compliant with changing regulations, and allow us to attract new opportunity seekers or segments of\nopportunity seekers, which could have a negative impact on our sales force.\n\nLimits on the amount of sales compensation we pay could inhibit our ability to attract and retain our sales force, negatively impact our revenue and cause regulatory risks.\n\nSeveral markets, including Mainland China, South Korea, Indonesia and Vietnam, impose limits on the amount of sales compensation we can pay to our sales force. For example, under regulations in Mainland China,\ndirect selling companies may pay independent direct sellers in Mainland China up to a maximum 30% of the revenue they generate through their own sales of products to consumers. Additionally, in South Korea, local regulations limit sales\ncompensation to 35% of the total price of goods or services supplied in South Korea. These regulations may limit the incentive for people to join our sales force and may reduce our ability to differentiate ourselves from our competitors in\nattracting and retaining our sales force.\n\nIn addition, we have been required to modify our sales compensation plan in certain markets, including South Korea and Vietnam, from time to time to remain in compliance with applicable sales compensation limits.\nBecause sales compensation, as a percentage of revenue, can fluctuate as sales force productivity fluctuates, we may be required to make further changes to stay within applicable sales compensation limits or may be at risk of exceeding them. In\naddition, which revenues and expenses are within the scope of these regulations is not always clear, and interpretation and enforcement of these laws are subject to change, which could require us to make further changes or result in\nnon-compliance with these regulations. Any failure to keep sales compensation within legal limits in Mainland China, South Korea, Indonesia, Vietnam or any other market that imposes a sales compensation limit could result in fines or other\nsanctions, including suspensions.\n\nWe may be held responsible for certain taxes, assessments and other requirements relating to the activities of our sales force, which could harm our financial condition and\noperating results.\n\nWe are subject to the risk in some jurisdictions of being responsible for social security taxes, withholding or other taxes, minimum wage laws, and related assessments and penalties with respect to our sales force.\nThis would occur if a jurisdiction classifies our sales force as our employees rather than as independent contractors, or if a jurisdiction expands the categories of personnel to whom these tax obligations apply.\n\n●\n\nThe laws and interpretations regarding “independent contractor” status in certain jurisdictions, including the United States and the European Union, continue to evolve, and in some cases,\nauthorities have sought to apply these laws unfavorably against gig economy, platform and direct selling companies. For example, in 2024, a regulation of the U.S. Department of Labor went into effect that alters the employee vs.\nindependent contractor analysis under the Fair Labor Standards Act in a way that could potentially cause more workers to be classified as employees. In addition, the European Union’s Platform Work Directive, which was adopted in 2024,\ndirects EU member states to implement national laws by December 2026 regulating the classification of platform workers and setting a rebuttable presumption of employment in certain scenarios. There may be differences in how the various\nEU member states implement this directive.\n\n●\n\nSome jurisdictions have, without challenging the “independent contractor” status, taken the position that direct sellers must nonetheless pay certain taxes with respect to payments to their sales force.\n\nIn the event that local laws and regulations, or the interpretation of local laws and regulations, require us to treat members of our sales force as employees rather than independent contractors (or to comply with\nsimilar requirements regardless of whether our sales force is classified as employees), this could harm our financial condition and operating results. This risk increases as our sales force increases its use of social sharing, as several\njurisdictions’ regulations protect in-person or in-home sales demonstrations from creating an employment relationship but are less protective of online demonstrations. If our Brand Affiliates were deemed to be employees rather than independent\ncontractors, we would also face the risk of increased liability for their actions.\n\nOur Sales Leaders could also face similar risks with respect to the Brand Affiliates in their sales organizations who may claim they are employees of the Sales Leader rather than independent contractors or\nindependent business owners, which could impact their sales operations or lead them to cease their participation in our business.\n\n23\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nRisks Associated with Market Conditions and Competition\n\nInability of products, platforms, business opportunities and other initiatives to gain or maintain sales force and market acceptance could harm our business, and trends\namong older and younger generations of customers contribute to this risk.\n\nOver the past several years, the environment for direct selling has become increasingly difficult due to customer trends, increased competition from other affiliate marketing, influencer and gig economy businesses,\nand a stricter regulatory environment across many of our markets. Our ability to improve our financial performance largely depends on our ability to anticipate and react in a timely and effective manner to\nchanges in consumer spending patterns and preferences regarding products, platforms, and business opportunities in the affiliate gig and sharing economy, including changes in how consumers discover, evaluate and purchase products. For example,\nwe have observed an increasing shift in certain markets (including Mainland China) toward third-party online product marketplaces and other digital commerce channels. Our operating results have been and could be adversely affected if our\nbusiness opportunities, platforms, products and other initiatives do not generate sufficient enthusiasm and economic benefit to retain our existing consumers and sales force or to attract new consumers and sales force members.\n\nFactors affecting the attractiveness of our business opportunities, platforms, products and other initiatives include, among other things, shifting consumer demands, perceived product quality and value,\nsimilarities to other products, product exclusivity or effectiveness, growth of the gig economy and influencer marketing, disruption of retail commerce and e-commerce by social commerce, the increasing prominence of third-party online product\nmarketplaces, demographic trends, the strength of our brand and public image, growth of connected commerce, sustainability factors, diversity and inclusion initiatives, economic competitiveness of our business opportunity in the marketplace,\nperceived ability of potential affiliates to succeed in our business opportunity, accepted methods of selling products to customers in the affiliate and member-based platform environment, the quality and accuracy of the data we use in running our\nbusiness, our technology infrastructure and capabilities, restrictions in social or digital media for sharing products and attracting consumers, adverse media attention, regulatory restrictions on claims and the ease of new startup\nentrepreneurship via artificial intelligence platforms. If we are unable to anticipate or adapt to changes in consumer preferences and trends, our business, financial condition and operating results could be materially adversely affected. Likewise, if we are unable to anticipate or adapt to changes in the affiliate marketing, gig and sharing economies or the artificial intelligence landscape, our ability to capture growth trends in the social\ncommerce marketplace could be materially adversely affected.\n\nTo adapt our business to current macroeconomic trends, we are taking the following actions, all of which entail risks:\n\n●\n\nFrom time to time we roll out enhancements to our sales compensation plan that incorporates additional features that may appeal to prospective affiliates in the current macroeconomic environment.\nHowever, the need to develop affiliate sales teams to take full advantage of our sales compensation plans or other incentives may be viewed negatively by prospective affiliates who are familiar with other gig and sharing\nopportunities. In addition, even if the changes to our sales compensation structure are successful in attracting such prospective affiliates, the changes might at the same time be viewed negatively by current and long-time members of\nour sales force who have already developed affiliate sales teams. We plan to continually evaluate potential changes to our sales compensation structure to address the evolving commercial environment, and any such changes could have a\nnegative impact on our revenue and could adversely affect sales force retention and productivity.\n\n●\n\nWe have developed, and continue to develop and enhance, digital tools with improved e-commerce functionality to help our sales force build\ntheir businesses. We also develop connected devices and other products to help us transform into a more digital and socially enabled business. These\ninitiatives have required significant expenditures and will continue to require significant expenditures. We face the risk that we will ultimately be unable to develop these items, that their development will be more costly or take\nlonger than anticipated, or that the applications and platforms we have and will develop will not meet the expectations of our sales force and/or consumers. Any of these eventualities could have a material negative impact on our\nbusiness, sales force, consumer development and revenue.\n\n●\n\nWe are currently pursuing an initiative to optimize the size of our product portfolio, which includes the discontinuation of some products. If we are unable to transition existing customers to a\nsimilar or alternative product, or we are unable to anticipate changes in consumer and sales force preferences and trends, or the discontinuation of products causes increased customer attrition, our business, financial condition and\noperating results could be materially adversely affected.\n\n \n\n●\n\nWe are currently endeavoring to help our sales force penetrate previously untapped emerging markets. These include new geographies, such as India, as well as new market segments within a geographic\nmarket. We face the risk that our current product portfolio, compensation plan and business positioning will not appeal to these target markets. In addition, any changes to products or compensation and incentives to appeal to these\nemerging markets may create a perception of competition with or distraction to our existing developed market sales leaders. While we see significant upside potential in emerging markets, any of the eventualities noted above could have a\nmaterial adverse effect on our business, sales force, and revenue.\n\n24\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nIn addition, in our more mature markets, one of the challenges we face is keeping Sales Leaders with established businesses and high-income levels motivated and actively engaged in business building activities and\nin developing new Sales Leaders. We also face challenges retaining our sales force as the population of our markets transitions to a younger, millennial/Gen Z demographic, with its associated new and different dynamics of connection through\nsocial media platforms, gratification and loyalty behaviors, particularly as this segment becomes a greater share of our revenue. It is possible that, over time, increasing negative perceptions about business opportunities that involve\nmulti-level compensation programs, particularly as affiliate marketing programs gain greater prominence in the gig economy, could develop and increase among these younger demographics, which would be detrimental to our business if we are unable\nto adapt and offer similar opportunities and rewards while still differentiating our business. In addition, as affiliate marketing programs gain greater market share, our competition for participants from our target market becomes more intense. \nMoreover, when sales through social sharing do not generate repeat purchases or subscriptions at the same rate as other sales, this creates revenue volatility and/or declines. Many in younger demographic groups actively use social sharing across\nmultiple business opportunity platforms. Some of our initiatives have not generated lasting excitement and engagement among our sales force in the long term, and at times, our initiatives have not\nsufficiently generated sales force activity and productivity or motivated Sales Leaders to remain engaged in business building and developing new Sales Leaders. These outcomes could recur in the future.\nSome initiatives have had, and could continue to have, unanticipated negative impacts on our sales force, particularly changes to our sales compensation plans,\nincentive rewards, and recognition practices.\n\nThe introduction of a new product or key initiative also can have negative impacts on our operating results. For example, a new product or initiative could negatively impact other product lines if Sales Leaders\nshift their efforts toward the new product or initiative, and can adversely affect channel growth if that shift disrupts existing business-building systems and practices. Alternatively, if Sales Leaders choose not to promote the new product or\ninitiative, then the product or initiative might not generate a meaningful amount of revenue for our business. This risk could materialize with our Prysm iO device, which we have begun to launch and plan\nto continue rolling out in 2026. Prysm iO is a wellness device designed to assess key nutritional indicators and translate those insights into personalized supplement and product recommendations. Many of\nour Sales Leaders could be hesitant to incorporate wellness products generally, or Prysm iO specifically, into their sales efforts, particularly if (1) they already have success with other products; (2)\nthey decide not to expend the time, training and resources to transition to Prysm iO; (3) the user experience with Prysm iO proves to be sub-optimal; (4) Prysm iO does not generate increased subscription sales of our nutritional supplement products; or (5) Prysm iO does not perform sufficiently well on social platforms\nto support adoption among younger demographics.\n\nIn addition, our ability to develop and introduce new products could be impacted by, among other things, government regulations, changing policies in social media and other communications platforms, the inability\nto attract and retain qualified staff, the termination of third-party research and collaborative arrangements, intellectual property of competitors that may limit our ability to offer innovative products or that challenge our own intellectual\nproperty, problems related to manufacturing or quality control, and difficulties in anticipating changes in consumer tastes and buying preferences. Our operating results could be adversely impacted if our products fail to gain or maintain sales\nforce and market acceptance or if our successful new products undercut the sales of our other products. In addition, if any of our products fails to deliver on consumer or sales force expectations, we could see an increase in product returns.\n\nAdditionally, independent third parties and consumers often review our products as well as those of our competitors. Perceptions of our product\nofferings in the marketplace may be significantly influenced by these reviews, which are disseminated via various media, including the internet. If reviews of our products or our brands are negative or less positive as compared to those of\nour competitors, our brands may be adversely affected and our business, financial condition and results of operations may be materially harmed.\n\nDifficult economic conditions could harm our business.\n\nDifficult economic conditions, such as high unemployment levels, inflation, deflation, or recession, have in the past, and could continue to, adversely affect our business by causing a decline in demand for our\nproducts, particularly if the economic conditions are prolonged or worsen. In addition, economic conditions may adversely impact access to capital for us and our suppliers, may decrease the ability of our sales force and consumers to obtain or\nmaintain credit cards, may cause governments to increase their regulatory enforcement activity to alleviate budget shortfalls, and may otherwise adversely impact our operations and overall financial condition. For example, we believe inflation\nhad a negative impact on our 2022 and 2023 sales by curbing the discretionary spending of our consumers. Inflation also has increased the cost of our inventory and shipping expenses. In addition, the economy in Mainland China continued to be\nchallenging during 2025, including deflationary and international trade pressures, capital markets, and tangible asset markets. All of these conditions could continue in 2026.\n\nOur markets are intensely competitive, and market conditions and the strengths of competitors may harm our business.\n\nThe markets for our products are intensely competitive. The success of our products is dependent on our ability to anticipate and respond to market trends and changes in consumer preferences and to maintain a\nproduct offering and pipeline that is relevant and priced accessibly to consumers and compelling to affiliates who have a desire to use our products to build an independent business opportunity. Our products compete directly with branded, premium\nretail products and with the products of other direct selling companies, and many of our competitors have much greater name recognition and financial resources than we have, which may give them a competitive advantage. Because of regulatory\nrestrictions concerning claims about the efficacy of beauty and wellness products, we may have difficulty differentiating our products from our competitors’ products, and competing products entering the beauty and wellness market could harm our\nrevenue. In addition, our business may be negatively impacted if we fail to adequately adapt to trends in consumer behavior and technologies to meet consumers’ needs and demands and reach a wider audience or if we fail to provide a competitive\nproduct price to value proposition to consumers.\n\n25\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nWe also compete with other direct selling companies, affiliate marketing companies and gig economy companies to attract and retain our sales force and consumers. Some of\nthese competitors have longer operating histories and greater visibility, name recognition and financial resources than we do. Some of our competitors have also adopted and could continue to adopt some of our successful business strategies,\nincluding our global sales compensation plan and our product development philosophy and focus. Moreover, certain companies in the affiliate marketing and gig economy are growing rapidly and enable\nseamless product sharing via social media platforms. In some of our markets, these social media platforms are integrated into product marketplaces to enable even faster affiliation of product offerings to potential customers. These companies have\ndisrupted and continue to disrupt the traditional direct selling space. Consequently, to successfully compete in this industry, and attract and retain our sales force and consumers, we must ensure that\nour business opportunities and sales compensation plans are financially rewarding and innovative. Successfully marketing our sales compensation plan in a way that differentiates it from our competitors\ncould become more difficult as the FTC increases its scrutiny of earnings claims and compensation structures. Likewise, continued tightening of social media platform policies could limit our sales force’s ability to differentiate our products and\nbusiness opportunities. Although we believe we have significant competitive advantages, we cannot assure that we will be able to continue to successfully compete in this industry.\n\nAdverse publicity concerning our business, marketing plan, products or people could harm our business and reputation.\n\nGrowth in our sales force and consumers and our results of operations can be particularly impacted by adverse publicity. Given the nature of our operations, lack of clarity on applicable legal requirements and\nstandards, and our continuous need to recruit and retain consumers and members of our sales force, we are particularly vulnerable to adverse publicity. Specifically, we are susceptible to adverse publicity concerning:\n\n●\n\nsuspicions about the legality and ethics of network marketing;\n\n●\n\nmedia or regulatory scrutiny regarding our business and our business models, including in Mainland China;\n\n●\n\nthe safety or effectiveness of our or our competitors’ products or the ingredients in such products;\n\n●\n\ninquiries, investigations, fines, legal actions, or mandatory or voluntary product recalls involving us, our competitors, our business models or our respective products;\n\n●\n\nthe actions of our current or former sales force and employees, including any allegations that our sales force or employees have overstated or made false product claims or earnings representations, or\nengaged in unethical or illegal activity;\n\n●\n\nmisperceptions about the types and magnitude of economic benefits offered at different levels of sales engagement in our business; and\n\n●\n\npublic, governmental or media perceptions of the direct selling, beauty product, or wellness product industries generally.\n\nThese issues have previously resulted in negative publicity and have harmed, and could continue to harm, our business.\n\nCritics of our industry, consumer protection groups, short sellers and other individuals have in the past and may in the future utilize the internet, social media, the media and other means to publish criticisms of\nthe industry, our company and our competitors, or make allegations regarding our business and operations, or the business and operations of our competitors. In some cases, such adverse publicity or allegations can lead to government and\nregulatory scrutiny. We continue to see adverse publicity regarding our company and the direct selling and wellness industries. We or others in our industry may receive similar negative publicity or allegations in the future, and it may harm our\nbusiness and reputation. Furthermore, the use of social media by our sales force and by critics can increase the reach of negative publicity. For example, if a member of our sales force makes an improper claim about our products or business\nopportunity on social media, or if a critic of our company posts negative information about our company on social media, it has the potential to be disseminated widely and noticed by the media or regulators.\n\nProduct diversion may have a negative impact on our business.\n\nWe have observed instances of our products being offered for sale on online marketplace platforms and through other unauthorized distribution channels in various markets. Despite our ongoing efforts to reduce and\ncontrol product diversion, such activities continue to present challenges. Changes to our global sales compensation structure, differences in product pricing among markets, and the expanded use of online channels for sales transactions have\ncontributed, and may continue to contribute, to product diversion. Product diversion may create confusion regarding our authorized distribution channels and may negatively impact the ability of our sales force to sell our products. Diversion may\nalso adversely affect perceptions regarding the viability of the business opportunity we offer and undermine confidence in our authorized distribution channels, which could impair our ability to recruit and retain members of our sales force. In\naddition, product diversion may erode brand equity and adversely affect consumer perceptions of our products. Certain diversion activities may involve unauthorized importation, investment, or other potentially unlawful conduct, and may also\nincrease the risk that gray-market or counterfeit goods are misrepresented as our products, which could further harm our brand and reputation. If we are unable to effectively mitigate or prevent product diversion, or if diversion activity\nincreases, our business, financial condition, results of operations, and reputation could be adversely affected.\n\n26\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nRisks Associated with Our Operations in Mainland China\n\nOur operations in Mainland China are subject to significant government scrutiny, and we could be subject to fines, operational restrictions or other penalties.\n\nOur operations in Mainland China are subject to significant regulatory scrutiny. The legal system in Mainland China provides government authorities broad latitude to conduct investigations, and many Chinese\nregulations, including those governing our business, are subject to significant interpretation, which may vary from jurisdiction to jurisdiction. Accordingly, regulatory expectations and enforcement priorities may change quickly and with limited\nnotice. Because of significant government concerns in Mainland China regarding improper direct selling activities, government regulators closely scrutinize activities of direct selling companies and activities that resemble direct selling. The\ngovernment in Mainland China continues to inspect and review companies in the direct selling industry on a regular basis. We believe the regulatory environment in Mainland China continues to be challenging and restrictive.\n\nThe government’s scrutiny of activities within the health products and direct selling industries has been at higher levels since 2019, when the government conducted a 100-day campaign\nto review and inspect the health products and direct selling industries following negative media coverage generated by healthcare-related product claims made by another direct selling company in Mainland China. Since 2019, we have received an\nincreased number of government reviews, inspections, and inquiries and consumer complaints in Mainland China; our ability to hold certain business meetings has been limited; and negative media coverage has spread to include additional companies,\nincluding ours.\n\nGovernment regulators frequently make inquiries into our business activities and investigate complaints from consumers and others regarding our business. Some of these inquiries and investigations in the past have\nresulted in the payment of fines by us or members of our sales force, interruption of sales activities, changes to aspects of our business model, and warnings. If government regulators determine in future inquiries or investigations that our\noperations or activities, or the activities of our sales force, are not in compliance with applicable regulations, we could face a range of outcomes, including substantial fines, extended interruptions of business, and termination of necessary\nlicenses and permits, including our direct selling and other licenses, all of which could harm our business.\n\nWe train our sales force in Mainland China on how our Mainland China business model differs from our global business model. However, Sales Leaders in Mainland China may attend regional and global events or interact\nwith Sales Leaders from other markets. Although our global model and Mainland China business model differ, mistakes may be made as to how those working in Mainland China should promote the business in Mainland China. These mistakes by our sales\nforce, or allegations of such mistakes, have led, and may in the future lead, to government reviews and investigations of our operations in Mainland China, as well as adverse publicity, reputational harm and adjustments or interruptions to our\noperations, all of which has and could in the future have a significant negative impact on our revenue and the number of Sales Leaders and Customers in the region.\n\nIf direct selling regulations in Mainland China are modified, interpreted or enforced in a manner that results in negative changes to our business model or the imposition\nof a range of potential penalties, our business could be significantly negatively impacted.\n\nThe government of Mainland China has adopted direct selling and anti-pyramiding regulations that impose significant restrictions and limitations on businesses in our industry. Most notably, the regulations prohibit\nmulti-level compensation, which is the basis of how we compensate our sales force outside of Mainland China. The regulations also prohibit the recruitment of overseas personnel as direct sellers in Mainland China. They are subject to\ninterpretation by regulators who exercise broad discretion in enforcement under applicable laws and regulations. We have structured our business model in Mainland China based on several factors: the guidance we have received from government\nofficials, our interpretation of applicable regulations, our understanding of the practices of other international direct selling companies operating in Mainland China, and our understanding as to how regulators are interpreting and enforcing the\nregulations. The regulatory environment in Mainland China continues to be challenging and restrictive. From time to time, we evaluate potential changes to the structure of our sales compensation in Mainland China to address the evolving\ncommercial environment and, as the need arises, the evolving regulatory environment. Any such changes could have a negative impact on our sales in that market.\n\nMembers of our sales force in Mainland China do not participate in our global sales compensation plan but are instead compensated according to a separate compensation model. We generally compensate our Sales\nLeaders in Mainland China at a level that is competitive with other direct selling companies in the market and comparable to the compensation of our Sales Leaders globally.\n\n27\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nOther than our direct selling subsidiary, we also have a separate subsidiary in Mainland China that operates an independent cross-border e-commerce business, through which one of our U.S. subsidiaries can sell a\nlimited selection of products to consumers in Mainland China for their personal consumption. Cross-border e-commerce is separated from the direct selling sales channel in Mainland China. Our Sales Leaders can contract with the China entity,\npromote this cross-border e-commerce platform to introduce consumers to place orders on this platform, and receive limited compensation in return. Through this entity, the U.S. subsidiary sells ageLOC Meta, ageLOC Youth and certain other overseas products, which are neither registered for retail sale in Mainland China nor registered specifically as direct selling\nproducts and, therefore, can only be sold to local consumers for their personal consumption, cannot be sold through the direct selling channel, and cannot be resold. We also plan to begin selling additional overseas products through this channel.\nAlthough we take measures (1) to maintain legal separation between our cross-border e-commerce entity and our direct selling entity; and (2) to ensure the products sold on our cross-border e-commerce platform are for consumers’ personal\nconsumption only, our business in Mainland China could be negatively impacted if regulatory authorities elect to attribute these cross-border e-commerce sales activities and related product claims, or the accompanying actions of our sales force,\nto our direct selling business, and make a determination they are in violation of direct selling, customs or other applicable laws.\n\nOur Mainland China business also has an e-commerce platform in which it sells products directly to customers. We permit members of our sales force to promote this e-commerce platform and refer customers to it, in\naddition to their participation in our direct selling business, and they receive compensation based on our sales on this platform to customers they have referred. Although we take measures to segregate this e-commerce business from our direct\nselling business as appropriate, it is possible that our business in Mainland China could be negatively impacted if regulatory authorities determine that these e-commerce sales activities and compensation are inconsistent with the direct selling\nlaws.\n\nThe nature of the political, regulatory and legal systems in Mainland China gives regulatory agencies at both the local and central levels of government broad discretion to interpret and enforce regulations as they\ndeem appropriate to promote social stability. We face a risk that regulators may change the way in which they currently interpret and enforce the direct selling regulations, or that such regulations may be modified. If our business practices are\ndeemed to be in violation of applicable regulations as they may be interpreted or enforced, in particular our use of the sales productivity of a Sales Leader him/herself and of the sales force that such Sales Leader trains, collaborates with,\nsupports and services in setting his/her salary or service fee and determining their position/title on a quarterly basis, then we could be sanctioned, required to change our business model, and/or have our direct selling license revoked, any of\nwhich could significantly harm our business.\n\nOur ability to expand our business in Mainland China could be negatively impacted if we are unable to obtain additional necessary national and local government approvals in\nMainland China.\n\nTo expand our direct selling model into additional provinces in Mainland China, we currently must obtain a series of approvals from district, city, provincial and national government agencies with respect to each\nprovince in which we wish to expand. Government authorities have not been issuing new licenses since the beginning of the 100-day action in 2019. When the process for obtaining government approvals to conduct direct selling is operational, it\noften evolves and is lengthy, as we are required to work with a large number of provincial, city, district and national government authorities. The complexity of the approval process as well as the government’s continued cautious approach as\ndirect selling develops in Mainland China makes it difficult to predict the timeline for obtaining these approvals. Furthermore, any media or regulatory scrutiny of our business in Mainland China could increase the time and difficulty we may face\nin obtaining additional licenses. If media or regulatory scrutiny of our business in Mainland China results in significant delays in obtaining licenses elsewhere in Mainland China, or if the current processes for obtaining approvals are delayed\nfurther for any reason or are changed or interpreted differently than currently understood, our ability to receive direct selling licenses in Mainland China and our growth prospects in this market could be negatively impacted.\n\nIf we are not able to register products for sale in Mainland China, our business could be harmed.\n\nWe face lengthy timelines with respect to product registrations in Mainland China. The process for obtaining product permits and licenses may require extended periods of time that may prevent us from launching new\nproduct initiatives in Mainland China on the same timelines as other markets around the world. For example, a vast majority of products marketed in Mainland China as “health foods” are subject to extensive laboratory and clinical analysis by\ngovernment authorities, and with a few exceptions, the product registration process in Mainland China takes a minimum of two years and may be substantially longer. We market both “health foods” and “general foods” in Mainland China. There is some\nrisk associated with the common practice in Mainland China of marketing a product as a “general food” without any health food claims while applying to the authorities for “health food” classification after localizing the product formula to meet\napplicable health food claims. If government officials feel the categorization of our products is inconsistent with product claims, form of delivery, ingredients or function, we could be prohibited or limited in marketing such products in\nMainland China in their current form.\n\n28\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nAs we expand our direct selling channel, we face additional product marketing restrictions compared to our retail store channel. Under applicable direct selling regulations in Mainland China, we can only register\nproducts for direct selling if we manufacture them and if they fall within categories that are authorized for direct selling, such as cosmetics, cleaning supplies, health foods, healthcare devices, small kitchen utensils and household\nappliances. Products that are not registered for direct selling are prohibited from being marketed or sold through our direct sales channel. The process for registering products for the direct sales channel in\nMainland China is subject to delays; in fact, government authorities have not been processing new registrations for direct selling since the beginning of the 100-day action in 2019. Any\nmarketing or sale of non-direct selling products by our independent direct sellers could result in negative publicity, fines and other government sanctions being imposed against us, including if a product is initially classified as a direct\nselling product but is later re-classified.\n\nRisks Associated with Epidemics and Other Widespread Crises\n\nEpidemics and other crises have negatively impacted our business and may do so in the future.\n\nDue to the person-to-person nature of direct selling, our results of operations have been, and likely will in the future be, harmed if the fear of a communicable and rapidly spreading disease, or another type of\ncrisis such as a natural disaster, results in travel restrictions or causes people to avoid group meetings, gatherings or interactions with other people.\n\nThe outbreak of COVID-19 in 2020 and ensuing pandemic resulted in significant contraction of economies around the world and interrupted global supply chains as many governments issued stay-at-home orders to combat\nCOVID-19. Government-imposed restrictions and public hesitance regarding in-person gatherings, travel and visiting public places reduced our sales force’s ability to hold sales meetings, resulted in cancellations of key sales leader events and\nincentive trips, and required us to temporarily close our walk-in and fulfillment locations in some markets where we had such properties. Our supply chain and logistics also incurred some interruptions and cost impacts, such as difficulties in\nobtaining some ingredients and in shipping products in some markets. All of these factors and other events related to COVID-19 negatively impacted our sales and operations, and similar adverse impacts could occur in the event of future epidemics\nor other crises.\n\nIn addition, during a widespread crisis, regulators are vigilant for companies that may be exploiting the crisis to the detriment of consumers. For example, during 2020 to 2022, the FTC issued letters that warned\nseveral direct-selling companies to remove and address claims that they or members of their sales force were making about their products’ ability to treat, cure or prevent COVID-19 and/or about the earnings that people who suffered the loss of a\njob or income could make. Although we take steps to educate our sales force on proper claims, if members of our sales force make improper claims, or if regulators determine we are making any improper claims, it could lead to an investigation and\ncould harm our business and reputation.\n\nInternational Risks\n\nOur ability to conduct business in international markets may be affected by political, legal, tax and regulatory risks.\n\nOur ability to capitalize on growth in new international markets and to maintain the current level of operations in our existing international markets is exposed to risks associated with our international\noperations, including:\n\n●\n\ngovernment actions could ban or severely restrict our sales compensation and business models;\n\n●\n\ncivil unrest, political instability, or changes in diplomatic or trade relationships could disrupt our supply chain or other operations—for example, the ongoing conflict in Russia and Ukraine has caused\ndistraction to our sales force;\n\n●\n\nless predictable or less developed legal systems in certain areas;\n\n●\n\nhigh inflation or currency instability in certain markets;\n\n●\n\nlegal, tax, customs or other financial burdens imposed on us or our sales force, due, for example, to the structure of our operations in various markets;\n\n●\n\na government authority could challenge the status of our sales force as independent contractors or impose employment or social taxes; and\n\n●\n\ncurrency remittance restrictions could limit our ability to repatriate cash.\n\nIt is unpredictable what impact, if any, changes in U.S. government leadership, trade policy, or enforcement priorities will have on the above risks. If actions by the United States or other jurisdictions cause any\nof the above risks to materialize, our financial position and results of operations could be negatively affected.\n\nThere has been an increasing level of tension in U.S.-China relations over the last several years. Given the significant size of our China business, our business could be harmed if relations continue to deteriorate\nor additional sanctions or restrictions are imposed by either government. In addition, there have been adverse public reaction and media attention to statements made by representatives of other businesses related to these issues that have\nadversely affected business. We could similarly face adverse public or media attention, and potentially increased regulatory scrutiny, as a result of increased trade or political tensions or any statements or actions by employees or our sales\nforce that generate publicity with respect to these issues.\n\n29\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nWe are subject to financial risks as a result of our international operations, including exposure to foreign-currency fluctuations, currency controls and inflation in\nforeign markets, all of which could impact our financial position and results of operations.\n\nIn 2025, approximately 74% of our sales occurred in markets outside of the United States and were denominated in each market’s respective local currency. Foreign-currency\nfluctuations affect our financial position and results of operations. We purchase inventory primarily in the United States in U.S. dollars. In preparing our financial statements, we translate revenue and expenses in our markets outside the United\nStates from their local currencies into U.S. dollars using weighted-average exchange rates. If the U.S. dollar strengthens relative to local currencies, our reported revenue, gross profit and net income will likely be reduced. Foreign-currency\nfluctuations also cause losses and gains resulting from translation of foreign-currency-denominated balances on our balance sheet.\n\nWe also face the risk of currency controls. If foreign governments restrict transfers of cash out of their country and control exchange rates, we may be limited as to the timing and amount of cash we can repatriate\nand may not be able to repatriate cash at beneficial exchange rates, which could have a material adverse effect on our financial position, results of operations or cash flows. We typically fund the cash requirements of our operations in the\nUnited States through intercompany dividends, intercompany loans and intercompany charges for products, use of intangible property, and corporate services. However, some markets impose government-approval or other requirements for the\nrepatriation of dividends. For example, in Mainland China, we are unable to repatriate cash from current operations in the form of dividends until we file the necessary statutory financial statements for the relevant period. We also have\nexperienced delays in repatriating cash from Argentina. As of December 31, 2025, we had $35.7 million in cash denominated in Chinese RMB, and our intercompany receivable with our Argentina subsidiary was $23.9 million.\n\nIn addition, high levels of inflation and currency devaluations in any of our markets could negatively impact our balance sheet and results of operations. Gains and losses resulting from the remeasurement of\nnon-U.S. dollar monetary assets and liabilities of our subsidiaries operating in highly inflationary economies are recorded in our net earnings. For example, during 2018, Argentina was designated as a highly inflationary economy under U.S.\ngenerally accepted accounting principles; accordingly, we began to apply highly inflationary accounting for our Argentina operations, which has resulted in additional foreign-currency charges. Other markets may be designated as highly\ninflationary economies in the future, which could result in further foreign-currency charges.\n\nAlthough we may engage in transactions intended to reduce our exposure to foreign-currency fluctuations, there can be no assurance that these transactions will be effective. Complex global political and economic\ndynamics can affect exchange rate fluctuations. For example, the implementation of tariffs, border taxes or other measures related to the level of trade between the United States and other markets could impact the value of the U.S. dollar. It is\ndifficult to predict future fluctuations and the effect these fluctuations may have upon future reported results or our overall financial condition.\n\nChanges to tariff and import/export regulations, and trade disputes between the United States and other jurisdictions have had a negative effect on global economic conditions and could\nnegatively affect our business, financial results and financial condition.\n\nChanges in customs regulations or tariff rates by the United States or other countries can affect our imports and exports, and further changes may occur at any time. Because\ntariff changes are difficult to predict, they may cause material short-term or long-term fluctuations in our costs. The current U.S. Administration has imposed new tariffs (some of which have been paused but could be resumed or expanded) and\nhas indicated an intention to continue using tariffs aggressively as a policy tool. Increases in U.S. duties or tariffs have triggered, and may continue to trigger, retaliatory measures by other\ncountries. Such developments could reduce the availability of certain raw materials, ingredients, components, and packaging material, raise the cost of our products and reduce customer demand, disrupt our supply chain, increase our customs\nduties and related expenses, pressure margins, or require price increases that could reduce demand.\n\nWe rely on Free Trade Agreements where available, but these agreements may be modified, suspended, or terminated, which could further increase our costs or otherwise harm our\nbusiness. While we may attempt to mitigate tariff impacts by shifting sourcing or production to alternative locations, there is no guarantee these actions will be successful or fully offset the additional costs. Beyond duties and tariffs, other\ntrade-related actions by the United States or foreign governments—such as restrictions on foreign investment, import bans, heightened regulatory or licensing requirements, or broader limitations on\ninternational trade—could adversely affect our operations. These actions are unpredictable and could materially harm global economic conditions and financial market stability, significantly reduce global trade, or restrict our access to\nsuppliers or customers. Any of the foregoing could have a material adverse effect on our business, financial condition, and results of operations.\n\n30\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nHuman Capital Risks\n\nIf we are unable to retain our existing sales force and recruit additional people to join our sales force, our revenue may not increase and may even decline.\n\nOur products are primarily marketed by our sales force, and we depend on them to generate virtually all of our revenue. Members of our sales force may terminate their relationship with us at any time, and like most\ndirect selling companies, we experience high turnover among our sales force from year to year. Individuals who join our company to purchase our products for personal consumption or to pursue short-term income goals often participate for a limited\ntime period or participate inconsistently. Sales Leaders who have committed time and effort to build a sales organization will generally stay for longer periods. To increase our revenue, we must increase the number of and/or the sales\nproductivity of our sales force. We must also expand our outreach and outbound efforts to attract, connect and nurture new customers for a wider consumer base who purchase products and whom we can foster along a consumer journey to promote\nretention and higher lifetime value.\n\nWe have experienced fluctuations in Sales Leaders, Paid Affiliates and Customers in the past and will likely continue to experience such fluctuations in the future. For example, from December 31, 2024 to December\n31, 2025, our Customers in South Korea declined 28% and our Sales Leaders in Mainland China declined 32%. If our business, products and initiatives do not drive growth and/or sales productivity in Sales Leaders, Paid Affiliates and Customers, our\noperating results could be further harmed.\n\nThe number and productivity of our sales force is negatively impacted by several additional factors, including:\n\n●\n\nany adverse publicity or negative public perception regarding us, our products or ingredients, our distribution channel, or our industry or competitors;\n\n●\n\nlack of interest in, dissatisfaction with, or the technical failure of, our products or digital tools;\n\n●\n\nlack of compelling products or income opportunities, including through our sales compensation plans and incentive trips and other offerings;\n\n●\n\nnegative sales force reaction to changes in our sales compensation plans or our failure to make changes that would be necessary to keep our compensation competitive with the market;\n\n●\n\ninteractions with our company, including our actions to enforce our policies and procedures and the quality of our customer service;\n\n●\n\nany regulatory actions or charges against us or others in our industry, as well as regulatory changes that impact product formulations and sales viability;\n\n●\n\ngeneral economic, business, public health and geopolitical conditions, including employment levels, employment trends such as the gig and sharing economies and affiliate marketing, and pandemics or other\nconditions that curtail person-to-person interactions;\n\n●\n\nchanges in the policies of social media platforms and product marketplaces used to prospect or recruit potential consumers and sales force participants;\n\n●\n\nrecruiting efforts of our competitors and changes in consumer-loyalty trends;\n\n●\n\npotential saturation or maturity levels in a given market, which could negatively impact our ability to attract and retain our sales force in such market;\n\n●\n\ngrowing competition in the gig economy and the influencer marketing space which may draw away potential product sellers, affiliates, and influencers;\n\n●\n\nour sales force’s increased use of social sharing channels, which may enable them to more easily engage their consumers and sales network in other opportunities;\n\n●\n\nlack of sufficient tools to create customer interest in our products and to manage and build a personalized business; and\n\n●\n\nour and our sales force’s ability to implement social commerce and other selling platforms that appeal to consumers.\n\nWe depend on our key personnel and Sales Leaders, and the loss of the services provided by any of our executive officers, other key employees or key Sales Leaders could\nharm our business and results of operations.\n\nOur success depends to a significant degree upon the continued contributions of our senior and regional management, many of whom would be difficult to replace. Our senior and regional management employees may\nvoluntarily terminate their employment with us at any time, and it is not uncommon for employees of direct-selling companies, including employees of our company, to terminate their employment and begin working for another direct-selling company.\nIn addition, we need to continue to attract and develop qualified management personnel to sustain growth in our markets. Attracting and retaining qualified personnel has been an increased challenge during the current competitive employment\nenvironment. In addition, there has been downward pressure on our employees’ incentive compensation in recent years, and our recent restructurings have in some cases caused employees to take on additional responsibilities, both of which have\npresented challenges to our employee morale and could lead to employee attrition. If we are not able to successfully retain existing personnel and identify, hire and integrate new personnel, our business and growth prospects could be harmed.\n\n31\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nThe success of our business also depends on our key Sales Leaders. For the three months ended December 31, 2025, we had approximately 30,045 Sales Leaders. As of December 31,\n2025, approximately 198 Sales Leaders occupied the highest levels under our global sales compensation plan, and in Mainland China approximately 60 key Sales Leaders were playing a significant role in managing, training and servicing our sales\nforce in that market and driving sales. We rely on these Sales Leaders (or other sales force members that they train, collaborate with, support and service) for a substantial majority of our revenue. As a result, the loss of a high-level\nor key Sales Leader or a group of leading Sales Leaders, whether by their own choice or through disciplinary actions by us for violations of our policies and procedures, could negatively impact our growth and our revenue.\n\nRisks Associated with Our Manufacturing and Operations\n\nProduction difficulties, quality control problems, inaccurate forecasting, shortages in ingredients, and reliance on our suppliers could harm our business.\n\nProduction difficulties, quality control problems, inaccurate forecasting, and our reliance on third-party suppliers to manufacture and deliver products that meet our specifications in a timely manner have harmed\nour business and could do so in the future. Occasionally, we have experienced production difficulties with respect to our products, including the availability of labor, raw materials, components, packaging, and products that do not meet our\nspecifications and quality control standards. These production difficulties and quality problems have in the past resulted, and could in the future result, in stock outages or shortages in our markets with respect to such products, harm our\nsales, or create inventory write-downs for unusable products.\n\nIn addition, we and manufacturers in our supply chain acquire ingredients, components, products and packaging from third-party suppliers and manufacturers. The loss of any of these suppliers and any difficulties in\nfinding or transitioning to alternative suppliers could harm our business. We obtain some products and ingredients from sole suppliers that own or control the product formulations, ingredients or other intellectual property rights associated with\nsuch products. We also license the right to distribute some of our products from third parties. In the event we are unable to maintain or renew our contracts with any of these suppliers, manufacturers or other third parties, we may need to\ndiscontinue some products or develop substitute products, which could harm our revenue. In addition, if we experience supply shortages, price increases or regulatory impediments with respect to the raw materials, ingredients, components or\npackaging we use for our products, we may need to seek alternative supplies or suppliers and may experience difficulties in finding replacements that are comparable in quality and price. For example, some of our products, including ageLOC Meta and ageLOC Youth (Youthspan or Y-Span in some markets), incorporate\nunique natural ingredients that may only be harvested once per year and/or may have limited global supplies. If demand exceeds forecasts, we may have difficulties in obtaining additional supplies to meet the excess demand until the next growing\nseason. If we are unable to successfully respond to such issues, our business could be harmed.\n\nThe loss of or a disruption in our manufacturing, supply chain and distribution operations, or significant expenses or violations incurred by such operations, could\nadversely affect our business.\n\nAs a company engaged in manufacturing, distribution, and research and development on a global scale, we are subject to the risks inherent in such activities, including industrial accidents, climate or environmental\nevents, fires, floods, earthquakes, labor shortages, strikes and other labor or industrial disputes, disruptions in logistics or information systems, loss or impairment of key manufacturing or distribution sites, import and export restrictions or\ndelays, product quality control, safety, licensing requirements and other regulatory or government issues, as well as natural disasters, pandemics, border disputes, global uncertainties, acts of terrorism, and other external or macroeconomic\nfactors over which we have no control. For example, physical environmental events or changing weather patterns may affect facility operations, logistics, or the availability of certain products or ingredients, including by disrupting third-party\nmanufacturers, logistics providers, utilities, or transportation infrastructure, and may contribute to volatility in energy, transportation, or insurance costs; the timing, severity, and location of any such impacts are uncertain. Certain impacts\nof physical risk may include temperature changes that increase the heating and cooling costs at our facilities; extreme weather patterns that affect the production or sourcing of certain components; flooding and storms that damage or destroy our\nbuildings, inventory or transportation channels; and heat and extreme weather events that cause long-term disruption or threats to the habitability of our customers’ communities. These risks may be heightened if we consolidate certain of our\nmanufacturing, distribution, or supply facilities or if we are unable to successfully enhance our disaster recovery planning. These risks also increase as we continue acquiring manufacturing companies and thereby conduct more of our manufacturing\nin-house. The loss of, or disruption or damage to, any of our facilities or centers or those of our third-party manufacturers could have a material adverse effect on our business, reputation, results of operations and financial condition. Also,\nif we are unable to operate our owned manufacturing facilities at efficient utilization levels, including due to demand variability or capacity constraints, our manufacturing variance could increase and harm our business.\n\n32\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nWe have experienced, and may continue to experience, disruptions to the transportation channels used in our supply chain and distribution operations, including increased airport and shipping port congestion, a lack\nof transportation capacity, increased fuel expenses, import or export controls or delays, and labor disputes or shortages. Disruptions in our container shipments may result in increased costs, including the additional use of air freight to meet\ndemand. Congestion to ports can affect previously negotiated contracts with shipping companies, resulting in unexpected increases in shipping costs and reduction in our profitability. For example, the COVID-19 pandemic resulted in several\ndisruptions and delays, as well as quantity limits and price increases, in our global transportation channels.\n\nIn addition, our manufacturing facilities are subject to numerous regulations, including labor regulations and environmental regulations that govern the storage, discharge, handling, emission, generation,\nmanufacture, use and disposal of chemicals and other materials. We will also likely become subject to new regulations in these areas, which could require substantial expenditures. Violations of existing or new requirements could result in\nfinancial penalties and other enforcement actions and could require us to halt one or more portions of our operations until a violation is cured. The costs of curing incidents of non-compliance, resolving enforcement actions or private-party\nactions that might be initiated against us, or of satisfying new legal requirements could have a material adverse effect on our business, financial condition, or results of operations.\n\nOur business could be negatively impacted if we fail to execute our product launch process or ongoing product sales due to difficulty in forecasting or increased pressure\non our supply chain, information systems and management.\n\nPrior to making a product generally available for purchase in a market, we often do one or more introductory offerings of the product, such as a preview of the product to our Sales Leaders or other product\nintroduction or promotion. These offerings sometimes generate significant activity and a high level of purchasing, which can result in a higher-than-normal increase in revenue, Customers, Paid Affiliates and Sales Leaders during the quarter and\nskew year-over-year and sequential comparisons. These offerings may also increase our product return rate. We have experienced, and may in the future experience, difficulty managing growth associated with\nthese offerings which could increase the risk of improper sales force activities and related government and regulatory scrutiny.\n\nIn addition, the size and condensed schedule of these product offerings increase pressure on our supply chain and order processing systems. We have failed, and may in the future fail, to\nappropriately scale our system capacity and operations in response to unanticipated changes in demand for our existing products or to the demand for new products, which reduces our sales force’s confidence in our business and could harm our\nreputation and profitability.\n\nAs our sales force increases its use of social platforms to interact with customers, our business results could be adversely affected if our implementation of new platforms and processes to\nsupport our sales force is delayed. In addition, we are dependent on third parties for testing and delivery of portions of our information system platforms. Unanticipated changes or system failures by third parties could harm our ability to meet\nthe expectations of our sales force and could result in harm to our revenue, reputation and sales force confidence in our systems.\n\nIf we do not accurately forecast sales levels in each market for product launches or ongoing product sales, obtain sufficient ingredients, components or packaging, or produce a sufficient\nsupply to meet demand, we may incur higher expedited shipping costs and we may temporarily run out of stock of certain products, which could negatively impact the enthusiasm of our sales force and consumers. Conversely, if demand does not meet\nour expectations for a product launch or ongoing product sales or if we change our planned launch strategies or initiatives, we could incur inventory write-downs. For example, during the third quarter of 2023, we made the strategic decision to\nre-balance and narrow our product portfolio, which resulted in an incremental $65.7 million inventory write-off. We incurred an additional inventory write-off of $38.8 million during the fourth quarter of 2024. Each of these issues has impacted\nus in the past, and they could again occur with our ongoing or future product offerings. If we fail to effectively forecast product demand in the product launch process or for ongoing product sales, our reputation and profitability also could be\nnegatively impacted.\n\nDifficulties managing our entry or growth in certain markets could cause our business and operations to be harmed.\n\nAt times, we can experience significant growth in one or more of our markets. For example, during 2020 we experienced significant growth in some of the markets in the Americas and Europe.\nGrowth can strain our operations and requires expansion of management, labor, technology capacity, and manufacturing capabilities. Failure to execute effectively could result in, among other things, product delays or shortages, decreases in\nproduct quality, service level challenges, operating mistakes and errors, inadequate customer service, inappropriate claims or promotions by our sales force, and governmental inquiries or investigations, all of which could harm our revenue and\nability to generate sustained growth and result in unanticipated expenses. In addition, we need to continue to attract and develop qualified management personnel to sustain growth. If we are not able to successfully retain existing personnel\nand identify, hire and integrate new personnel, our business and growth prospects could be harmed.\n\n33\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nIn addition, as we expand into India and other markets in the future, our efforts might not be successful in driving growth. New markets may have competitive conditions, consumer tastes and\ndiscretionary spending patterns that are more difficult to predict or satisfy than our existing markets. We may have difficulty attracting Brand Affiliates to our business opportunity due to our lack of name recognition, growing competition in\nthe affiliate gig and sharing economies, or other reasons, and it may be difficult to find and retain qualified employees and vendors. We also might be unable to successfully navigate the risks inherent in international operations, such as\ndiffering legal and regulatory requirements that may apply to our products and/or operations, including those that pertain to privacy and data protection, direct selling, employment and intellectual property. If we do not successfully execute\nplans to enter new markets, these new markets may not generate growth and may be unprofitable, causing our business, financial condition or results of operations to be adversely affected.\n\nSystem failures, capacity constraints and other information technology difficulties could harm our business.\n\nOur business operations across global markets depend on a variety of interconnected technology systems, including websites, mobile applications, cloud services, data centers, databases, and\nnetworks. These systems support order processing, sales force and customer support, compensation calculations and payments, corporate and regional operations, and financial reporting. Ensuring their functionality and reliability is essential\nfor maintaining our reputation, sustaining operations, and supporting our sales force and customer base.\n\nWe are actively modernizing our e-commerce platform to adapt to emerging trends in online retail, social media integration, and hybrid marketing strategies. To support this transformation, we\nhave partnered with Infosys Limited as our primary managed services provider, leveraging their expertise to enhance operational efficiency and deliver results through our digital channels. While these initiatives are designed to strengthen our\ncompetitive position, they come with inherent risks tied to implementation complexity and dependency on third parties.\n\nOur systems, as well as those managed by third-party providers, are exposed to potential disruptions from events such as fires, floods, earthquakes or other natural disasters,\nhuman error, physical break-ins, computer viruses, cyberattacks, power outages, system malfunctions and other events. Despite investing in preventive measures like redundancies, enhanced security, and disaster recovery plans, we have\nexperienced system failures, outages, cyberattacks and other disruptions, and we will likely experience them in the future. Any prolonged system disruption could harm our ability to operate effectively, damage\nour reputation, or lead to financial losses.\n\nThe shift to cloud-based and outsourced solutions further heightens our reliance on third-party providers, including Worldpay for payment services, Amazon Web Services for core computing\nneeds and Infosys Limited for managed services and digital channel operations. Disruptions in these partnerships or challenges in transitioning services could delay critical business processes and increase operational costs.\n\nOur digital transformation efforts, though critical for our future growth, require significant investment and come with the risk of unforeseen challenges. For example, in 2018, we incurred\nsubstantial costs, including $49 million in asset impairments and $22 million in severance-related expenses, as we overhauled outdated technology systems. We have incurred additional asset impairments, most recently in the fourth quarter of\n2024 when we wrote down $29.4 million of information technology assets. As we continue to re-architect legacy systems and roll out new tools, we face the possibility of further costs, delays, or disruptions.\n\nMoreover, our growing business places additional demands on our technology infrastructure, particularly our e-commerce channels. Despite ongoing investments to expand and upgrade our systems,\nany inability to handle increased traffic or transaction volumes could impede order processing, impact customer satisfaction, and harm our financial performance.\n\nIn summary, our initiatives to evolve and enhance our technology systems involve considerable risks. Any failure to address these challenges effectively could disrupt our operations, erode\nstakeholder confidence, and adversely affect our financial results.\n\n34\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nAny acquired companies or future acquisitions may expose us to additional risks.\n\nWe have acquired certain businesses, and we plan to continue to do so in the future as we encounter acquisition prospects that would complement our\ncurrent product offerings, increase the size and geographic scope of our operations or otherwise offer growth and operating efficiency opportunities. At any particular time, we may be in various stages of assessment, discussion and/or\nnegotiation regarding one or more potential acquisitions, divestitures, or investments, not all of which will be consummated. Acquisitions involve numerous\nrisks and uncertainties, and some of our past acquisition targets have been in industries in which we lack operational or market experience. Our past acquisitions have entailed, and future acquisitions could entail, numerous risks, including:\n\n●\n\ndifficulties in integrating acquired operations, employees or products;\n\n●\n\ndifficulties and costs of imposing financial and operating controls on the acquired companies and their management;\n\n●\n\npotential loss of key employees, customers, suppliers or distributors from acquired businesses;\n\n●\n\ndisruption to our direct selling channel;\n\n●\n\ndiversion of management’s and other employees’ attention from our core business;\n\n●\n\nfailure to achieve the strategic objectives of these acquisitions;\n\n●\n\nincreased fixed costs;\n\n●\n\nfinancing structures that dilute the interests of our stockholders and/or result in an increase in our indebtedness;\n\n●\n\nfailure of the acquired businesses to achieve projected results;\n\n●\n\nfailure to accurately assess the value, strengths, weaknesses, operating characteristics or long-term profitability of an acquisition target, or to realize anticipated synergies or other expected\nbenefits;\n\n●\n\nassumption of unexpected liabilities, including litigation risks or compliance issues not discovered during pre-acquisition diligence;\n\n●\n\nadverse effects on existing business relationships with our suppliers, sales force or consumers;\n\n●\n\ninability to protect intellectual property related to newly acquired technologies; and\n\n●\n\nrisks associated with entering markets or industries in which we have limited or no prior experience, including limited expertise in running the business, developing the technology, and selling and\nservicing the products.\n\nThe expansion of our Rhyz business into new businesses has been viewed negatively by some of our Sales Leaders as some of these new companies sell products that are similar to those of our core business and are\nviewed as using our resources for non-core businesses. These perspectives of our Sales Leaders could have a material negative impact on the number or productivity of our Sales Leaders and result in a reduction in our revenue.\n\nOur failure to successfully integrate an acquired business, adjust fixed costs sufficiently or timely, or manage the other risks described above could have a material adverse effect on our business, financial\ncondition and operating results. In addition, there can be no assurance that we will be able to identify suitable acquisition candidates, consummate acquisitions on favorable terms or realize the anticipated benefits of an acquisition.\n\nWe may also make strategic divestitures from time to time. With respect to any divestiture, we may encounter difficulty finding potential acquirers\nor other divestiture options on favorable terms. Any divestiture could affect our profitability as a result of the gains or losses on such sale of a business or service, the loss of the operating income resulting from such sale or the costs\nor liabilities that are not assumed by the acquirer that may negatively impact profitability subsequent to any divestiture. We may also recognize impairment charges as a result of a divesture.\n\nProduct Legal and Regulatory Risks\n\nRegulations governing our products, including the formulation, registration, pre-approval, marketing and sale of our products, could harm our business.\n\nOur products are subject to extensive government regulation by numerous international, federal, provincial, state, and local government agencies and authorities. Many of these laws and regulations involve a high\nlevel of subjectivity, are subject to interpretation, and vary significantly from market to market. These laws and regulations can, and often do, have several impacts on our business, including but not limited to:\n\n●\n\ndelays in, or altogether prohibitions on, introducing or selling a product or ingredient in one or more markets;\n\n●\n\ndelays and expenses associated with the registration and approval process for a product;\n\n●\n\nlimitations on our ability to import products into a market;\n\n●\n\ndelays and expenses associated with compliance, such as record keeping, documentation of the properties of certain products, labeling, and scientific substantiation;\n\n●\n\nlimitations on the claims we can make regarding our products—for example, restrictions on product claims vary from market to market, including with respect to Prysm iO, limiting our ability to market the products; and\n\n●\n\nproduct reformulations, or the recall or discontinuation of certain products that cannot be reformulated to comply with new regulations.\n\n35\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nWe have observed a general increase in regulatory activity and enforcement scrutiny in the United States and across many markets globally where we operate, and the regulatory landscape is becoming more complex with\nincreasingly strict requirements. In particular, the requirements are impacting the ingredients we can include in our products, the accepted quantities of those ingredients, and the quality and characterization of the ingredients. In recent\nyears, global regulators have become more restrictive regarding the accepted levels of active ingredients that we can use in our products, in some cases banning them outright. They have also become more restrictive regarding the permitted\ncontaminant levels in ingredients and, in many cases, have forced complete removal of such contaminants. In certain cases, such as some pesticides which are virtually ubiquitous in nature, it has proven difficult to comply with the requirements.\nFurther, many of the restrictions regarding ingredient quality are not directly applicable to our products, leaving the possibility that our interpretation of compliance may not match that of the enforcing authorities. Often there is a lack of an\nequivalent active ingredient present in the marketplace. In other cases, the removal or reduction of a technical ingredient, such as various types of parabens, leads to a significant change in the character of the product that may make it no\nlonger desirable or safe to the consumer. If this trend in new regulations continues, we may find it necessary to alter some of the ways we have traditionally marketed our products to stay in compliance with a changing regulatory landscape and\nthis could add to the costs of our operations and/or have an adverse impact on our business.\n\nMany laws and regulations govern the registration, pre-market approval or other aspects of regulatory oversight of our products. For example, in the United States, some legislators and industry critics have pushed\nto increase the regulatory authority of the FDA over nutritional supplements. In 2011, the FDA proposed draft guidance to clarify the FDA’s interpretation of the dietary ingredient notification requirements, and in 2016, the FDA issued revised\ndraft guidance that superseded the 2011 version. In April 2024, the FDA issued new draft guidance replacing and expanding on the 2016 revised guidance. This draft guidance is not yet final but indicates that the FDA is expanding its definition of\nwhat is considered a “new dietary ingredient.” While still in flux, if finalized substantially as proposed, this guidance could impose new and significant regulatory barriers for our nutritional supplement products or unique ingredients, which\ncould delay or inhibit our ability to formulate, introduce and sell nutritional supplements as we have in the past.\n\nSimilarly, from time to time, efforts are made by some individuals or groups to repeal the Dietary Supplement Health and Education Act of 1994 (“DSHEA”), the U.S. law that\nprovides a separate body of regulations for dietary supplements as compared to drugs. Such a repeal would result in significant burdens for our product development, and the costs of running our business would increase significantly. We\nface similar pressures in our other markets, which continue to set restrictions on ingredients and their acceptable maximum levels, as well as on ingredient characterization, quality and levels. In Europe, for example, we are unable to market\nsupplements that contain ingredients that were not marketed in Europe prior to May 1997 (“novel foods”) without going through an extensive registration and pre-market approval process.\n\nThe FDA currently does not have a pre-market approval system for cosmetics. However, cosmetic products may become subject to more extensive regulation in the future, even beyond the requirements mandated by the\nrecently enacted Modernization of Cosmetics Regulation Act of 2022. These events could interrupt the marketing and sale of our products, severely damage our brand reputation and image in the marketplace,\nincrease the cost of our products, cause us to fail to meet customer expectations or cause us to be unable to deliver merchandise in sufficient quantities or of sufficient quality to our stores, any of which could result in lost sales.\n\nOur operations could be harmed if new laws or regulations are enacted that restrict our ability to market or distribute our products or impose additional burdens or requirements on us in order to continue selling\nour products. In addition, the adoption of new regulations or changes in the interpretations and enforcement of existing regulations may result in significant compliance costs or discontinuation of product sales and may impair the marketability\nof our products, resulting in significant loss of net sales. We cannot predict the nature of any future laws, regulations, interpretations, or applications, nor can we determine what effect additional governmental regulations or administrative\norders, when and if promulgated, would have on our business. If new or existing laws and regulations restrict, inhibit or delay our ability to introduce or market our products or limit the claims we are able to make regarding our products, this\ncould have a material adverse effect on our business, financial condition, and operating results. If we fail to comply with the laws and regulations governing our products, we could face enforcement action, and we could be fined or forced to\nalter or stop selling our products.\n\nGovernment regulations and private party actions relating to the marketing and advertising of our products and services may restrict, inhibit or delay our ability to sell\nour products and harm our business.\n\nGovernment authorities regulate advertising and product claims regarding the efficacy and benefits of our products. These regulatory authorities typically require adequate and reliable scientific substantiation to\nsupport any marketing claims. What constitutes such reliable scientific substantiation can vary widely from market to market and there is no assurance that the research and development efforts that we undertake to support our claims will be\ndeemed adequate for any particular product or claim. If we are unable to show adequate and reliable scientific substantiation for our product claims, or if our marketing materials or the marketing materials of our sales force make claims that exceed the scope of allowed claims for dietary supplements, cosmetics or devices that we offer, the FDA or other regulatory authorities could take enforcement action requiring us to revise our marketing\nmaterials, amend our claims or stop selling certain products, which could harm our business.\n\n36\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nFor example, in recent years, the FDA has issued warning letters to many cosmetic companies alleging improper structure/function claims regarding their cosmetic products, including, for example, product claims\nregarding gene activity, cellular rejuvenation, and rebuilding collagen. There is a degree of subjectivity in determining whether a claim is an improper structure/function claim. Given this subjectivity and our research and development focus on\nthe sources of aging and the influence of certain ingredients on gene expression, there is a risk that we could receive a warning letter, be required to modify our product claims or take other actions to satisfy the FDA if the FDA determines any\nof our marketing materials include improper structure/function claims for our cosmetic products. In addition, plaintiffs’ lawyers have filed class action lawsuits against some of our competitors after our competitors received these FDA warning\nletters. There can be no assurance that we will not be subject to government actions or class action lawsuits, which could harm our business.\n\nIn the United States, the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising (“Guides”) require disclosure of material connections between an endorser and the company they are\nendorsing, and they generally do not allow marketing using atypical results. Our sales force has historically used testimonials and “before and after” photos to market and sell some of our popular\nproducts such as our spa devices and ageLOC\nTru Face anti-aging skin care system. We intend to continue to use testimonials for our popular products, including weight management products and beauty products. In highly regulated and scrutinized\nproduct categories such as weight management, if we or our sales force fails to comply with the Guides or makes improper product claims, the FTC could bring an enforcement action against us, and\nwe could be fined and/or forced to alter our marketing materials. In addition, during 2023, the FTC sent notices of penalty offense to nearly 700 companies, including us, regarding the requirement of sufficient substantiation for product claims.\nPursuant to the FTC’s “penalty offense authority,” companies that received the notice are expected to comply with the standards set in the FTC’s prior administrative cases on this topic, and they could incur significant civil penalties if the FTC\nwere to determine that they or their representatives engaged in conduct inconsistent with those standards.\n\nAdditionally, state statutes throughout the United States create private rights of action for individuals claiming harm from false or misleading marketing claims that can lead to the assertion or filing of class\naction lawsuits. There can be no assurance that we will not be subject to class action lawsuits asserting false or misleading marketing claims, which could harm our business.\n\nOur operations could be harmed if we or our vendors fail to comply with Good Manufacturing Practices.\n\nAcross our markets, there are regulations on a diverse range of Good Manufacturing Practices that apply to us and to our vendors covering product categories such as dietary supplements, cosmetics, foods,\nover-the-counter drugs and medical devices. The Good Manufacturing Practices impose stringent requirements on a variety of topics, including vendor qualifications, ingredient identification, manufacturing controls and record keeping. Ingredient\nidentification requirements, which often require us to confirm the levels, identity and potency of ingredients listed on our product labels within a narrow range, are particularly burdensome and difficult for us because our products contain many\ndifferent ingredients. Additionally, certain Good Manufacturing Practices obligate us to track and periodically report adverse events to government agencies. Compliance with these increasing regulations may further increase the cost of\nmanufacturing certain of our products as we work with our vendors to assure they are qualified and in compliance. In addition, our operations could be harmed if regulatory authorities determine that we or our vendors are not in compliance with\nthese regulations or if public reporting of adverse events harms our reputation for quality and safety. A finding of noncompliance may result in administrative warnings, penalties or actions impacting our ability to continue selling certain\nproducts, including public withdrawals, seizures and recalls. For example, we have had product recalls in the United States based on labeling issues. Problems associated with product recalls could be\nexacerbated due to the global nature of our business because a recall in one jurisdiction could lead to recalls in other jurisdictions. In addition, these risks associated with noncompliance could increase as we acquire businesses, including\nour current and future Rhyz businesses.\n\nIf our current or any future device products are determined to be medical devices in a particular geographic market, or if our sales force uses these products for medical\npurposes or makes improper medical claims, our ability to continue to market and distribute such devices could be harmed, and we could face legal or regulatory actions.\n\nOne of our strategies is to market unique and innovative products that allow our sales force to distinguish our products. As we pursue this strategy with our current and future device products,\nthere is a risk that regulatory authorities in our markets could determine that these products must receive clearance or be registered as medical devices. Such a determination could restrict our ability to import or sell the product in such a\nmarket until registration or clearance is obtained. The process for obtaining such registrations and clearances could require us to provide documentation concerning product manufacturing and clinical utility; to make design, specification and\nmanufacturing process modifications to meet standards imposed on medical device companies; and to modify our marketing claims regarding the registered product.\n\nWhile we have not been required to register our device products as medical devices in most markets, we have registered some of them in some markets, including ageLOC\n\nBoost and Nu Skin Wellspa iO in Thailand and our ageLOC Galvanic Facial Spa and ageLOC Body Spa systems in\nIndonesia, Thailand, Peru and Colombia. We also sought and received clearance from the United States Food and Drug Administration to market our Nu Skin Facial Spa device and, more recently, our Nu Skin RenuSpa iO device for over-the-counter use.\n\n37\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nIn some cases, challenges can arise even after we have completed the required registration/clearance process or determined that a product does not need registration/clearance. This could occur\nif a jurisdiction changes its laws or interpretations thereof, for example. In addition, if, in violation of our policies, our sales force attempts to import or export products from one market to another, makes medical claims regarding our\nproducts, or uses our products to perform medical diagnoses or other activities limited to licensed professionals or approved medical devices (in markets where the product is not approved), it could negatively impact our ability to market or sell\nthese products and subject us to legal or regulatory actions.\n\nBecause medical device regulations vary widely from market to market, registration or clearance in one market does not preclude challenges or delays in obtaining registration or clearance in\nother markets, nor does it preclude other markets from requiring us to make additional modifications or provide additional documentation as conditions to granting clearance. Furthermore, in some cases, registration or clearance to sell a\nproduct in one market may be used as precedent for requiring similar approval for the product in another market, or for similar products in the same market. These additional requirements could increase the cost associated with manufacturing and\nselling these products as non-medical devices in such markets.\n\nAny of the above factors could have a material negative impact on our ability to sell products and could negatively affect our financial results.\n\nWe may incur product liability claims that could harm our business.\n\nWe sell a variety of different products for human consumption and use, including cosmetics, dietary supplements, conventional foods, OTC drugs and devices. Our cosmetics and conventional foods, as well as some of\nour dietary supplements, are not generally subject to pre-market approval or registration processes so we cannot rely upon a government safety panel to qualify or approve our products for use, and some ingredients may not have long histories of\nhuman consumption or use. We rely upon published and unpublished safety information including clinical studies on ingredients used in our products and conduct our own clinical and safety studies on some key ingredients and products, but not all\nproducts. A product may be safe for the general population when consumed or used as directed but could cause an adverse reaction for some individuals, such as a person who has a health condition or allergies or who is taking a prescription\nmedication. While we include what we believe are adequate instructions and warnings and we have historically had low numbers of reported reactions, previously unknown adverse reactions could occur. If we discover that our products are causing\nadverse reactions, or if we determine that any of our employees have not properly handled reports of adverse reactions, we could suffer further adverse publicity or government sanctions.\n\nAs a result of the type of products that we sell, we may be subject to various product liability claims, including that the products fail to meet quality or manufacturing specifications, contain contaminants,\ninclude inadequate instructions as to their proper use, include inadequate warnings concerning side effects and interactions with other substances or for persons with health conditions or allergies, or cause adverse reactions or side effects.\nConsumer protection laws and regulations governing our business continue to expand, and in some states such as California, class-action lawsuits based on increasingly novel theories of liability are expanding. Product liability claims could\nincrease our costs, cause negative publicity, and adversely affect our business and financial results. As we continue to offer an increasing number of new products through large product offerings our product liability risk may increase.\n\nIf our sales force or employees provide improper advice regarding our products or our products’ use or safety, we may be subject to additional product liability.\n\nWe have generally elected to self-insure our product liability risks. We periodically evaluate whether we can and should obtain product liability insurance. Based upon our current approach to product liability risk\nmanagement, if any of our products are found to cause any injury or damage or we become subject to product liability claims, we will be subject to the full amount of liability associated with any injuries or damages. This liability could be\nsubstantial and may exceed our existing reserves and harm our business.\n\nLegal, Regulatory and Compliance Risks\n\nWe may become involved in legal proceedings and other matters that could adversely affect our operations or financial results.\n\nWe have been, and regularly are, a party to litigation, government inquiries or investigations, audits or other legal matters. These legal proceedings have included, or could include, among other things, claims\nalleging violation of the federal securities laws or state corporate laws, or claims related to employment matters, contracts, intellectual property, consumer protection, fair-competition/anti-trust laws, our products, business opportunity or\nadvertising, defamation, negligence, data breaches, privacy compliance, or other matters. Claims have been brought by regulators, investors, members of our sales force, consumers, employees, and other private parties and in some cases have been\nbrought as class action lawsuits. In addition, as we have been more active during the past several years with acquisitions, divestments and other investment-related activities, we have had litigation and threats of litigation with parties\ninvolved in these transactions or businesses.\n\n38\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nFor example, we currently have ongoing litigation in Washington state in which the plaintiffs claim that various aspects of our 2018 brand affiliate agreement and policies and procedures are unconscionable and in\nviolation of Washington consumer-protection and other laws. The trial court granted partial summary judgment as to some of the plaintiffs’ claims in October 2025, and we are currently appealing that decision. This matter could ultimately result\nin payment of damages, attorney fees and costs, as well as injunctive relief regarding our enforcement of certain sections of our brand affiliate agreement.\n\nIn general, litigation claims, regulatory actions or other legal matters are expensive and time-consuming and can result in settlements, adverse rulings or damages that could significantly affect financial results\nand the conduct of our business. It is not possible to predict the final resolution of any legal proceeding to which we may become party, and the impact of these matters on our business, results of operations and financial condition could be\nmaterial.\n\nNon-compliance or alleged non-compliance with anti-corruption laws could harm our business.\n\nOur international operations are subject to various anti-corruption laws in the jurisdictions where we operate, including principally the U.S. Foreign Corrupt Practices Act (the “FCPA”). The FCPA prohibits\ncompanies and their agents or intermediaries from offering, promising, giving, or authorizing others to give anything of value, either directly or indirectly, to a non-U.S. government official in order to influence official action or otherwise\nfor the purpose of obtaining or retaining business. The FCPA also requires public companies to make and keep books and records, which, in reasonable detail, accurately and fairly reflect the transactions of the company and to devise and maintain\nan adequate system of internal accounting controls.\n\nSignificant international regulation of our industry and accordingly our business operations requires our employees, agents, and intermediaries to interact frequently with public officials, including officials of\nnon-U.S. governments, in some highly regulated jurisdictions, including Mainland China. We dedicate time and resources to internal investigations of any allegation that we are not or may not be in compliance with the FCPA or other applicable\ninternational anti-corruption laws. Such allegations, even if untrue, may result in a government investigation by a foreign or U.S. regulator, including the U.S. Department of Justice and the Securities and Exchange Commission. Our corporate\npolicies require all employees, agents and intermediaries to comply with the FCPA and other applicable anti-corruption laws, including the FCPA’s books-and-records and internal-accounting-controls requirements. Any regulatory determination,\nhowever, that our operations or activities are not in compliance with existing anti-corruption laws or regulations could result in the imposition of substantial fines and other penalties from U.S. or other regulatory entities.\n\nAlthough we have implemented anti-corruption policies, controls and training globally to maintain an adequate system of books and records and internal accounting controls, we have in the past and may in the future\nhave regulatory investigations and penalties. We cannot guarantee that our compliance efforts will prevent future investigations, fines or penalties under the FCPA or other anti-corruption laws.\n\nAdditionally, we cannot predict the nature, scope or effect of future regulatory requirements to which our international operations might be subject or the manner in which existing or new laws might be administered\nor interpreted. Alleged or actual violations of any such existing or future laws (either due to our own acts or our inadvertence, or due to the acts or inadvertence of others) may result in criminal or civil sanctions or reputational harm, which\ncould have a material adverse effect on our business, financial condition and results of operations.\n\nA failure of our internal controls over financial reporting or our regulatory compliance efforts could harm our stock price and our financial and operating results or could\nresult in fines or penalties.\n\nWe have implemented internal controls to help ensure the completeness and accuracy of our financial reporting and to detect and prevent fraudulent actions within our financial and accounting processes. We have also\nimplemented compliance policies and programs to help ensure that our employees and sales force comply with applicable laws and regulations. Our internal audit team regularly audits our internal controls\nand various aspects of our business and compliance program, and we regularly assess the effectiveness of our internal controls. There can be no assurance, however, that our internal or external assessments and audits will identify all fraud,\nmisstatements in our financial reporting, and significant deficiencies or material weaknesses in our internal controls. Material weaknesses have in the past resulted in, and may in the future result in, a material misstatement of our financial\nresults, requiring us to restate our financial statements.\n\nFrom time to time, we initiate investigations into our business operations to improve our regulatory compliance efforts or based on the results of our internal and external audits or on complaints, questions or\nallegations made by employees or other parties regarding our business practices and operations. In addition, our business and operations may be investigated by applicable government authorities. In the event any of these investigations identify\nmaterial violations of applicable laws by our employees, sales force or affiliates, we could be subject to adverse publicity, fines, penalties or loss of licenses or permits.\n\n39\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nRisks Associated with Taxes, Customs and Debt\n\nWe are subject to changes in tax and customs laws, changes in our tax rates, the adoption of new U.S. or international tax legislation or exposure to additional tax\nliabilities, which could have a material and adverse impact on our effective tax rate, operating results, cash flows and financial condition.\n\nAs a U.S.-based company operating internationally, we must comply with applicable tax and customs laws in all jurisdictions where we conduct business. These include rules governing intercompany pricing and\ntransactions among our corporate entities, as well as customs valuation and classification, income taxes, value-added taxes, withholding taxes, payroll taxes, and other relevant tax obligations. Tax and customs laws, along with related\nregulations, administrative practices, and interpretations, may change at any time—sometimes without notice—due to economic, political, or other external factors. Any changes in the law or in regulatory interpretations could significantly\nincrease our tax or customs costs and raise our effective tax rate.\n\nBecause our subsidiaries operate in numerous jurisdictions with evolving tax rules and interpretations, determining and estimating our income tax provisions requires significant judgment. Our future effective tax\nrates may be influenced by a variety of factors, including intercompany transactions, shifts in business operations, acquisitions or divestitures, expansion into new markets, the amount and geographic distribution of our earnings, recognized\nlosses, our ability to utilize tax benefits, foreign currency fluctuations, changes in our stock price, uncertain tax positions, state tax allocation and apportionment, and changes to deferred tax assets, liabilities, and related valuation\nallowances. Additionally, U.S. and foreign governments may implement new tax laws or negotiate tax treaties that further alter global tax frameworks, potentially having a material impact on our operating results and financial condition.\n\nGovernment authorities may question our tax or customs positions or change their laws in a manner that could increase our effective tax rate or otherwise harm our business.\n\nAlthough we strive to stay informed about and comply with all applicable tax and customs laws—including changes and differing interpretations—local authorities may still challenge our positions from time to time.\nWe are routinely subject to audits, investigations, inquiries, and other tax or customs reviews by authorities worldwide involving income taxes, customs valuation and classification, transfer pricing, value-added taxes, withholding taxes, payroll\ntaxes, and other relevant taxes.\n\nThe resolution of these matters can take years, and outcomes are uncertain; they may result in additional taxes or customs duties, including back payments, interest, and penalties. In our consolidated financial\nstatements, we record reserves that we believe comply with U.S. GAAP and continually evaluate the likelihood of adverse outcomes to assess the adequacy of our accruals, adjusting them as necessary. Nevertheless, developments in these matters may\nrequire additional accruals and expenses, and the final outcome could differ materially from our estimates, potentially affecting our effective tax rate and overall tax or customs expense.\n\nA decline in our business could adversely affect our financial position and liquidity, and our debt covenants could limit our ability to pursue transactions or other opportunities that could be\nbeneficial to our business.\n\nAny significant decline in our operating results could adversely affect our financial position and liquidity. Under the terms of our credit facility, we are required to maintain certain interest coverage and\nleverage ratios. In addition, our outstanding borrowings under our credit facility and related term loan impose debt service and amortization requirements. A significant deterioration in our results of operations, whether as a result of\nprevailing economic, financial and industry conditions, or other causes, could impact our ability to comply with our debt covenants and debt service and amortization obligations, which could result in an event of default under the terms of our\ncredit facility. An event of default under our credit facility could result in an inability to access funding under the agreement and cause all outstanding amounts to become immediately due and payable, which would have a material adverse\neffect on our financial condition and liquidity. In addition, even if we do not default, our debt covenants could impose limitations on our ability to borrow additional funds in order to pursue transactions or other opportunities that could be\nbeneficial to our business.\n\nIntellectual Property Risks\n\nWe may be subject to claims of infringement on the intellectual property rights or trade secrets of others, resulting in costly litigation.\n\nIn recent years, there has been significant litigation in the United States involving patents and other intellectual property rights. In particular, there has been an increase in the filing of suits alleging\ninfringement of intellectual property rights, which pressure defendants into entering into settlement arrangements quickly to dispose of such suits, regardless of their merit. Other companies or individuals may allege that we, or our sales force, consumers, licensees or other parties indemnified by us, infringe on their intellectual property rights. Even if we believe that such claims are without merit, defending such intellectual\nproperty litigation can be costly, distract management’s attention and resources, and the outcome is inherently uncertain. Claims of intellectual property infringement also might require us to redesign affected products, enter into costly\nsettlement or license agreements, pay costly damage awards, or face a temporary or permanent injunction prohibiting us from marketing or selling certain of our products. Any of these results may adversely affect our financial condition.\n\n40\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nAs a result of claims against us regarding suspected infringement, our technologies may be subject to injunction, we may be required to pay damages, or we may have to seek a license to continue certain practices\n(which may not be available on reasonable terms, if at all), all of which may significantly increase our operating expenses or may require us to restrict our business activities and limit our ability to deliver our products and services and/or\ncertain features, integrations, and capabilities of our platform. As a result, we may also be required to develop alternative non-infringing technology, which could require significant effort and expense and/or cause us to alter our products or\nservices, which could negatively affect our business.\n\nWe employ individuals who were previously employed at other beauty or wellness product companies, including our competitors or potential competitors. To the extent that our employees are involved in research areas\nthat are similar to those in which they were involved with their former employers, we may be subject to claims that such employees have inadvertently or otherwise used or disclosed the alleged trade secrets or other proprietary information of the\nformer employers. Litigation may be necessary to defend against such claims.\n\nIf we are unable to protect our intellectual property rights or our proprietary information and know-how, our ability to compete could be negatively impacted and the value\nof our products could be adversely affected.\n\nThe market for our products depends to a significant extent upon the value associated with our product innovations and our brand equity. We rely upon patent, copyright, trademark, and trade secret laws in the\nUnited States and other markets, and non-disclosure, confidentiality, and other types of agreements with our employees, sales force, customers, suppliers and other parties, to establish, maintain and\nenforce our intellectual property rights. Despite these measures, any of our intellectual property rights could be challenged, invalidated, circumvented, or misappropriated, or such intellectual property rights may not be sufficient to permit us\nto provide competitive advantages, which could result in costly product redesign efforts, discontinuance of certain product offerings or other competitive harm. In addition, the laws of certain foreign markets where we have significant business,\nincluding markets such as Mainland China, do not protect our intellectual property rights to the same extent as the laws of the United States.\n\nThe costs required to protect our patents and trademarks may be substantial. In some cases it may not even be practical to seek to register our intellectual property for various reasons, including costs and\nenforceability. We have filed patent and trademark applications globally to protect our intellectual property rights in our new technologies; however, there can be no assurance that our patent and trademark applications will be approved and\nissued, that any patents and trademarks issued will adequately protect our intellectual property, or that such patents and trademarks will not be challenged by third parties or found by a judicial authority to be invalid or unenforceable.\nAdditionally, we cannot guarantee that our intellectual property rights will be respected and not infringed by third parties. Moreover, many of our products rely on technologies developed or licensed by third parties, and we may not be able to\nobtain or continue to obtain licenses and technologies from these third parties on reasonable terms or at all.\n\nFrom time to time, we become aware of potential violations of our intellectual property rights. For example, we are aware of the use of and attempts to obtain trademark registrations for “Nu Skin” or phonetically\nsimilar marks and of some products that may infringe on our intellectual property related to the ageLOC LumiSpa device. To enforce and protect our intellectual property rights, we may initiate actions\nagainst third parties to protect our intellectual property, such as patent, copyright, and trademark infringement lawsuits or interference proceedings, and seek indemnification by contract or otherwise. Any lawsuits that we initiate could be\nexpensive, take significant time and divert management’s attention from other business concerns, and we may ultimately fail to prevail on or recover on any indemnification or infringement claim. Litigation also puts our patents and trademarks at\nrisk of being invalidated or interpreted narrowly and our patent and trademark applications at risk of not issuing. Additionally, we may provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and\nthe damages or other remedies awarded, if any, may not be commercially valuable. The occurrence of any of these events may adversely affect our financial condition or diminish our investments in this area.\n\nIn addition to patented technology, we rely on our unpatented proprietary technology, trade secrets, processes and know-how. We generally seek to protect this information by confidentiality, non-disclosure and\nassignment of invention agreements with our employees, consultants, scientific advisors and third parties. Our employees may leave the company to work for competitors. Our sales force members may seek other opportunities. These agreements may be\nbreached, and we may not have adequate remedies for any such breach. In addition, our trade secrets may be disclosed to, become known by or be independently developed by competitors. To the extent that our current or former employees, sales\nforce, consultants or contractors use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions. If, for any of the above reasons, our intellectual property is\ndisclosed or misappropriated, it would harm our ability to protect our rights and adversely affect our financial condition.\n\n41\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nData Security and Privacy Risks\n\nFailure to maintain satisfactory compliance with certain privacy and data protections laws and regulations, and the integrity of company, employee, sales force, customer or guest data, could\nexpose us to litigation, liability, substantial negative financial consequences and harm to our reputation.\n\nWe collect, transmit and/or store large volumes of company, employee, sales force, customer and guest data, including payment card information, personally identifiable information, health-related data, biometric\ninformation and other sensitive personal information, for business purposes, including for transactional and promotional purposes, and our various information technology systems enter, process, summarize, report and transmit such data. The\nvarious mobile applications, connected beauty and wellness devices, and other connected tools that we have developed or are developing also collect data. The integrity and protection of this personal data is critical to our business.\n\nWe are subject to various security and privacy regulations in the markets where we do business, as well as requirements\nimposed by the payment card industry. For example, the General Data Protection Regulation, which went into effect in the European Union in 2018, imposes increased data protection regulations, the violation of which could result in fines of up\nto 4% of annual consolidated revenue. Many other U.S. states and foreign jurisdictions have similarly enacted security, privacy and data use transparency regulations. These include the California Consumer Privacy Act (“CCPA”) of 2020 (as amended by the California Privacy Rights Act (“CPRA”)) and the Washington My Heath My Data Act of 2023. As of 2025, more than a dozen U.S. states have enacted\nprivacy statutes imposing requirements related to consumer rights, data minimization, sensitive data handling, profiling, and opt-out controls, and state enforcement and rulemaking activities continue to increase. Internationally, multiple\njurisdictions continue to adopt or expand privacy frameworks, including India’s Digital Personal Data Protection Act, and laws and regulations granting rights to individuals to understand and control the use of their data. We anticipate that\nfederal, state and international regulators will continue to enact legislation and issue new rules and regulations related to data governance and privacy. These laws may impose restrictions on our ability to gather and/or transfer personal\ndata, provide individuals with additional rights around their personal data, and place downstream obligations on our Brand Affiliates or other business partners relating to their use of information we provide. Many jurisdictions, including\nCalifornia and Mainland China, have increased enforcement of laws and regulations that have recently taken effect. In addition, the FTC has taken an increasingly active approach to enforcing data privacy in the U.S. and has launched\ninvestigations and taken action against several large private companies over their data privacy practices in the past year. We believe these trends will continue.\n\nIn the United States, congressional committees have held preliminary hearings about the advisability of a federal data privacy law, but it is\nuncertain whether the federal government will adopt such a law and whether it would preempt state data privacy laws. Efforts have been made in recent years at the federal level to establish a comprehensive privacy regime including many of the\nconcepts found in other state and federal privacy bills and laws, such as consent requirements for entities providing services to the public that collect, store, process, use or otherwise control sensitive personal information. The prospect of\nnew data privacy laws and ambiguity regarding the interpretation of new and existing laws has resulted in significant uncertainty and compliance costs and may require\nus to devote additional operational, legal, and technical resources to address evolving requirements.\n\nIn addition to laws specifically governing privacy and data security, in some cases, federal and state regulators and state attorneys general and\nadministrative agencies have interpreted more general consumer protection laws to impose standards for the online collection, use, dissemination and security of data. Plaintiffs’ counsels have also put forward a number of novel theories suing\ncompanies on the basis of their collection and use of information under existing privacy-adjacent laws. For example, there has been a recent increase in class action and individual litigation applying the provisions of the California Invasion\nof Privacy Act, enacted in 1967, to the use of common website technology (such as tracking pixels, session-replay tools, chat features, and other analytics or\nadvertising technologies). Although we monitor regulatory developments in this area, laws may be implemented, interpreted, or enforced in a non-uniform or inconsistent way across jurisdictions, and we may not be aware of every\ndevelopment that impacts our business. Any actual or perceived failure by us to comply with these requirements could subject us to significant penalties, lawsuits and negative publicity and require changes to our business practices. The costs\nof complying with existing or new data privacy or data protection laws and regulations may limit our ability to gather personal information needed to provide our products and services, delay or impede the development of new products and\nservices, or negatively impact the use of or demand for our products and services, any of which could harm our business. In particular, maintaining compliance with these and other evolving regulations and requirements around the world has\nrequired changes to our information system architecture and data transfer and data storage processes. For example, data privacy laws in Mainland China, the European Union and other jurisdictions place restrictions on the cross-border\ntransmission of personal data, which could impede our ability to perform many business functions, including calculating and paying compensation to our sales force, absent significant changes to our information system architecture. In 2023, the\nEuropean Union adopted a new adequacy decision for the E.U.-U.S. Data Privacy Framework, which provides a legal mechanism for certain cross-border transfers of personal data to the United States. However, activist groups have already indicated\nan intent to challenge this new framework. Because of these challenges, there is constant uncertainty regarding the legal basis for data transfers to the United States from the European Union. This may result in the eventual interruption of\nsuch transfers and therefore the interruption of business functions that rely on these transfers. Changing our information system architecture and data transfer and storage processes is difficult and expensive. Investigations by the regulators\nof data security or protection laws across jurisdictions could also result in the payment of fines, reputational harm and an inability to continue doing business in certain jurisdictions. Class actions or other private actions by affected\nindividuals in some jurisdictions could also result in significant monetary or reputational damage.\n\n42\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nThe following additional factors also cause risks related to the use of data:\n\n●\n\nSales force—We share certain data with our sales force. We could face fines, investigations, lawsuits or other legal action if our sales force violates, or is perceived to violate, applicable laws and regulations, and our reputation\nand brand could be negatively impacted.\n\n●\n\nPayment card industry data security standards—A failure to adhere to the payment card industry’s data security standards could cause us to incur penalties from payment card associations, termination of our ability to accept credit or\ndebit card payments, litigation and adverse publicity, any of which could have a material adverse effect on our business and financial condition.\n\n●\n\nConsumer health data regulations—In addition to state comprehensive privacy laws, several states (Washington, Nevada and Connecticut) have passed targeted legislation regulating “consumer\nhealth information,” generally defined as personal information linked or reasonably linkable to a consumer that identifies their past, present, or future physical or mental health status. This broad definition likely imposes\nrestrictions on our ability to gather this data. These new laws appear to require additional privacy policies and specific consents from consumers; compliance with these new laws may require significant time and effort. If found to be\nin violation of these laws, we may face regulatory scrutiny and fines. The cost of assessing and bringing company practices into compliance with these new laws can be significant, and the risk of legal claims in the event of\nnon-compliance is increasing. For example, Washington’s “My Health, My Data” law creates a private right of action for non-compliance.\n\n●\n\nArtificial intelligence (“AI”)—As we introduce AI technologies into new or existing offerings or back-office functions, it may result in new\nor expanded risks and liabilities due to enhanced governmental or regulatory scrutiny, litigation, compliance issues, ethical concerns, and data privacy and security risks, all of which could adversely affect our business, reputation\nand financial results. In addition, several U.S. and international jurisdictions have passed laws regulating the use of AI technologies. For example, the European Union’s Artificial Intelligence Act of 2024 has provided a regulatory\nlandscape that private businesses will need to navigate with caution. The scale of penalties for non-compliance could be up to €35 million or 7% of global turnover. In the United States, the federal regulatory and policy environment for AI has also evolved, including through executive orders and agency guidance issued in 2025 that may affect expectations for AI governance,\nrisk management, and procurement, and may increase compliance uncertainty and costs. We anticipate regulation in this area will increase, which may impact our ability to use AI technologies in new or existing offerings or\nback-office functions, and new regulations may require reconstruction of technologies already in use.\n\nThe unauthorized access, use, theft or destruction of our information systems or of data that is stored in our information systems or by third parties on our behalf could impact our reputation\nand brand and expose us to potential liability and loss of revenues.\n\nA breached or compromised data system or the intentional, inadvertent or negligent release, misuse or disclosure of data could result in theft, loss,\nor fraudulent or unlawful use of company, employee, sales force, customer or guest data. Although we take measures to protect the security, integrity, accessibility and confidentiality of our data systems, we experience cyberattacks of varying\ndegrees and types on a regular basis. Although we use best efforts to detect and investigate all cyberattacks and data security incidents, it may be difficult to determine the scope of impact. Our infrastructure may be vulnerable to these\nattacks, and in some cases it could take time to discover attacks and determine their impact. Our security measures may also be breached due to employee error or malfeasance, system errors or otherwise. Additionally, outside parties may attempt\nto fraudulently induce employees, users, or customers to disclose confidential information to gain access to our systems, our data, or our users’ or customers’ data\nincluding through phishing, social engineering, or other forms of impersonation. Any such breach or unauthorized access could result in the unauthorized disclosure, misuse or loss of sensitive information and lead to significant legal\nand financial exposure, regulatory inquiries or investigations, loss of confidence by our sales force and customers, disruption of our operations, damage to our reputation, and costs associated with remediating the incident. The cost of\ninvestigation and response, including providing required breach notification obligations to individuals, regulators, and other third parties, may be significant.  The risk of legal claims in the event of a security breach is increasing. We have\nelected to self-insure our cybersecurity risks, so we could be subject to the full amount of liability associated with any such claims, which could be substantial and may exceed our existing reserves and harm our business. A data breach could\nalso lead to a lack of consumer trust and negatively affect our reputation. These risks are likely to increase as we continue to expand operations and process increasing amounts of personal information, proprietary data and sensitive data.\n\nIn addition, should a threat-actor successfully breach our systems to a significant extent, they could disable our systems or take our systems\noffline via ransomware, and such actions could stop or significantly impair our ability to conduct business, including processing orders and tracking and timely paying sales compensation to our sales force. As noted above, we have elected to\nself-insure these and other cybersecurity risks. Additionally, threat-actors regularly extort money from victims as a condition to returning the victim’s systems to operation and/or to not release stolen data to the public and we may incur significant costs and operational disruption in responding to such demands, even if systems are ultimately restored.\n\n43\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nThese risks are heightened as we implement new technologies, work with third-party providers, including providers of mobile and cloud technologies, and as our sales force uses social media, as our third-party\nproviders and the social media platforms could be vulnerable to the same types of breaches and other risks. These risks also are heightened as a result of our recent restructurings, which affected several functions at our company, including our\ninformation technology and information security functions. Acquisition activity, which we have engaged in and which we plan to continue to engage in, may also heighten these risks, as the systems of the companies we acquire are not under our\ncontrol prior to the acquisitions and it may take time to evaluate these systems and implement appropriate modifications to them.\n\nThe use of artificial intelligence could adversely affect our business, results of operations and reputation.\n\nArtificial intelligence (“AI”), including generative AI, is rapidly evolving and is increasingly used across digital commerce and marketing ecosystems. We and our third-party service providers use, and may\nincreasingly use, AI-enabled tools in business operations such as digital marketing and content creation, personalization and product recommendations, e-commerce and social selling tools, customer service, analytics, fraud prevention, and\nsupply-chain and inventory planning. As AI-enabled commerce tools and recommendation engines become more prevalent, they may enable consumers to discover, evaluate and purchase products with less reliance on independent sales representatives,\nincluding through lower-cost or more automated channels. If these developments reduce the effectiveness of, or the need for, our sales force or require us to materially modify our business model, our sales, profitability and competitive position\ncould be adversely affected. AI technologies may not always operate as intended, may produce inaccurate, discriminatory or misleading outputs, or may reflect bias or other deficiencies due to flawed design, insufficient or biased data sets, or\nother limitations. Disruptions, latency, or failures of AI-enabled systems—whether operated by us or by third parties—could impair our ability to serve our customers and sales force, negatively affect customer experiences, reduce sales, increase\ncosts, or otherwise adversely affect our business.\n\nBecause our products are marketed in a highly regulated environment and our business model relies on our independent sales force and digital communications, including social and digital platforms, AI use may also\nincrease compliance and reputational risk. For example, we are developing and may deploy machine-learning functionality in the Nu Skin Prysm iO mobile application to generate product recommendations, and we may also use generative AI to produce\nnarrative explanations of how those recommendations could benefit a user based on our product information. Even if we design these tools to avoid making improper product or other claims, generative AI systems may produce outputs that are\ninaccurate or incomplete, or that include non-approved or non-compliant representations regarding our products, their efficacy or other matters. AI-generated content or AI-assisted communications created by us, our sales force, or third parties\ncould inadvertently include inaccurate statements or unapproved representations regarding our products, their efficacy, or other matters, or could be disseminated rapidly through online platforms. Such outcomes may expose us to increased\nregulatory scrutiny, require additional monitoring and enforcement efforts, lead to litigation or investigations, and cause reputational harm and loss of confidence by our consumers or sales force.\n\nAI may also amplify privacy, data protection and cybersecurity risks. AI-enabled tools involve the collection, use, sharing or processing of personal information, including inferences drawn from consumer or sales\nforce activity. Laws and regulations governing privacy, cross-border data transfers, automated decision-making and use of personal information for AI-related purposes are evolving and may be interpreted inconsistently across jurisdictions.\nCompliance with such requirements may increase our costs, restrict our ability to use data in marketing and digital operations, or require changes to our practices. In addition, the increased adoption of AI technologies may intensify\ncybersecurity threats, including efforts to exploit vulnerabilities, exfiltrate data or misuse confidential information. If vendors, contractors, or service providers use AI tools in connection with services they provide to us, such use could\nincrease the risk of inadvertent disclosure of proprietary or confidential information. Any of these events could result in regulatory investigations, fines, litigation, remediation costs, operational disruption or reputational damage.\n\nFurther, we rely on third-party providers for certain AI-enabled tools and infrastructure. If these providers fail to perform as anticipated, experience outages, reach quotas or capacity limits, become unavailable\nto provide services to us, change their terms, do not maintain adequate controls, or use data in ways that are inconsistent with applicable law or our expectations, we may not be able to achieve the intended benefits of AI adoption and could\nexperience business disruption, increased costs, or legal and reputational harm. Finally, our ability to compete increasingly depends on delivering effective, compliant digital tools for customers and our independent sales force; if our\nAI-enabled initiatives do not perform as expected or we are unable to implement them in a timely and cost-effective manner relative to competitors, our revenue and margins could be adversely affected.\n\n44\n\n[Table of Contents](#TABLEOFCONTENTS)\n\nSustainability Risks\n\nOur business could be negatively impacted by corporate citizenship and sustainability matters.\n\nThere are increased and increasing expectations and focus from certain investors, sales force members, consumers, employees, regulators and other stakeholders concerning corporate citizenship and sustainability\nmatters, including environmental, social and governance matters; packaging; responsible sourcing; and diversity, equity and inclusion matters. For example, the European Union’s Packaging and Packaging Waste Regulation, which was adopted in 2024,\nwith some of its provisions becoming effective beginning in August 2026, regulates what kind of packaging can be placed on the EU market, as well as packaging waste management and prevention measures. Packaging not meeting the standards will no\nlonger be allowed on the EU market. In addition, the European Union’s Batteries Regulation, adopted in 2023, establishes requirements governing the full lifecycle of batteries, including design, production, use and end-of-life management.\nBeginning in February 2027, portable batteries incorporated into appliances placed on the EU market must be readily removable and replaceable by the end-user, which may require product redesign, changes to materials or manufacturing processes, or\nother compliance measures.\n\nIn addition, some jurisdictions, including California and the European Union, have enacted laws requiring public disclosure of information in sustainability-related areas, and from time to time, we announce certain\ninitiatives and goals in these areas. We could fail, or be perceived to fail, in our achievement of such initiatives or goals or in meeting stakeholders’ expectations, or we could fail in complying with laws or accurately reporting our progress\non such initiatives, goals and expectations. Moreover, the standards by which corporate citizenship and sustainability efforts and related matters are measured are developing and evolving, and certain areas are subject to assumptions. The\nstandards or assumptions could change over time. In addition, we could be criticized for the scope of our initiatives or goals or perceived as not acting responsibly in connection with these matters, such as with our carbon footprint,\nrecyclability of our packaging, ingredients used in our products or the sourcing of such ingredients. Any such matters, or related corporate citizenship and sustainability matters, could have a material adverse effect on our business.\n\nRisks Related to Our Common Stock\n\nThe market price of our Class A common stock is subject to significant fluctuations due to a number of factors that are beyond our control.\n\nOur Class A common stock closed at $18.56 per share on January 31, 2024 and closed at $10.61 per share on January 30, 2026. During this two-year period, our common stock traded as low as $5.32 per share and as high\nas $19.12 per share. Many factors, including some we may be unable to control, could cause the market price of our Class A common stock to fall. Some of these factors include:\n\n●\n\nfluctuations in our operating results;\n\n●\n\ngovernment investigations of our business;\n\n●\n\ntrends or adverse publicity related to our business, products, industry or competitors;\n\n●\n\nthe sale of shares of Class A common stock by significant stockholders;\n\n●\n\nour dividend policy;\n\n●\n\ndemand, and general trends in the market, for our products;\n\n●\n\nacquisitions by us or our competitors;\n\n●\n\neconomic or currency exchange issues in markets in which we operate;\n\n●\n\nchanges in estimates of our operating performance or changes in recommendations by securities analysts;\n\n●\n\nspeculative trading, including short selling and options trading, as well as stockholder activism and takeover activity, all of which may be more likely after a stock price decline such as ours in recent\nyears; and\n\n●\n\ngeneral economic, business, regulatory and political conditions.\n\nBroad market fluctuations could also lower the market price of our Class A common stock regardless of our actual operating performance."}