Lifevantage Corp: Form 10-Q for the period ended Mar 31, 2026

Overview

We are a company focused on nutrigenomics, the study of how nutrition and naturally occurring compounds affect human genes to support good health. We are dedicated to helping people achieve their health, wellness, and financial goals. We provide quality, scientifically validated products to customers and independent consultants as well as a financially rewarding commission-based direct sales opportunity to our independent consultants. We engage in the identification, research, development, formulation and sale of advanced nutrigenomic activators, dietary supplements, weight management products, pre- and pro-biotics, skin and hair care products, and nootropics. We currently sell our products to customers and independent consultants in two geographic regions that we have classified as the Americas region and the Asia/Pacific and Europe region.

The success and growth of our business is primarily based on the effectiveness of our independent consultants to attract and retain customers in order to sell our products and our ability to attract and retain independent consultants. When we are successful in attracting and retaining independent consultants and customers, it is largely because of:

• Our products, including our flagship Protandim® family of scientifically validated dietary supplements, our LifeVantage® family of dietary supplements that include the MindBody GLP-1 System®, Omega+, ProBio, IC Bright®, the Rise AM & Reset PM System®, D3+, and Daily Wellness, our PhysIQ™ Fat Burn and Prebiotic dietary supplements, our TrueScience® line of skin and hair care products and Liquid Collagen, Petandim®, our companion pet supplement formulated to combat oxidative stress in dogs; AXIO®, our nootropic energy drink mixes; and LoveBiome® P84 and PhytoPower B, dietary supplements acquired pursuant to the purchase of LoveBiome’s critical assets formulated to support gut health.
• Our sales compensation plan and other sales initiatives and incentives; and
• Our delivery of superior customer service.

As a result, it is vital to our success that we leverage our product development resources to develop and introduce compelling and innovative products and provide opportunities for our independent consultants to sell these products in a variety of markets. We sell our products in the United States, Mexico, Japan, Australia, Hong Kong, Canada, Thailand, the United Kingdom, the Netherlands, Germany, Taiwan, Austria, Spain, Ireland, Belgium, New Zealand, Singapore and Iceland. In addition, we sell our products in a number of countries for personal consumption only. Entering a new market requires a considerable amount of time, resources and continued support. If we are unable to properly support an existing or new market, our revenue growth may be negatively impacted. On June 30, 2025, we ceased operations in the Philippines and closed that market. In September 2025, we commenced operations in Iceland.

Our Products

Our products are: the Protandim® line of scientifically validated dietary supplements; the LifeVantage® line of dietary supplements that include the MindBody GLP-1 System®, Omega+, ProBio, IC Bright®, the Rise AM & Reset PM System®, D3+, and Daily Wellness; the PhysIQ Fat Burn and Prebiotic dietary supplements; the TrueScience® line of skin and hair care products and Liquid Collagen; the Petandim® companion pet supplement formulated to combat oxidative stress in dogs; AXIO®, our nootropic energy drink mixes; and LoveBiome® P84 and PhytoPower B, dietary supplements acquired pursuant to the purchase of LoveBiome’s critical assets formulated to support gut health. We believe the significant number of customers who regularly and repeatedly purchase our products is a strong indicator of the health benefits of our products.

The Protandim® product line includes Protandim® NRF1 Synergizer®, Protandim® Nrf2 Synergizer®, and Protandim® NAD Synergizer®. The Protandim® NRF1 Synergizer® is formulated to increase cellular energy and performance by boosting mitochondria production to improve cellular repair and slow cellular aging. The Protandim® Nrf2 Synergizer® contains a proprietary blend of ingredients and has been shown to combat oxidative stress and enhance energy production by increasing the body’s natural antioxidant protection at the genetic level, inducing the production of naturally occurring protective antioxidant enzymes, including superoxide dismutase, catalase, and glutathione synthase. The Protandim® NAD Synergizer® was specifically formulated to target cell signaling pathways involved in the synthesis and recycling of a specific molecule called NAD (nicotinamide adenine dinucleotide), and it has been shown to double sirtuin activity, supporting increased health, focus, energy, mental clarity, and mood. Use of the three Protandim® products together, marketed as the Protandim® Tri-Synergizer®, has been shown to produce synergistic benefits greater than using the single products on their own.

The LifeVantage® product line includes: the new MindBody GLP-1 System®, a dietary supplement that combines two products MB Core™ and MB Enhance™ designed to support weight loss and wellness by activating GLP-1 naturally and balancing signals along the gut-brain axis; Omega+, a dietary supplement that combines DHA and EPA Omega-3 fatty acids, omega-7 fatty acids, and vitamin D3 to support cognitive health, cardiovascular health, skin health, and the immune system; ProBio, a dietary supplement designed to support optimal digestion and immune system function; Daily Wellness, a dietary supplement designed to support immune health. IC Bright®, a dietary supplement to help support eye and brain health, reduce eye fatigue and strain, support cognitive functions, and may help support normal sleep patterns; the Rise AM & Reset PM System®, a dietary supplement that uses Timewise Nutrient Delivery™ to provide the body with the right nutrients in the right amounts at the right time and D3+, a dietary supplement that provides vitamin D3, vitamin K2, magnesium, calcium, and other trace minerals to support a balanced immune system, strong bones, and cardiovascular health.

PhysIQ™ Fat Burn is a dietary supplement designed to support weight management, and PhysIQ™ Prebiotic is a dietary supplement designed to support a healthy digestive tract.

Our TrueScience® line of skin and hair care products includes TrueScience® TrueClean Refining Cleanser, TrueScience® TrueRenew Daily Firming Complex, TrueScience® TrueLift Illuminating Eye Cream, TrueScience® TrueHydrate Brightening Moisturizer, TrueScience® TrueTone Perfecting Lotion, TrueScience® TrueProtect Daily Mineral Sunstick SPF 30, TrueScience® Perfecting Lotion, TrueScience® Hand Cream, TrueScience® Invigorating Shampoo, TrueScience® Nourishing Conditioner, TrueScience® Scalp Serum, and TrueScience® Liquid Collagen, a dietary supplement that activates, replenishes, and maintains collagen to support firmness and elasticity from within.

Petandim® is a supplement specially formulated to combat oxidative stress in dogs through Nrf2 activation.

AXIO® is our line of our nootropic energy drink mixes formulated to promote alertness and support mental performance.

LoveBiome® P84 is a dietary supplement formulated to activate 14 key peptides that regulate, repair, and restore gut health. PhytoPower B is a dietary supplement formulated to slow carb-to-sugar conversion and support healthy metabolism.

We sell our products both individually and in stacks. A stack consists of multiple products bundled together that are designed to achieve a specific result. In fiscal year 2025, our stack strategy continued to focus on the brand message of activation. During the year, we introduced a number of new stacks to meet customer and independent consultant needs. Prior to the launch of our latest activator, the MindBody GLP-1 System®, we introduced the Kickstart Bundle, which features a selection of products (varies by market) to help prepare the body for GLP-1 activation. Additionally, several stacks were introduced that incorporated the MindBody GLP-1 System® to offer consumers support for weight management and wellness along with delivering other targeted benefits as part of their activated lifestyle.

We also introduced our Healthy Weight Stack, which includes the MindBody GLP-1 System® and Protandim® Nrf2 Synergizer®. Results of an in vitro study were released that showed beneficial “activation synergies” when both products were used together, including enhanced fatty acid metabolism, improved defense against oxidative stress, and activation of 22 new genes that help cells make what they need to support organ strength, structure, and signaling.

Subsequent to acquiring the critical assets of LoveBiome, we introduced our Healthy Edge Stack, which includes Protandim® Nrf2 Synergizer® and LoveBiome® P84; and our Healthy Edge + MindBody GLP-1 System Stack, which includes Protandim® Nrf2 Synergizer®, the MindBody GLP-1 System® and LoveBiome® P84.

We continue to offer other popular stacks with products that complement one another with inner activation power for internal benefits that can be felt, external benefits that can be seen, or both.

We currently have additional products in development and additional product offerings that come with our acquisition of LoveBiome’s critical assets in October 2025. Any delays or difficulties in introducing compelling products or attractive initiatives or tools into our markets may have a negative impact on our revenue and our ability to attract new independent consultants and customers.

Compensation Plan for our Independent Consultants

On March 1, 2023, we launched a new compensation plan for our independent consultants in the United States, Japan, Australia, and New Zealand markets. We refer to this compensation plan as our Evolve Compensation Plan. On February 1, 2024, we launched the Evolve Compensation Plan in the Canada, Mexico, and Europe markets. On November 1, 2024, we launched an optimized version of the Evolve Compensation Plan in the United States, Japan, Australia, New Zealand, Canada, Mexico, and Europe markets. On March 1, 2025, we launched the Evolve Compensation Plan in other markets, including Taiwan, Hong Kong, and Singapore. In September 2025, we launched Iceland with the Evolve Compensation Plan and plan to do the same in any new markets.

Accounts

Because we primarily utilize a direct selling model for the distribution of a majority of our products, the success and growth of our business depends in large part on the effectiveness of our independent consultants to attract and retain customers to purchase our products and our ability to attract new and retain existing independent consultants. Changes in our product sales typically are the result of variations in product sales volume relating to fluctuations in the number of active independent consultants and customers purchasing our products. The number of active independent consultants and customers is, therefore, used by management as a key non-financial measure.

The following tables summarize the changes in our active accounts base by geographic region. These numbers have been rounded to the nearest thousand as of the dates indicated. For purposes of this report, we define “Active Accounts” as only those independent consultants and customers who have purchased from us at any time during the most recent three-month period, either for personal use or for resale.

Results of Operations

Three and nine months ended March 31, 2026 and 2025

Revenue. We generated net revenue of $43.7 million and $58.4 million during the three months ended March 31, 2026 and 2025, respectively. We generated net revenue of $140.2 million and $173.4 million during the nine months ended March 31, 2026 and 2025, respectively. The decrease in revenue for the three and nine months ended March 31, 2026 was primarily driven by declines in sales of our MindBody GLP-1 System®. Total sales of our MindBody GLP-1 System® decreased $9.6 million and $20.1 million during the three and nine months ended March 31, 2026, respectively. The decline in sales of our MindBody GLP-1 System® during the three months ended March 31, 2026 was slightly offset by sales of the LoveBiome product line, which we acquired in October 2025.

Foreign currency fluctuations positively impacted our revenue by $0.3 million, or 0.5%, during the three months ended March 31, 2026. Foreign currency fluctuations positively impacted our revenue by $0.7 million, or 0.4%, during the nine months ended March 31, 2026.

Americas. The following table sets forth revenue for the three and nine months ended March 31, 2026 and 2025 for the Americas region (in thousands):

Revenue in the Americas region for the three and nine months ended March 31, 2026 decreased $13.9 million, or 28.9%, and $32.2 million or 22.7%, respectively, from the prior year periods. The decrease in revenue for the three and nine months ended March 31, 2026 was primarily driven by decreased sales of our MindBody GLP-1 System® of $8.7 million and $17.4 million, respectively, and reductions in our total Active Accounts which decreased 25.7% compared to the prior year period.

Asia/Pacific & Europe. The following table sets forth revenue for the three and nine months ended March 31, 2026 and 2025 for the Asia/Pacific & Europe region and its principal markets (in thousands):

Revenue in the Asia/Pacific & Europe region decreased $0.8 million, or 7.7%, and $1.0 million, or 3.1%, for the three and nine months ended March 31, 2026, respectively, as compared to the prior year periods. Total Active Accounts in the region decreased 9.7% compared to the prior year period. In March 2025, we launched our MindBody GLP-1 System® in Japan and exclusively to our independent consultants in Australia, New Zealand, Europe, United Kingdom, Mexico and Thailand. Revenue within the Asia/Pacific & Europe region from our MindBody GLP-1 System® was $0.9 million and $2.7 million for the three and nine months ended March 31, 2026, respectively. Decreases in total Active Accounts and sales throughout our other product lines contributed to an overall decline in sales for the respective periods.

Overall, revenue in the Asia/Pacific & Europe region was positively impacted by foreign currency exchange rate fluctuations of approximately $0.1 million, or 1.2%, and $0.4 million, or 1.3%, during the three and nine months ended March 31, 2026, respectively, as compared to the prior year periods. Revenue in Japan was negatively impacted by foreign exchange rate fluctuations in the amount of approximately $0.2 million, or 2.8%, and $0.2 million or 1.1%, during the three and nine months ended March 31, 2026, respectively, as compared to the prior year periods. On a constant currency basis, revenue in Japan decreased 7.5% and 1.4% for the three and nine months ended March 31, 2026, respectively, as compared to the prior year periods. The decrease in revenue on a constant currency basis in Japan during three and nine months ended March 31, 2026 was due to decreases in total Active Accounts during the respective periods.

Globally, our sales and marketing efforts continue to be directed toward strengthening our core business through our fiscal year initiatives and building our worldwide sales. We plan to continue the refinement and expansion of our product offerings internationally during the remainder of fiscal year 2026 and beyond.

Cost of Sales. Cost of sales were $9.2 million and $11.1 million for the three months ended March 31, 2026 and 2025, respectively, resulting in gross profit percentages of 79.0% and 81.0%, respectively. Cost of sales were $31.6 million and $33.8 million for the nine months ended March 31, 2026 and 2025, respectively, resulting in gross profit percentages of 77.4% and 80.5%, respectively. The increase in cost of sales as a percentage of revenue is primarily due to increases in inventory obsolescence costs related to our MindBody GLP-1 System® of $0.2 and $2.6 million, along with increases in shipping and warehouse expenses during the three and three and nine months ended March 31, 2026, respectively.

Commissions and Incentives. Commissions and incentives expenses during the three months ended March 31, 2026 were $19.0 million, or 43.5% of revenue, as compared to $26.2 million, or 44.8% of revenue, for the three months ended March 31, 2025. Commissions and incentives expenses during the nine months ended March 31, 2026 were $59.6 million, or 42.5% of revenue, as compared to $79.0 million, or 45.6% of revenue, for the nine months ended March 31, 2025. The decrease in commissions and incentives expenses as a percentage of revenue compared to the prior year periods is primarily due to the timing and magnitude of promotional and incentive programs and changes to the mix of customers and independent consultants in our overall Active Accounts.

Commissions and incentives expenses, as a percentage of revenue, may fluctuate in future periods based on our ability to hold incentive trips and events and the timing and magnitude of compensation, incentive and promotional programs.

Selling, General and Administrative. Selling, general and administrative expenses during the three months ended March 31, 2026 were $13.9 million, or 31.7% of revenue, as compared to $17.1 million, or 29.2% of revenue, for the three months ended March 31, 2025. Selling, general and administrative expenses during the nine months ended March 31, 2026 were $44.5 million, or 31.8% of revenue, as compared to $50.5 million, or 29.1% of revenue, for the nine months ended March 31, 2025. The increase in selling, general and administrative expenses as a percentage of revenue during the three and nine months ended March 31, 2026 compared to the prior year periods is primarily due to overall decreases in sales for the comparable periods.

Total Other Income (Expense). During the three months ended March 31, 2026 we recognized total net other expense of $22,000 as compared to total net other income of $0.1 million for the three months ended March 31, 2025. During the nine months ended March 31, 2026 we recognized total net other expense of $0.1 million as compared to $0.2 million for the nine months ended March 31, 2025. Total net other income (expense) for the three and nine months ended March 31, 2026 and 2025 consisted primarily of interest income, offset by foreign currency gains and losses.

Income Tax Expense. We recognized income tax expense of $0.3 million and $0.6 million for the three and nine months ended March 31, 2026, respectively, as compared to $0.7 million and $2.0 million for the three and nine months ended March 31, 2025, respectively. The effective tax rate for the three and nine months ended March 31, 2026 was 17.8% and 13.2%, respectively, compared to 17.0% and 20.3% for the three and nine months ended March 31, 2025, respectively.

The change in the effective tax rate for the three and three and nine months ended March 31, 2026 compared to the prior year periods was primarily due to changes in taxable income and the impact of discrete items.

We expect that our effective tax rate will fluctuate slightly during the remainder of fiscal 2026 as the impact of discrete items and other permanent differences are recognized during the year; however, our tax rate can be impacted by various book to tax differences and fluctuations in our stock price that occur during the year which are difficult to forecast.

Liquidity and Capital Resources

Liquidity

Our primary liquidity and capital resource requirements are to finance the cost of our planned operating expenses and working capital (principally inventory purchases), fund capital expenditures, and service our debt, which includes any outstanding balances under our credit facility. We have generally relied on cash flow from operations to fund operating activities and we have, at times, incurred long-term debt in order to fund stock repurchases and strategic transactions.

As of March 31, 2026, our available liquidity was $12.5 million, which consisted of available cash and cash equivalents. This represents a decrease of $7.7 million from the $20.2 million in cash and cash equivalents as of June 30, 2025.

During the nine months ended March 31, 2026, our net cash provided by operating activities was $5.5 million as compared to $10.8 million during the nine months ended March 31, 2025. The decrease in cash provided by operating activities is primarily related to the payment of employee related incentive compensation and incentive trip expenses during the nine months ended March 31, 2026, previously accrued at June 30, 2025.

During the nine months ended March 31, 2026, our net cash used in investing activities was $6.3 million, as a result of the acquisition of LoveBiome in October 2025 and the purchase of fixed assets. During the nine months ended March 31, 2025, our net cash used in investing activities was $1.2 million, as a result of the purchase of fixed assets.

Cash used in financing activities during the nine months ended March 31, 2026 was $6.6 million as a result of our payment of cash dividends, repurchases of common stock, and shares purchased as payment of tax withholding upon vesting of equity awards, partially offset by proceeds from stock issued under our 2019 Employee Stock Purchase Plan (as amended, the “2019 ESPP”). Cash used in financing activities during the nine months ended March 31, 2025 was $4.4 million as a result of our payment of cash dividends, the repurchase of common stock, and shares purchased as payment of tax withholding upon vesting of equity awards, partially offset by proceeds from stock issued under our 2019 ESPP and stock option exercises.

At March 31, 2026 and June 30, 2025, the total amount of our foreign subsidiary cash was $6.1 million and $6.4 million, respectively. The federal tax reform legislation that was passed into law during December 2017 enacted a 100% dividend deduction for greater than 10% owned foreign corporations. Therefore, in the future, if needed, we expect to be able to repatriate cash from foreign subsidiaries without paying additional U.S. taxes.

At March 31, 2026, we had working capital (current assets minus current liabilities) of $19.2 million, compared to working capital of $23.7 million at June 30, 2025. We believe that our cash and cash equivalents balances and our ongoing cash flow from operations will be sufficient to satisfy our cash requirements for at least the next 12 months. The majority of our historical expenses have been variable in nature and as such, a potential reduction in the level of revenue would reduce our cash flow needs. In the event that our current cash balances and future cash flow from operations are not sufficient to meet our obligations or strategic needs, we would consider raising additional funds, which may not be available on terms that are acceptable to us, or at all. Our 2024 Credit Facility (as defined below), provides for a revolving line of credit in an aggregate principal amount not to exceed $5.0 million. We would also consider realigning our strategic plans including a reduction in capital spending and expenses.

Capital Resources

Shelf Registration Statement

On March 10, 2026, we filed a shelf registration statement on Form S-3 (the “2026 Shelf Registration”) with the Securities and Exchange Commission (“SEC”) that was declared effective on March 20, 2026, which permits us to offer up to $75 million of common stock, preferred stock, debt securities and warrants in one or more offerings and in any combination, including in units from time to time. Our 2026 Shelf Registration is intended to provide us with additional flexibility to access capital markets for general corporate purposes, which may include, among other purposes, working capital, capital expenditures, other corporate expenses and acquisitions of assets, licenses, products, technologies or businesses.

2024 Credit Facility

On April 12, 2024, we entered into a Loan Agreement, as amended (the “Loan Agreement”) with Bank of America, N.A., as Lender (the “Lender”). In connection with the Loan Agreement and on the same date, we, Lifeline Nutraceuticals Corporation, as Guarantor (the “Guarantor”), and the Lender also entered into a Continuing and Unconditional Guaranty (the “Continuing and Unconditional Guaranty”) and a Security and Pledge Agreement (the “Security and Pledge Agreement”). The Loan Agreement provides for a revolving line of credit in an aggregate principal amount not to exceed $5.0 million (the “Line of Credit” and collectively with the Loan Agreement, the Continuing and Unconditional Guaranty and the Security and Pledge Agreement, the “2024 Credit Facility”).

On September 22, 2025, we entered into an amendment to the Loan Agreement, which amended the 2024 Credit Facility (“Amendment No. 1”) to allow the proceeds of the credit to be also used for permitted acquisitions. On September 22, 2025, we also entered into a collateral assignment of, and grant of security interest in, the LoveBiome assets purchased by the Company.

In the event we borrow under the Line of Credit, interest will be payable commencing on the last day of each month following such borrowing until payment in full of all principal outstanding under the Line of Credit, with all unpaid principal and interest due on April 12, 2027 (the “Expiration Date”). The Line of Credit will bear interest at a rate per year equal to the sum of (i) the greater of the Term Secured Overnight Financing Rate Daily Floating Rate (as defined in the Loan Agreement) or 0.00%, plus (ii) 2.00%. Amounts under the Line of Credit may be repaid and re-borrowed from time to time until the Expiration Date.

Our obligations under the Loan Agreement are secured by a security interest in substantially all of the assets of the Company and the Guarantor, as further provided for in the Security and Pledge Agreement. Pursuant to the Continuing and Unconditional Guaranty, the Guarantor guarantees and promises to pay promptly to the Lender all indebtedness of the Company when due.

The Loan Agreement contains customary covenants, including affirmative and negative covenants that in certain circumstances restrict our ability to incur additional indebtedness, make certain investments, purchase or otherwise acquire all or substantially all the assets or equity interests of other companies, or transfer any part of the business or any assets of the Company or the Guarantor. The Loan Agreement requires us to maintain specified financial ratios and satisfy certain financial condition tests.

The Loan Agreement contains certain customary events of default, including, among other things, our failure to make required payments under the Loan Agreement, certain breaches of representations made by us or the Guarantor, insolvency or bankruptcy of the Company or the Guarantor, failure to have an enforceable first lien or security interest in any property given as security for the Loan Agreement, or our failure to comply with covenants set forth in the Loan Agreement. If an event of default occurs under the Loan Agreement, the obligation of the Lender to make any additional credit available to us may be terminated and the amounts outstanding may become immediately due and payable in the discretion of the Lender, provided that in the event of insolvency or bankruptcy of the Company or the Guarantor, all debts outstanding under the Loan Agreement will automatically become due and payable. Upon the occurrence of any default or after maturity, all amounts outstanding under the Loan Agreement will at the option of the Lender bear interest at a rate which is 2.00% higher than the rate of interest otherwise provided under the Loan Agreement.

As of the date of this report, there is no balance outstanding under the 2024 Credit Facility.

Commitments and Obligations

Please refer to Note 8 to the condensed consolidated financial statements contained in this report for information regarding our contingent liabilities.

Critical Accounting Policies and Estimates

We prepare our financial statements in conformity with accounting principles generally accepted in the United States of America. As such, we are required to make certain estimates, judgments, and assumptions that we believe are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the periods presented. Actual results could differ from these estimates. Our significant accounting policies are described in Note 2 to our consolidated financial statements. Certain of these significant accounting policies require us to make difficult, subjective, or complex judgments or estimates. We consider an accounting estimate to be critical if (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.

There are other items within our financial statements that require estimation but are not deemed critical as defined above. Changes in estimates used in these and other items could have a material impact on our financial statements. Management has discussed the development and selection of these critical accounting estimates with our Board of Directors, and our audit committee has reviewed the disclosures noted below.

Stock-Based Compensation

We use the fair value approach to account for stock-based compensation in accordance with current accounting guidance. We recognize compensation costs for awards with performance conditions when we conclude it is probable that the performance conditions will be achieved. We reassess the probability of vesting at each balance sheet date and adjust compensation costs based on our probability assessment.

Historically, our estimates and underlying assumptions have not materially deviated from our actual reported results and rates. However, we base the assumptions we use on our best estimates, which involves inherent uncertainties based on market conditions that are outside of our control. If actual results are not consistent with the assumptions we use, the stock-based compensation expense reported in our consolidated financial statements may not be representative of the actual economic cost of stock-based compensation. For example, if actual employee forfeitures significantly differ from our estimated forfeitures, we may be required to adjust our consolidated financial statements in future periods.

Income Taxes

The provision for income taxes includes income from U.S. and foreign subsidiaries taxed at statutory rates, the accrual or release of amounts for tax uncertainties, and U.S. tax impacts of foreign income in the U.S.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the carrying amounts of assets and liabilities on the financial statements and their respective tax bases. Deferred tax assets also are recognized for net operating losses and credit carryforwards. Deferred tax assets and liabilities are measured using the enacted rates applicable to taxable income in the years in which the temporary differences are expected to reverse and the credits are expected to be used. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. An assessment is made as to whether or not a valuation allowance is required to offset deferred tax assets. This assessment requires estimates as to future operating results, as well as an evaluation of the effectiveness of our tax planning strategies. These estimates are made on an ongoing basis based upon our business plans and growth strategies in each market and consequently, future material changes in the valuation allowance are possible. The valuation allowance reduces the deferred tax assets to an amount that management determined is more-likely-than-not to be realized.

We operate in and file income tax returns in the U.S. and numerous foreign jurisdictions with complex tax laws and regulations, which are subject to examination by tax authorities. The complexity of our global structure requires specialized knowledge and judgment in determining the application of tax laws in various jurisdictions. Years open to examination contain matters that could be subject to differing interpretations of applicable tax laws and regulations related to the amount and/or timing of income, deductions, and tax credits. We account for uncertain tax positions in accordance with Accounting Standards Codification 740, Income Taxes. This guidance prescribes a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized. The minimum threshold is defined as a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement.

Interest and penalties related to tax contingency or settlement items are recorded as a component of the provision for income taxes in our Consolidated Statements of Operations and Comprehensive Income. We record accruals for tax contingencies as a component of accrued liabilities or other long-term liabilities on our Consolidated Balance Sheet.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act of 1934, as amended) that are designed to ensure that the information required to be disclosed in the reports we file or submit under the Exchange Act of 1934, as amended, is (a) recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and (b) accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of the end of the period covered by this quarterly report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness and design and operation of such disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were designed and operating effectively as of March 31, 2026.

Changes in Internal Control over Financial Reporting

An evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 of the Exchange Act of 1934, as amended, was also performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of any change in our internal control over financial reporting that occurred during our last fiscal quarter. That evaluation did not identify any changes in our internal control over financial reporting during the three months ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations of Internal Control Over Financial Reporting

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in “Part I. Item 1A — Risk Factors” in our annual report on Form 10-K for the fiscal year ended June 30, 2025, filed on September 4, 2025. The risks and uncertainties described in such risk factors and elsewhere in this report have the potential to materially affect our business, financial condition, results of operations, cash flows, projected results and future prospects. We do not believe that there have been any material changes to the risk factors previously disclosed in our recent SEC filings, including our most recently filed Form 10-K, as referenced above.