Document

SEC Form 10-Q filed by Mannatech Incorporated

10-Q 1 mtex0630202510-q.htm 10-Q Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2025

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________.

Commission File No. 000-24657

MANNATECH, INCORPORATED

(Exact Name of Registrant as Specified in its Charter)


Texas		75-2508900
(State or other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
1410 Lakeside Parkway, Suite 200,
Flower Mound,	Texas	75028
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, including Area Code: (972) 471-7400

Securities registered pursuant to Section 12(b) of the Act:


Title of each class		Trading Symbol(s)	Name of each exchange on which registered
Common Stock,	par value $0.0001 per share	MTEX	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “accelerated filer”, “large accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging Growth Company

If an emerging growth company, indicated by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

As of August 5, 2025, the number of shares outstanding of the registrant’s sole class of common stock, par value $0.0001 per share, was 1,900,930.

MANNATECH, INCORPORATED

TABLE OF CONTENTS


Special Note Regarding Forward-Looking Statements			1
Part I – FINANCIAL INFORMATION
Item 1. Financial Statements			2
Condensed Consolidated Balance Sheets (unaudited)			2
Condensed Consolidated Statements of Operations (unaudited)			3
Condensed Consolidated Statements of Comprehensive Loss (unaudited)			3
Condensed Consolidated Statements of Shareholders’ Equity (unaudited)			4
Condensed Consolidated Statements of Cash Flows (unaudited)			5
Notes to Condensed Consolidated Financial Statements (unaudited)			7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			22
Company Overview			22
Results of Operations			24
Liquidity and Capital Resources			31
Significant Accounting Policies and Critical Estimates			33


Item 3. Quantitative and Qualitative Disclosures About Market Risk			35

Item 4. Controls and Procedures			35

Part II – OTHER INFORMATION
Item 1. Legal Proceedings			37

Item 1A. Risk Factors			37

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			38

Item 3. Defaults Upon Senior Securities			38

Item 4. Mine Safety Disclosures			38

Item 5. Other Information			38

Item 6. Exhibits			38

Signatures			40

Special Note Regarding Forward-Looking Statements

Certain disclosures and analyses in this Form 10-Q, including information incorporated by reference, may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995 that are subject to various risks and uncertainties. Opinions, forecasts, projections, guidance, or other statements other than statements of historical fact are considered forward-looking statements and reflect only current views about future events and financial performance. Some of these forward-looking statements include statements regarding:

•management’s plans and objectives for future operations;

•existing cash flows being adequate to fund future operational needs;

•future plans related to budgets, future capital requirements, market share growth, and anticipated capital projects and obligations;

•the realization of net deferred tax assets;

•the ability to curtail operating expenditures;

•global statutory tax rates remaining unchanged;

•the impact of future market changes due to exposure to foreign currency translations;

•the possibility of certain policies, procedures, and internal processes minimizing exposure to market risk;

•the impact of new accounting pronouncements on financial condition, results of operations, or cash flows;

•the outcome of new or existing litigation matters;

•the outcome of new or existing regulatory inquiries or investigations;

•other assumptions described in this report underlying such forward-looking statements.

Although we believe that the expectations included in these forward-looking statements are reasonable, these forward-looking statements are subject to certain events, risks, assumptions, and uncertainties, including those discussed below, the “Risk Factors” section in Part I, Item 1A of our Form 10-K for the year ended December 31, 2024, and elsewhere in this Form 10-Q and the documents incorporated by reference herein. If one or more of these risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results and developments could materially differ from those expressed in or implied by such forward-looking statements. For example, any of the following factors could cause actual results to vary materially from our projections:

•overall growth or lack of growth in the nutritional supplements industry;

•plans for expected future product development;

•changes in manufacturing costs;

•shifts in the mix of packs and products;

•the future impact of any changes to global associate career and compensation plans or incentives or the regulations governing such plans and incentives;

•the ability to attract and retain independent associates and preferred customers;

•new regulatory changes that may affect operations, products or compensation plans and incentives;

•ability of our outside suppliers and manufacturers to supply products in sufficient quantities and comply with

our product safety and quality standards or applicable law;

•the competitive nature of our business with respect to products and pricing;

•publicity related to our products or network marketing; and

•the political, social and economic climate of the countries in which we operate; and

•changes in trade policy in the United States and other countries, including the imposition of tariffs and

the resulting consequences, may adversely impact our business, results of operations and financial condition.

Forward-looking statements generally can be identified by use of phrases or terminology such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “approximates,” “predicts,” “projects,” “hopes,” “potential,” and “continues” or other similar words or the negative of such terms and other comparable terminology. Similarly, descriptions of Mannatech’s objectives, strategies, plans, goals, or targets contained herein are also considered forward-looking statements. Readers are cautioned when considering these forward-looking statements to keep in mind these risks, assumptions, and uncertainties and any other cautionary statements in this report, as all of the forward-looking statements contained herein speak only as of the date of this report.

Unless stated otherwise, all financial information throughout this report and in the Condensed Consolidated Financial Statements and related Notes include Mannatech, Incorporated and all of its subsidiaries on a consolidated basis and may be referred to herein as “Mannatech,” “the Company,” “its,” “we,” “us,” “our,” or “their.”

Our products are not intended to diagnose, cure, treat, or prevent any disease, and any statements about our products contained in this report have not been evaluated by the Food and Drug Administration, also referred to herein as the “FDA.”

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

MANNATECH, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS – (UNAUDITED)

(in thousands, except share and per share amounts)


ASSETS	June 30, 2025		December 31, 2024
Cash and cash equivalents	$	5,525	$	11,396
Restricted cash	550		550
Accounts receivable, net of allowance of $939 and $935	409		19
Income tax receivable	734		737
Inventories, net	12,587		10,405
Prepaid expenses and other current assets	1,890		1,755
Deferred commissions	730		1,259
Total current assets	22,425		26,121
Property and equipment, net	2,947		2,858
Operating lease right-of-use assets	2,059		2,094

Other assets	2,961		2,644
Deferred tax assets, net	1,780		1,770
Long-term restricted cash	610		569
Total assets	$	32,782	$	36,056
LIABILITIES AND SHAREHOLDERS’ EQUITY
Commissions and incentives payable	$	6,427	$	8,642
Accrued expenses	3,828		3,832
Deferred revenue	2,046		3,027
Accounts payable	5,402		2,070
Current portion of operating lease liabilities	1,085		1,178
Taxes payable	1,147		1,788
Current notes payable	—		84
Current portion of finance lease liabilities	284		275

Total current liabilities	20,219		20,896
Long-term notes payable	2,900		2,900
Operating lease liabilities, excluding current portion	1,562		1,576
Other long-term liabilities	1,600		1,390
Finance lease liabilities, excluding current portion	537		680
Total liabilities	26,818		27,442

Commitments and contingencies

Shareholders’ equity:
Preferred stock, $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding	—		—
Common stock, $0.0001 par value, 99,000,000 shares authorized, 2,742,857 shares issued and 1,900,930 shares outstanding as of June 30, 2025 and 2,742,857 shares issued and 1,884,814 shares outstanding as of December 31, 2024	—		—
Additional paid-in capital	33,074		33,027
(Accumulated deficit) retained earnings	(4,653)		1,189
Accumulated other comprehensive loss	(2,895)		(5,666)
Treasury stock, at average cost, 841,927 shares as of June 30, 2025 and 858,043 shares as of December 31, 2024	(19,562)		(19,936)
Total shareholders’ equity	5,964		8,614
Total liabilities and shareholders’ equity	$	32,782	$	36,056

MANNATECH, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS – (UNAUDITED)

(in thousands, except per share information)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Net sales	$	25,679	$	27,740	$	52,242	$	57,133
Cost of sales	6,778		6,363		13,605		12,658
Gross profit	18,901		21,377		38,637		44,475

Operating expenses:
Commissions and incentives	9,567		11,660		20,120		23,345
Selling and administrative expenses	10,777		10,860		20,793		21,452


Total operating expenses	20,344		22,520		40,913		44,797

Loss from operations	(1,443)		(1,143)		(2,276)		(322)
Interest expense, net	(102)		(105)		(175)		(87)
Other (expense) income, net	(2,744)		1,120		(3,162)		1,990
(Loss) income before income taxes	(4,289)		(128)		(5,613)		1,581

Income tax expense	(23)		(496)		(229)		(1,025)
Net (loss) income	$	(4,312)	$	(624)	$	(5,842)	$	556

(Loss) income per common share:
Basic	$	(2.27)	$	(0.33)	$	(3.07)	$	0.30
Diluted	$	(2.27)	$	(0.33)	$	(3.07)	$	0.30

Weighted-average common shares outstanding:
Basic	1,901		1,885		1,901		1,885
Diluted	1,901		1,885		1,901		1,885

MANNATECH, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS – (UNAUDITED)

(in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Net (loss) income	$	(4,312)	$	(624)	$	(5,842)	$	556
Foreign currency translations	2,533		(1,656)		2,771		(3,087)
Comprehensive loss	$	(1,779)	$	(2,280)	$	(3,071)	$	(2,531)

See accompanying notes to unaudited condensed consolidated financial statements.

MANNATECH, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY – (UNAUDITED)

(amounts in thousands, except share data


	Common Stock, $0.0001 par value
	Number of Shares	Amount		Additional paid-in capital		(Accumulated deficit) retained earnings		Accumulated other comprehensive loss		Treasury stock		Total shareholders’ equity
Balance at January 1, 2025	1,884,814	$	—	$	33,027	$	1,189	$	(5,666)	$	(19,936)	$	8,614
Net loss	—	—		—		(1,530)		—		—		(1,530)

Charge related to stock-based compensation	—	—		23		—		—		—		23
Issuance of unrestricted shares	16,116	—		(134)		—		—		374		240




Foreign currency translations	—	—		—		—		238		—		238
Balance at March 31, 2025	1,900,930	$	—	$	32,916	$	(341)	$	(5,428)	$	(19,562)	$	7,585

Net loss	—	—		—		(4,312)		—		—		(4,312)

Charge related to stock-based compensation	—	—		158		—		—		—		158



Foreign currency translations	—	—		—		—		2,533		—		2,533
Balance at June 30, 2025	1,900,930	$	—	$	33,074	$	(4,653)	$	(2,895)	$	(19,562)	$	5,964


	Common Stock, $0.0001 par value
	Number of Shares	Amount		Additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Treasury stock		Total shareholders’ equity
Balance at January 1, 2024	1,860,154	$	—	$	33,309	$	(1,301)	$	(1,015)	$	(20,509)	$	10,484
Net income	—	—		—		1,180		—		—		1,180

Charge related to stock-based compensation	—	—		12		—		—		—		12
Issuance of unrestricted shares	24,660	—		(373)		—		—		573		200




Foreign currency translations	—	—		—		—		(1,431)		—		(1,431)
Balance at March 31, 2024	1,884,814	$	—	$	32,948	$	(121)	$	(2,446)	$	(19,936)	$	10,445

Net loss	—	—		—		(624)		—		—		(624)

Charge related to stock-based compensation	—	—		34		—		—		—		34



Foreign currency translations	—	—		—		—		(1,656)		—		(1,656)
Balance at June 30, 2024	1,884,814	$	—	$	32,982	$	(745)	$	(4,102)	$	(19,936)	$	8,199

See accompanying notes to unaudited condensed consolidated financial statements.

MANNATECH, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – (UNAUDITED)

(in thousands)


	Six Months Ended June 30,
	2025		2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(5,842)	$	556
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization	571		803
Non-cash operating lease expense	833		789
Provision for inventory losses	48		370
Provision for allowance for credit losses	182		106
Loss on retirement of property and equipment	—		126
Gain on disposal of subsidiary entity	—		(226)
Unrealized loss (gain) from foreign exchange	2,713		(1,895)
Charge related to stock-based compensation	421		246

Deferred income taxes	(10)		(79)
Changes in operating assets and liabilities:
Accounts receivable	(553)		(133)
Income tax receivable	2		45
Inventories	(1,815)		520
Prepaid expenses and other current assets	(152)		26
Deferred commissions	537		206

Other assets	(258)		(43)
Accounts payable	3,278		(506)
Accrued expenses	(953)		(850)
Other long-term liabilities	209		(651)
Taxes payable	(792)		326
Commissions and incentives payable	(2,510)		64
Deferred revenue	(995)		(592)

Net cash used in operating activities	(5,086)		(792)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment	(631)		(143)

Cash used in investing activities	(631)		(143)
CASH FLOWS FROM FINANCING ACTIVITIES:




Proceeds from notes payable	—		3,600
Repayment of note payable	(84)		—
Repayment of finance lease obligations and other long-term liabilities	(162)		(491)
Net cash (used in) provided by financing activities	(246)		3,109
Effect of currency exchange rate changes on cash and cash equivalents	133		(751)
Net (decrease) increase in cash, cash equivalents, and restricted cash	(5,830)		1,423
Cash, cash equivalents, and restricted cash at the beginning of the period	12,515		9,387
Cash, cash equivalents, and restricted cash at the end of the period	$	6,685	$	10,810

See accompanying notes to unaudited condensed consolidated financial statements.


	Six Months Ended June 30,
	2025		2024
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Income taxes paid	$	—	$	586
Interest paid on finance leases and other financing arrangements	$	266	$	160


NON-CASH INVESTING AND FINANCING ACTIVITIES
Assets acquired through other financing arrangements	$	—	$	446


Operating lease right-of-use assets acquired in exchange for new operating lease liabilities	$	639	$	304

See accompanying notes to unaudited condensed consolidated financial statements.

MANNATECH, INCORPORATED AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Mannatech, Incorporated (together with its subsidiaries, the “Company”), located in Flower Mound, Texas, was incorporated in the state of Texas on November 4, 1993 and is listed on the Nasdaq Global Select Market under the symbol “MTEX.” The Company develops, markets, and sells high-quality, proprietary nutritional supplements, skin care and anti-aging products, and weight-management products. We currently sell our products into three regions: (i) the Americas (the United States, Canada and Mexico); (ii) EMEA (Austria, the Czech Republic, Denmark, Estonia, Finland, Germany, the Republic of Ireland, Namibia, the Netherlands, Norway, South Africa, Spain, Sweden and the United Kingdom); and (iii) Asia/Pacific (Australia, Japan, New Zealand, the Republic of Korea, Singapore, Thailand, Hong Kong, Taiwan and China).

The Company sells its products principally through network marketing distribution channels via its active associates (“independent associate” or “associates” or “distributors”) and its “preferred customers,” Active business building associates and preferred customers purchase the Company’s products at published wholesale prices. The Company cannot distinguish products sold for personal use from other sales, when sold to associates, because it is not involved with the products after delivery, other than usual and customary product warranties and returns. Only associates are eligible to earn commissions and incentives. We also ship our products to customers in the following countries: Belgium, France, Greece, Italy, Luxembourg, and Poland. The Company operates a non-direct selling business in mainland China. Our subsidiary in China, Meitai Daily Necessity & Health Products Co., Ltd. (“Meitai”), is operating as a traditional retailer under a cross-border e-commerce model in China. Meitai cannot legally conduct a direct selling business in China unless it acquires a direct selling license in China.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with instructions for Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, the Company’s condensed consolidated financial statements and footnotes contained herein do not include all of the information and footnotes required by GAAP to be considered “complete financial statements”. However, in the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements and footnotes contain all adjustments, including normal recurring adjustments, considered necessary for a fair presentation of the Company’s consolidated financial information as of, and for, the periods presented. The Company cautions that its consolidated results of operations for an interim period are not necessarily indicative of its consolidated results of operations to be expected for its fiscal year. The December 31, 2024 consolidated balance sheet was included in the audited consolidated financial statements in the Company’s annual report on Form 10-K for the year ended December 31, 2024 and filed with the United States Securities and Exchange Commission (the “SEC”) on March 25, 2025 (the “2024 Annual Report”), which includes all disclosures required by GAAP. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company included in the 2024 Annual Report.

Principles of Consolidation

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

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in accordance with GAAP requires the use of estimates that affect the reported value of assets, liabilities, revenues and expenses. These estimates are based on historical experience and various other factors. The Company continually evaluates the information used to make these estimates as the business and economic environment changes. Historically, actual results have not varied materially from the Company’s estimates and the Company does not currently anticipate a significant change in its assumptions related to these estimates. However, actual results may differ from these estimates under different assumptions or conditions.

The use of estimates is pervasive throughout the condensed consolidated financial statements, but the accounting policies and estimates considered the most significant are described in this note to the condensed consolidated financial statements.

Significant Accounting Policies

Our significant accounting policies are described in the notes to our consolidated financial statements for the year ended December 31, 2024 included in our 2024 Annual Report. There have been no significant changes in our accounting policies or the application thereof during the period ending June 30, 2025 .

MANNATECH, INCORPORATED AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less at the date of acquisition to be cash equivalents. Cash and cash equivalents was $5.5 million at June 30, 2025 and $11.4 million at December 31, 2024. The Company includes in its cash and cash equivalents credit card receivables due from its credit card processor, as the cash proceeds from credit card receivables are received within 24 to 72 hours. At June 30, 2025 and December 31, 2024, credit card receivables were $2.0 million and $1.6 million, respectively, and cash and cash equivalents held in bank accounts in foreign countries totaled $2.5 million and $5.1 million at June 30, 2025 and December 31, 2024, respectively. The Company invests cash in liquid instruments, such as money market funds and interest-bearing deposits. The Company holds cash in high quality financial institutions and does not believe it has an excessive exposure to credit concentration risk.

Restricted Cash

The Company is required to restrict cash for: (i) direct selling insurance premiums and credit card sales in the Republic of Korea; (ii) reserves related to credit card sales in the United States and Canada; and (iii) the Australia building lease collateral. At June 30, 2025 and December 31, 2024, our total restricted cash was $1.2 million and $1.1 million, respectively.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Company's condensed consolidated balance sheets to the total amount presented in the condensed consolidated statement of cash flows (in thousands):


	June 30, 2025		December 31, 2024
Cash and cash equivalents	$	5,525	$	11,396
Current restricted cash	550		550
Long-term restricted cash	610		569
Cash, cash equivalents, and restricted cash	$	6,685	$	12,515

Accounts Receivable, net

Accounts receivable are carried at their estimated collectible amounts. Receivables are created upon shipment of an order if the credit card payment is rejected or does not match the order total. As of June 30, 2025 and December 31, 2024, receivables consisted primarily of amounts due from preferred customers and associates.

The Company's accounts receivable balances, net, are presented below (in thousands):


	June 30, 2025		December 31, 2024
Accounts receivable, net	$	409	$	19

In accordance with Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASC 326"), the Company assesses collectability by reviewing accounts receivable on a collective basis where similar characteristics exist and on an individual basis when the Company identifies specific customers with known disputes or collectability issues. Expected loss estimates are determined utilizing an aging schedule. In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status and makes judgments about the creditworthiness of customers based on ongoing credit evaluations. The Company also considers customer-specific information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data.

At June 30, 2025 and June 30, 2024, the Company held an allowance for credit losses of $0.9 million and $1.4 million, respectively.


	June 30, 2025		June 30, 2024
Allowance for credit losses at beginning of period	$	935	$	1,278
Provision in current period	176		106
Accounts charged off against the allowance	(172)		(20)
Allowance for credit losses at end of period	$	939	$	1,364

Inventories

Inventories consist of raw materials, finished goods, and promotional materials that are stated at the lower of cost (using standard costs that approximate average costs) or net realizable value. The Company periodically reviews inventories for obsolescence and any inventories identified as obsolete are reserved or written off.

MANNATECH, INCORPORATED AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Other Assets

Other Assets consisted of the following (in thousands):


	June 30, 2025		December 31, 2024
Investment in Korea Mutual Aid Cooperative & Consumer	$	1,354	$	1,255
Deposits for building leases	1,370		1,152
Manapol Trademark	237		237
	$	2,961	$	2,644

The Company accounts for its investment in Korea Mutual Aid Cooperative & Consumer at its initial investment amount, in accordance with ASC 321, Investments - Equity Securities (“ASC 321”). This guidance offers an alternative to the requirement of carrying equity interests at fair value as per ASC 820, Fair Value Measurement. The measurement alternative is applicable to certain equity interests without readily determinable fair values that fall within the scope of ASC 321 and are otherwise required to be measured at fair value. The application of this measurement alternative is optional and is applied upon the acquisition of an equity interest.

Accrued Expenses

Accrued expenses consisted of the following (in thousands):


	June 30, 2025		December 31, 2024
Accrued compensation	$	1,307	$	1,320

Accrued legal and accounting fees	864		823
Customer deposits and sales returns	339		480
Other accrued operating expenses	471		530
Accrued shipping and handling costs	331		306
Accrued sales and other taxes	176		157
Accrued travel expenses related to corporate events	173		127
Accrued inventory purchases	137		45
Accrued royalties	30		39
Accrued rent expense	—		5
	$	3,828	$	3,832

MANNATECH, INCORPORATED AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Other Long-Term Liabilities

Other long-term liabilities consisted of the following (in thousands). See Note 9, Employee Benefit Plans, of the Company’s 2024 Annual Report for more information.


	June 30, 2025		December 31, 2024
Government required severance	$	1,031	$	853
Accrued lease restoration costs	353		326
Defined benefit plan obligation	216		211
	$	1,600	$	1,390

Revenue Recognition

The Company’s revenue is derived from sales of individual products and associate fees or, in certain geographic markets, starter packs. Substantially all of the Company’s product sales are made at published wholesale prices to associates and preferred customers. The Company records revenue net of any sales taxes and records a reserve for expected sales returns based on its historical experience. The Company's shipping terms with customers are such that ownership transfers upon delivery to the freight carrier, satisfying the Company's performance obligation. The Company's deferred revenue balances related to product orders in transit were $0 at each of June 30, 2025 and December 31, 2024. The Company's remaining performance obligations related to associate fees were $0.1 million at both June 30, 2025 and December 31, 2024. These amounts are included in deferred revenue on the accompanying Condensed Consolidated Balance Sheets, respectively.

Orders placed by associates or preferred customers constitute our contracts with customers. Product sales placed in the form of an automatic order contain two performance obligations: (a) the sale of the product and (b) the loyalty program. The Company's customer loyalty program conveys a material right to the customer to redeem loyalty points for the purchase of products. For these contracts, the Company accounts for each of these obligations separately as they are each distinct. The transaction price is allocated between the product sale and the loyalty program on a relative standalone selling price basis. Sales placed through a one-time order contain only the first performance obligation noted above — the delivery of the product. Payments are made immediately through credit card upon purchase of the products.

The Company provides associates with access to a complimentary three-month package for the Success Tracker™ and Mannatech+ online business tools with the first payment of an associate fee. The first payment of an associate fee contains three performance obligations: (a) the associate fee, whereby the Company provides an associate with the right to earn commissions, bonuses and incentives for a year, (b) three months of complimentary access to utilize the Success Tracker™ online tool and (c) three months of complimentary access to utilize the Mannatech+ online business tool. The transaction price is allocated between the three performance obligations on a relative standalone selling price basis and revenue is recognized over the period that access to the tools is active. Associates do not have complimentary access to online business tools after the first contractual period.

With regard to both of the aforementioned contracts, the Company determines the standalone selling prices by using observable inputs.

Deferred Revenue

The Company defers certain components of its revenue. Deferred revenue consisted of: (i) revenue from the loyalty program; (ii) prepaid registration fees from customers planning to attend a future corporate-sponsored event; and (iii) prepaid annual associate fees.

The table below presents the changes to deferred revenue balances (in thousands).


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Total deferred revenue at beginning of the period	$	2,322	$	4,235	$	3,027	$	4,786
Amount recognized as revenue during the period that is included in beginning of the period	(801)		(2,090)		(2,250)		(5,823)
New deferrals at the end of the period, net	525		2,007		1,269		5,189
Total deferred revenue at end of the period	$	2,046	$	4,152	$	2,046	$	4,152

MANNATECH, INCORPORATED AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company’s customer loyalty program conveys a material right to the customer as it provides the promise to redeem loyalty points for the purchase of products, which is based on earning points through placing consecutive qualified orders. The Company factors in breakage rates, which is the percentage of the loyalty points that are expected to be forfeited or expire, for purposes of revenue recognition. Breakage rates are estimated based on historical data and can be reasonably and objectively determined.

The deferred revenue associated with the loyalty program at June 30, 2025 and June 30, 2024 was $2.0 million and $2.9 million, respectively.


	Three Months Ended June 30,				Six Months Ended June 30,
Loyalty program (in thousands)	2025		2024		2025		2024
Loyalty deferred revenue at beginning of the period	$	2,231	$	3,056	$	2,921	$	3,242
Loyalty points forfeited or expired	(437)		(692)		(1,088)		(1,410)
Loyalty points used	(1,726)		(2,137)		(4,042)		(4,518)
Loyalty points vested	1,613		1,820		3,890		4,733
Loyalty points unvested	291		814		291		814
Loyalty deferred revenue at end of period	$	1,972	$	2,861	$	1,972	$	2,861

Deferred Commissions

The Company defers commissions on (i) the sales of products shipped but not received by customers by the end of the respective period (up to the change in shipping terms with the customers, which occurred during the quarter ended September 30,2024) and (ii) the loyalty program. Deferred commissions are incremental costs and are charged to expense when the related revenue is recognized.

The table below illustrates the changes to deferred commission balances (in thousands).


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Deferred commissions at beginning of the period	$	761	$	1,836	$	1,259	$	2,130
Amount recognized as commissions expense	(278)		(883)		(857)		(2,294)
New commission deferrals at the end of the period	247		957		328		2,074
Total deferred commissions at end of the period	$	730	$	1,910	$	730	$	1,910

Sales Refunds and Allowances

The Company utilizes the expected value method, as set forth by Accounting Standard Codification ("ASC") Topic 606 Revenue from Contracts with Customers ("ASC 606"), to estimate the sales returns and allowance liability by taking the weighted average of the sales return rates over a rolling six-month period. The Company allocates the total amount recorded within the sales return and allowance liability as a reduction of the overall transaction price for the Company’s product sales. The Company deems the sales refund and allowance liability to be variable consideration.

Historically, sales returns have not materially changed through the years, as the majority of our customers who return their merchandise do so within the first 90 days after the original sale. Sales returns have historically averaged 0.5% or less of our gross sales.

As of each of the periods shown below, our sales return reserve consisted of the following (in thousands):


	June 30, 2025		June 30, 2024
Sales reserve at beginning of period	$	56	$	41
Provision in current period	373		405
Returns charged off against the reserve	(372)		(387)
Sales reserve at end of period	$	57	$	59

MANNATECH, INCORPORATED AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Shipping and Handling Costs

The Company records inbound freight as a component of inventory and cost of sales. The Company records freight and shipping fees collected from its customers as fulfillment costs. Freight and shipping fees are accounted for as activities to fulfill the promise to transfer the products to the customer, not as a separate performance obligation.

Commissions and Incentives

Associates earn commissions and incentives based on their direct and indirect commissionable net sales over each month of the fiscal year. The Company accrues commissions and incentives when earned by associates and pays commissions on product and pack sales on a monthly basis.

Comprehensive Loss and Accumulated Other Comprehensive Loss

Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources and includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. The Company’s comprehensive loss consists of the Company’s net loss, foreign currency translation adjustments from its Japan, Republic of Korea, Denmark, Norway, Sweden, Mexico, Taiwan and China operations, remeasurement of intercompany balances of a long-term-investment nature from its Mexico, Taiwan, and Cyprus operations, and changes in the pension obligation for its Japanese employees.

Accounting Pronouncements Issued but Not Yet Effective

Income Tax Reporting (ASU 2023-09) — Income Taxes (Topic 740): Improvements to Income Tax Disclosures(“ASU 2023-09”). In December 2023, the FASB issued accounting guidance to expand the annual disclosure requirements for income taxes, primarily related to the rate reconciliation and income taxes paid. This guidance is effective January 1, 2025, with early adoption permitted. This guidance can be applied prospectively or retrospectively. The Company is currently evaluating the disclosure impacts of ASU 2023-09 on its consolidated financial statements as well as the impacts to its financial reporting process and related internal controls.

Income Statement Expenses (ASU 2024-03) — Income Statement (Subtopic 220-40) - Reporting Comprehensive

Income - Expense Disaggregation Disclosures. In November 2024, the FASB issued accounting guidance which is intended to

improve expense disclosures, primarily by requiring disclosure of disaggregated information about certain income statement

expense line items on an annual and interim basis. The ASU does not change the expense captions an entity presents on the face

of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures

within the footnotes to the financial statements. ASU 2024-03 becomes effective January 1, 2027. The Company is currently

evaluating the disclosure impacts of ASU 2024-03 on its consolidated financial statements as well as the impacts to its financial

reporting process and related internal controls.

Credit Losses (ASU 2025-05) – Financial Instruments-Credit Losses (Topic 326) - Measurement of Credit Losses for Accounts Receivable and Contract Assets. In July 2025, the FASB issued accounting guidance which introduces a practical expedient for the application of the current expected credit loss (“CECL”) model to current accounts receivable and contract assets. This guidance is effective beginning in the first quarter of fiscal year 2027 on a prospective basis, with early adoption permitted. The Company is currently evaluating the impacts of ASU 2025-05 on its consolidated financial statements as well as the impacts to its financial reporting process and related internal controls.

Other recently issued accounting pronouncements did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

MANNATECH, INCORPORATED AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2: INVENTORIES

Inventories consist of raw materials, finished goods, and promotional materials. The Company provides an allowance for any slow-moving or obsolete inventories. The allowance for slow-moving inventory obsolescence was $0.2 million and $0.6 million at June 30, 2025 and December 31, 2024, respectively.

Inventories as of June 30, 2025 and December 31, 2024, consisted of the following (in thousands):


	June 30, 2025		December 31, 2024
Raw materials	$	3,792	$	4,438
Finished goods and promotional materials	8,795		5,967

Total	$	12,587	$	10,405

NOTE 3: INCOME TAXES

For the three and six months ended June 30, 2025, the Company’s effective tax rate was (0.5)% and (4.1)%, respectively. For the three and six months ended June 30, 2024, the Company's effective tax rate was (277.4)% and 74.8%, respectively. For the three and six months ended June 30, 2025 and 2024, the Company's effective tax rate was determined based on the estimated annual effective income tax rate. The effective tax rate for the three months ended June 30, 2025 and June 30, 2024, was different from the federal statutory rate due to the mix of earnings across jurisdictions and the associated valuation allowances recorded on losses in certain jurisdictions.

NOTE 4: NOTES PAYABLE

Notes payable were $2.9 million and $3.0 million as of June 30, 2025 and December 31, 2024, respectively.

The current portion was $0 and $0.1 million at June 30, 2025 and December 31, 2024, respectively, as a result of insurance financing arrangements.

The long-term portion of notes payable relates to three unsecured notes, described below. The long-term portion of notes payable was $2.9 million at each of June 30, 2025 and December 31, 2024.

On April 23, 2024, the Company issued an unsecured note payable to Jade Capital in the amount of $2.5 million. The note bears interest at 16% per annum and requires quarterly interest payments beginning June 30, 2024. The note is due in full on September 30, 2026. The Company has the right to prepay all or a portion of the Promissory Note at any time without premium or penalty. Tyler Rameson is an independent member of Mannatech's Board of Directors, and is the managing member of Jade Capital. As of June 30, 2025, there was no current portion and the long-term portion of the balance was $2.0 million.

On April 23, 2024, the Company issued an unsecured note payable to J. Stanley Fredrick in the amount of $1.0 million. The note bears interest at 16% per annum and requires quarterly interest payments beginning June 30, 2024. The note is due in full on September 30, 2026. The Company has the right to prepay all or a portion of the Promissory Note at any time without premium or penalty. Mr. Fredrick is the Chairman of Mannatech's Board of Directors. As of June 30, 2025, there was no current portion and the long-term portion of the balance was $0.8 million.

On April 23, 2024, the Company issued an unsecured note payable to Kevin Robbins in the amount of $0.1 million. The note bears interest at 16% per annum and requires quarterly interest payments beginning June 30, 2024. The note is due in full on September 30, 2026. The Company has the right to prepay all or a portion of the Promissory Note at any time without premium or penalty. Mr. Robbins is a member of Mannatech's Board of Directors. As of June 30, 2025, there was no current portion and the long-term portion of the balance was $0.1 million.

As of June 30, 2025, the Company's future principal payments on notes payable were as follows (in thousands):









Principal Payments	Remaining 2025		2026		Thereafter		Total

Jade Capital Note	$	—	$	2,014	$	—	$	2,014
J.S. Fredrick Note	—		806		—		806
K. Robbins Note	—		80		—		80
Total	$	—	$	2,900	$	—	$	2,900

NOTE 5: STOCK-BASED COMPENSATION

Stock Option Plan

MANNATECH, INCORPORATED AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company currently has one active stock-based compensation plan, the Mannatech, Incorporated 2017 Stock Incentive Plan, which was adopted by the Company’s Board of Directors (the "Board") on April 17, 2017 and was approved by its shareholders on June 8, 2017, and subsequently amended by the Board in February 2019, which amendment was approved by the Company's shareholders on June 11, 2019 (as amended, the "2017 Plan"). The Board has reserved a maximum of 370,000 shares of our common stock that may be issued under the 2017 Plan (subject to adjustments for stock splits, stock dividends or other changes in corporate capitalization). As of June 30, 2025, the Company had a total of 36,188 shares available for grant under the 2017 Plan, which expires on April 16, 2027.

The 2017 Plan provides for grants of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock and performance stock units to our employees, board members, and consultants. However, only employees of the Company and its corporate subsidiaries are eligible to receive incentive stock options. The exercise price per share for all stock options will be no less than the market value of a share of common stock on the date of grant. Any incentive stock option granted to an employee owning more than 10% of our common stock will have an exercise price of no less than 110% of our common stock’s market value on the grant date.

The majority of stock options vest over two or three years, and generally are granted with a term of ten years, or five years in the case of an incentive option granted to an employee who owns more than 10% of our common stock.

The Company is required to measure and recognize compensation expense related to any outstanding and unvested stock options in its consolidated financial statements using a fair-value based option-pricing model. The Company records stock-based compensation expense related to granting stock options in selling and administrative expenses. The fair value of the stock option award is calculated using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires us to apply judgment and use subjective assumptions about expected dividend yields, risk-free interest rates, price volatility related to the underlying shares, and the expected stock option life, including forfeitures.

During the six months ended June 30, 2025 and 2024, the Company granted 68,000 and 10,000 stock options, respectively. The weighted average fair value of stock options granted during the six months ended June 30, 2025 and 2024 was approximately $6.06 and $4.67, respectively.

The following assumptions were used to calculate the fair value of stock options granted:


	June 2025 Grants
Estimated fair value per share of options granted:	$	6.08
Assumptions:
Annualized dividend yield	—		%
Risk-free rate of return	3.9% - 4.0%
Common stock price volatility	68.8		%
Expected average life of stock options (in years)	4.5

The computation of the expected volatility assumption used in the Black-Scholes calculations for new grants is based on historical volatility of the Company’s stock. The expected life assumptions are based on the Company’s historical employee exercise and forfeiture behavior.

Stock Grants

On March 11, 2024, the Company issued a grant of 8,187 restricted stock units (“RSUs”) of our common stock to our Chief Executive Officer. Under the terms of the stock grant, the grant is available for 18 months and will not vest until Mannatech's stock price averages $15.00 per share (i.e., the volume weighted price) for 60 consecutive days. If the contingency is not met within the 18-month period, the grant will lapse and will not be awarded.

The Company is required to measure and recognize compensation expense related to the grant in its consolidated financial statements using a fair-value based model. The Company has determined the fair value of the grant is $0.1 million. Accordingly, the Company has recognized compensation expense related to the grant of $10 thousand and $19 thousand for the three and six months ended June 30, 2025, respectively.

MANNATECH, INCORPORATED AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company recognized compensation expense related to the fair values of options and RSUs as follows for the three and six months ended June 30 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Total gross compensation expense	$	158	$	34	$	181	$	46
Total tax benefit associated with compensation expense	(6)		(6)		(7)		(8)
Total net compensation expense	$	152	$	28	$	174	$	38

As of June 30, 2025, the Company expects to record compensation expense related to stock options and RSUs in the future as follows (in thousands):

Six months
ending
December 31,
2025

Years ending December 31,

Total gross unrecognized compensation expense