10q10k10q10k.net

What changed in MANNATECH INC's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of MANNATECH INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+242 added−239 removedSource: 10-K (2025-03-26) vs 10-K (2024-03-28)

Top changes in MANNATECH INC's 2024 10-K

242 paragraphs added · 239 removed · 191 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

64 edited+7 added−9 removed171 unchanged
Biggest changeCurrently, products in this category are only offered in Korea. 5 Table of Contents The following table summarizes our global product offerings, by category: Product Category Representative Products Integrative Health Ambrotose ® Complex, Ambrotose AO ® , Advanced Ambrotose ® , Ambrotose Life ® Catalyst™, Cognitate ® , Manapol ® Powder, MannaBears ® , MultiKids, Nutriverus™, Optimal Support Packets, PhytoMatrix ® , PLUS™, Chaga Cafe, Glycentials™, MannaTea™, PhytoCleanse, GlycoCafe®, MightyBears ® , MannaGel™, Tru-C™ and TruCoffee ® Targeted Health BounceBack ® , CardioBALANCE ® , GI-ProBalance ® , GI-Zyme ® , GI-Defense®, Blood Sugar ProBalance, ImmunoSTART ® , Manna-C ™, MannaBOOM ® , MannaCLEANSE™, Omega-3 with Vitamin D3, PhytAloe ® , I-Start, MannaAloe ® with AloePrime ® , Chlorophyll, MANNAGEL™, MegaKids, GlyCollagen con Aloe Prime, M Gold+ con aloe Prime™ and GlycoForce + con aloePrime™ , EnzymeProBalance and Trulu ™ AM/PM Weight and Fitness OsoLean ® , SPORT™, TruHealth™ Fat Loss System, including: TruHealth™ Shake, TruHealth™ Cleanse, TruSHAPE™, EM∙PACT ® and Mannashake™ Skin Care Emprizone ® , FIRM with Ambrotose ® , FreshDen ® , Luminovation™ and MannaDent Essentials Catalyst™ Multivitamin, Eye Support, Liver Support, Joint Support SUPERFOOD, Sleep Support gummies and Stress Support gummies Home Living Organt® and PURO A significant portion of our revenue is derived from our Ambrotose, Ambrotose Life ® , TruHealth ™ , Manapol®, and Optimal Support Packets products.
Biggest changeEssentials , a sub-category of Targeted Health, offers a variety of dietary supplements that are formulated with a simpler ingredient profile, at a price point that is intended to be a value-add for preferred customers and associates. 5 The following table summarizes our global product offerings, by category: Product Category Representative Products Integrative Health Ambrotose ® Complex, Ambrotose AO ® , Advanced Ambrotose ® , Ambrotose Life ® Catalyst™, Cognitate ® , Manapol ® Powder, MannaBears ® , MultiKids, Nutriverus™, Optimal Support Packets, PhytoMatrix ® , PLUS™, Chaga Cafe, Glycentials™, MannaTea™, PhytoCleanse, MightyBears ® , MannaGel™, Tru-C™, TruCoffee ®, TruEdge Coffee and TruEdge Energy Targeted Health BounceBack ® , CardioBALANCE ® , GI-ProBalance ® , GI-Zyme ® , GI-Defense®, Blood Sugar ProBalance, ImmunoSTART ® , Manna-C ™, MannaBOOM ® , MannaCLEANSE™, Omega-3 with Vitamin D3, PhytAloe ® , I-Start, MannaAloe ® with AloePrime ® , Chlorophyll, MANNAGEL™, MegaKids, GlyCollagen con Aloe Prime, M Gold+ con aloe Prime™ and GlycoForce + con aloePrime™ , EnzymeProBalance, Luminivation Collagen Glaze, M Gold+, Men's Prime 7 and Women's Premier All-in-One Weight and Fitness OsoLean ® , SPORT™, TruHealth™ Fat Loss System, including: TruHealth™ Shake, TruHealth™ Cleanse, TruSHAPE™, EM∙PACT ® and Mannashake™, EMPACT Plus TruHealth Satiety ™ and Yogurt Nuts Protein Bar Skin Care Emprizone ® , FIRM with Ambrotose ® , FreshDen ® and Luminovation™ Essentials Catalyst™ Multivitamin, Eye Support, Liver Support, Joint Support SUPERFOOD, Sleep Support gummies and Stress Support gummies A significant portion of our revenue is derived from our Ambrotose Life ® , TruHealth ™ , Ambrotose, and Optimal Support Packets products.
Ambrotose Life ® is available in a bulk canister (unflavored), along with flavored single serving sachets. • In 2019, Mannatech’s key product launches were: Eye Health, TruPlenish Chocolate and Vanilla sachets, New Catalyst, Liver Support, and Sleep Support products in various markets. • In 2020, Mannatech’s key product launches included a product suite to address microbiome health: new GI-Defense ™ intestinal support product, improved GI-ProBalance pre/pro-biotic product and improved GI-Zyme digestive enzyme product, reformulated ImmunoStart and MannaBOOM products, and a re-launch of its MannaBears gummies. • In 2021, Mannatech introduced Liver Support to the North American market, providing detox support for healthy liver function.
Ambrotose Life ® is available in a bulk canister (unflavored), along with flavored single serving sachets. • In 2019, Mannatech’s key product launches were: Eye Support, TruPlenish Chocolate and Vanilla sachets, New Catalyst, Liver Support, and Sleep Support products in various markets. • In 2020, Mannatech’s key product launches included a product suite to address microbiome health: new GI-Defense ™ intestinal support product, improved GI-ProBalance pre/pro-biotic product and improved GI-Zyme digestive enzyme product, reformulated ImmunoStart and MannaBOOM products, and a re-launch of its MannaBears gummies. • In 2021, Mannatech introduced Liver Support to the North American market, providing detox support for healthy liver function.
We currently sell our products in three regions: (i) the Americas (the United States, Canada and Mexico); (ii) Europe/the Middle East/Africa (“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, Taiwan, Hong Kong, and China).
We currently sell our products in three regions: (i) the Americas (the United States, Canada and Mexico); (ii) Europe/the Middle East/Africa (“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, Taiwan, Hong Kong, and China).
Currently we sell our products in 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, Taiwan, Hong Kong and China).
Currently we sell our products in 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, Taiwan, Hong Kong, China and Thailand).
If a violation is found, the complaint moves through the compliance process where the person against whom the complaint has been filed has an opportunity to respond to the allegations. Depending on the nature of the violation, we may impose various sanctions, including written warnings, mandatory training, probation, withholding commissions, and termination of associate status.
If a violation is found, the complaint moves through the compliance process where the person against whom the complaint has been filed has an opportunity to respond to the allegations. Depending on the nature of the violation, we may impose various sanctions, including written 11 warnings, mandatory training, probation, withholding commissions, and termination of associate status.
A manufacturer of dietary supplements may make statements concerning the effect of a supplement or a dietary ingredient on the structure or any function of the body, in accordance with the regulations described above. As a result, we make such statements with respect to our products.
A manufacturer of dietary supplements may make statements concerning the effect of a supplement or a dietary ingredient on the structure or any function of the body, in 13 accordance with the regulations described above. As a result, we make such statements with respect to our products.
Although we maintain an extensive business continuity plan, a long-term failure or impairment of any of our information technology systems could adversely affect our ability to conduct day-to-day business.
Although we 12 maintain an extensive business continuity plan, a long-term failure or impairment of any of our information technology systems could adversely affect our ability to conduct day-to-day business.
We believe we can successfully compete for independent associates by emphasizing the following: • our exclusive, proprietary blend of high-quality products; • our 29 year track record in the business of selling nutritional products; • our business model which does not require our independent associates to carry inventory or accounts receivable; • our unique and financially rewarding global associate compensation plan; • our innovative marketing and educational tools; and • our easy and convenient delivery system.
We believe we can successfully compete for independent associates by emphasizing the following: • our exclusive, proprietary blend of high-quality products; • our 30 year track record in the business of selling nutritional products; • our business model which does not require our independent associates to carry inventory or accounts receivable; • our unique and financially rewarding global associate compensation plan; • our innovative marketing and educational tools; and • our easy and convenient delivery system.
Included in the system is the TruPLENISH TM Nutritional Shake, TruPURE ® Cleanse Slimsticks and TruSHAPE TM Fat-Loss Capsules. 4 Table of Contents • In 2017, Mannatech launched several new products, including GlycoCafé ® , a glyconutritional coffee made with the whole coffee fruit, and Luminovation, a line of mass-market and premium Korean beauty products. • In 2018, Mannatech launched a unique fitness drink, EMPACT+ ® , combining fueling, hydration and recovery in one product.
Included in the system is the TruPLENISH TM Nutritional Shake, TruPURE ® Cleanse Slimsticks and TruSHAPE TM Fat-Loss Capsules. 4 • In 2017, Mannatech launched several new products, including GlycoCafé ® , a glyconutritional coffee made with the whole coffee fruit, and Luminovation, a line of mass-market and premium Korean beauty products. • In 2018, Mannatech launched a unique fitness drink, EMPACT+ ® , combining fueling, hydration and recovery in one product.
We believe the addition of effective nutritional supplements to a well-balanced diet, coupled with an effective exercise program, will enhance and help maintain optimal health and wellness.
We believe the addition of effective nutritional supplements to a well-balanced diet, coupled with an effective exercise and sleep program, will enhance and help maintain optimal health and wellness.
Additionally, such materials are available in print upon the written request of any shareholder to our principle executive office located at 1410 Lakeside Parkway, Suite 200, Flower Mound, Texas 75028, Attention: Investor Relations, or by contacting our investor relations department at (972) 471-6512 or IR@mannatech.com . 3 Table of Contents Business Segment, Products and Product Development Business Segment.
Additionally, such materials are available in print upon the written request of any shareholder to our principle executive office located at 1410 Lakeside Parkway, Suite 200, Flower Mound, Texas 75028, Attention: Investor Relations, or by contacting our investor relations department at (972) 471-6512 or IR@mannatech.com . 3 Business Segment, Products and Product Development Business Segment.
We support our independent associates by providing an array of support services that can be tailored to meet individual needs, including: • offering educational meetings and corporate-sponsored events that emphasize business-building and compliance related information; • sponsoring various informative and science-based conference calls, web casts, and seminars; • providing automated services through the Internet, mobile app and telephone that offer a full spectrum of information and business-building tools; • maintaining an efficient decentralized ordering and distribution system; • providing highly personalized and responsive order processing and customer service support accessible by multiple communication channels including telephone, Internet, or e-mail; • offering 24-hour, seven days a week access to information and ordering through the Internet; • offering Success Tracker ™ , a customized business-building genealogy system, which contains sales reporting, graphs, maps, alerts, rank advancement guidance, and business volume reports; • offering, in the United States and Canada, a compilation of online marketing and training tools, including personalized web pages; and • providing a wide assortment of business-building and educational materials to help stimulate product sales and simplify enrollment.
We support our independent associates by providing an array of support services that can be tailored to meet individual needs, including: • offering educational meetings and corporate-sponsored events that emphasize business-building and compliance related information; • sponsoring various informative and science-based conference calls, web casts, and seminars; • providing automated services through the Internet, mobile app and telephone that offer a full spectrum of information and business-building tools; • maintaining an efficient decentralized ordering and distribution system; • providing highly personalized and responsive order processing and customer service support accessible by multiple communication channels including telephone, Internet, or e-mail; • offering 24-hour, seven days a week access to information and ordering through the Internet; • offering an extensive business-building genealogy system, which contains sales reporting, graphs, maps, alerts, rank advancement guidance, and business volume reports; 10 • offering, in the United States and Canada, a compilation of online marketing and training tools, including personalized web pages; and • providing a wide assortment of business-building and educational materials to help stimulate product sales and simplify enrollment.
This category includes a variety of daily nutritional supplements, health solutions for children, and additional nutrients designed to support the body's optimal levels. Targeted Health , which is designed to give bodies an extra edge with products designed to target specific areas and provide additional nutrients that help support body system health.
This category includes a variety of daily nutritional supplements, health solutions for children, and additional nutrients designed to support the body's optimal levels. Targeted Health , which is designed to give the human body an extra edge with products designed to target specific areas and provide additional nutrients that help support body system health.
In addition, our research and development team identifies other quality-driven suppliers and manufacturers for both our global and regional needs. Research and development efforts include new product development, enhancement of existing products, clinical studies and trials, FDA compliance, safety monitoring/adverse event reporting and science and substantiation of products. Quality Assurance Program .
In addition, our research and development team identify other quality-driven suppliers and manufacturers for both our global and regional needs. Research and development efforts include new product development, enhancement of existing products, clinical studies and trials, FDA compliance, safety monitoring/adverse event reporting and science and substantiation of products. Quality Assurance Program .
We believe network marketing is the best sales approach to sell our products for the following reasons: • our products can be introduced into the global marketplace at a much lower up-front cost than through conventional methods; • our key ingredients and differential components found in our proprietary products can be better explained through network marketing; • the network marketing approach can quickly and easily adapt to changing market conditions; • consumers appreciate the convenience of ordering from home, through a sales person, by telephone, or on the Internet; and • network marketing enables independent associates to earn financial rewards. 21 Table of Contents We compete with other direct selling and network marketing companies for new independent associates and for retention of continuing independent associates.
We believe network marketing is the best sales approach to sell our products for the following reasons: • our products can be introduced into the global marketplace at a much lower up-front cost than through conventional methods; • our key ingredients and differential components found in our proprietary products can be better explained through network marketing; • the network marketing approach can quickly and easily adapt to changing market conditions; • consumers appreciate the convenience of ordering from home, through a sales person, by telephone, or on the Internet; and • network marketing enables independent associates to earn financial rewards. 20 We compete with other direct selling and network marketing companies for new independent associates and for retention of continuing independent associates.
Mannatech has created a culture around “customer obsession.” Our customers are at the center of everything we do. 9 Table of Contents Intellectual Property Trademarks. We pursue registrations for various trademarks associated with our key products and branding initiatives.
Mannatech has created a culture around “customer obsession.” Our customers are at the center of everything we do. 9 Intellectual Property Trademarks. We pursue registrations for various trademarks associated with our key products and branding initiatives.
To support our research and development efforts, we have strategic alliances with our suppliers, consultants, and manufacturers that allow us to effectively identify and develop high-quality, innovative, proprietary products that increase our competitive advantage in the marketplace. 7 Table of Contents These efforts include developing and maintaining quality standards, supporting development efforts for new ingredients and compounds, and improving or enhancing existing products or ingredients.
To support our research and development efforts, we have strategic alliances with our suppliers, consultants, and manufacturers that allow us to effectively identify and develop high-quality, innovative, proprietary products that increase our competitive advantage in the marketplace. 7 These efforts include developing and maintaining quality standards, supporting development efforts for new ingredients and compounds, and improving or enhancing existing products or ingredients.
In the United States, governmental regulations, laws, administrative determinations, court decisions, and similar legal requirements at the federal, state, and local levels regulate companies such as ours and network marketing activities.
Government Regulations Domestic Regulations . In the United States, governmental regulations, laws, administrative determinations, court decisions, and similar legal requirements at the federal, state, and local levels regulate companies such as ours and network marketing activities.
Our global associate career and compensation plan is intended to comply with all applicable governmental regulations that govern the various aspects of payments to independent associates in each country. 11 Table of Contents Based upon our knowledge of industry-related network marketing compensation plans, we believe our global associate career and compensation plan remains strong in the industry.
Our global associate career and compensation plan is intended to comply with all applicable governmental regulations that govern the various aspects of payments to independent associates in each country. Based upon our knowledge of industry-related network marketing compensation plans, we believe our global associate career and compensation plan remains strong in the industry.
Code of Advertising and Sales Promotion regulates our business and trade practices and the activities of our independent associates, while the Trading Standards Office regulates any claims or representations relating to our operations. Our products are regulated by the Medicines and Healthcare Products Regulatory Agency. 18 Table of Contents In Denmark, the notion of door-to-door selling is prohibited.
Code of Advertising and Sales Promotion regulates our business and trade practices and the activities of our independent associates, while the Trading Standards Office regulates any claims or representations relating to our operations. Our products are regulated by the Medicines and Healthcare Products Regulatory Agency. 17 In Denmark, the notion of door-to-door selling is prohibited.
At December 31, 2023, our Board of Directors is composed of five directors, including three independent directors. We believe our board members have a wealth of knowledge and experience in all aspects of our business operations and are especially well versed in network marketing, finance, nutritional products, regulatory matters, and corporate governance.
At December 31, 2024, our Board of Directors is composed of six directors, including three independent directors. We believe our board members have a wealth of knowledge and experience in all aspects of our business operations and are especially well versed in network marketing, finance, nutritional products, regulatory matters, and corporate governance.
Enforcement of Czech-specific regulations is undertaken by the Ministry of Health, National Institute of Public Health, State Institute of Drug Control and the Czech Agriculture and Food Inspection Authority. 19 Table of Contents In Estonia, there are no specific regulations governing the network marketing business, but the business is generally regulated under the Consumer Protection Act.
Enforcement of Czech-specific regulations is undertaken by the Ministry of Health, National Institute of Public Health, State Institute of Drug Control and the Czech Agriculture and Food Inspection Authority. 18 In Estonia, there are no specific regulations governing the network marketing business, but the business is generally regulated under the Consumer Protection Act.
The following governmental agencies regulate various aspects of our business and our products in the United States: • the Food and Drug Administration; • the Federal Trade Commission (the “FTC”); • the Consumer Product Safety Commission; • the Department of Agriculture; • the Environmental Protection Agency; • the United States Postal Service; • state attorney general offices; and • various agencies of the states and localities in which our products are sold.
The following governmental agencies regulate various aspects of our business and our products in the United States: • the FDA; • the Federal Trade Commission (the “FTC”); • the Consumer Product Safety Commission; • the Department of Agriculture; • the Environmental Protection Agency; • the United States Postal Service; • state attorney general offices; and • various agencies of the states and localities in which our products are sold.
Network marketing consists of enrolling individuals who build a network of independent associates, preferred customers, and retail customers who purchase products.
Independent Associate Development . Network marketing consists of enrolling individuals who build a network of independent associates, preferred customers, and retail customers who purchase products.
For information regarding technology-related risks, see the information in "Item 1A: Risk Factors - Risks Affecting Our Business and Industry- If our information technology system fails or if the implementation of new information technology systems is not executed efficiently and effectively, our business, financial position and operating results could be adversely affected." We continue to enhance our information technology, websites, and e-commerce platforms to remain competitive, efficient and secure. 13 Table of Contents Government Regulations Domestic Regulations .
For information regarding technology-related risks, see the information in "Item 1A: Risk Factors - Risks Affecting Our Business and Industry- If our information technology system fails or if the implementation of new information technology systems is not executed efficiently and effectively, our business, financial position and operating results could be adversely affected." We continue to enhance our information technology, websites, and e-commerce platforms to remain competitive, efficient and secure.
As of December 31, 2023, we had approximately 145,000 active associate and preferred customer positions held by individuals in our network associated with the purchase of our products and packs and/or payment of associate fees within the last 12 months.
As of December 31, 2024, we had approximately 133,000 active associate and preferred customer positions held by individuals in our network associated with the purchase of our products and packs and/or payment of associate fees within the last 12 months.
Our common stock trades on The Nasdaq Global Select Market (“Nasdaq”) under the symbol “MTEX.” Information for each of our two most recent fiscal years, with respect to our net sales, results of operations, and identifiable assets is set forth in the Consolidated Financial Statements of this report.
Our common stock trades on The Nasdaq Capital Markets (“Nasdaq”) under the symbol “MTEX.” Information for each of our two most recent fiscal years, with respect to our net sales, results of operations, and identifiable assets is set forth in the Consolidated Financial Statements of this report.
The types of conduct governed by these types of regulations may include: • claims made about our products; • promises or claims of income or other promises or claims by our independent associates; and 20 Table of Contents • sales of products in markets where the products have not been approved or licensed.
The types of conduct governed by these types of regulations may include: • claims made about our products; • promises or claims of income or other promises or claims by our independent associates; and 19 • sales of products in markets where the products have not been approved or licensed.
The associate may return or exchange the product based on the associate product return policy. In China, where we sell our products under a cross-border e-commerce model, we have a 14-day return policy. 12 Table of Contents • Associate and Preferred Customer Product Return Policy.
The associate may return or exchange the product based on the associate product return policy. In China, where we sell our products under a cross-border e-commerce model, we have a 14-day return policy. • Associate and Preferred Customer Product Return Policy.
We can make no assurances that regulators will not question our actions in the future, even though we continue to make efforts to comply with all applicable regulations, inquiries, and investigations. 15 Table of Contents International Regulations . We are also subject to extensive regulations in each country in which we operate.
We can make no assurances that regulators will not question our actions in the future, even though we continue to make efforts to comply with all applicable regulations, inquiries, and investigations. 14 International Regulations . We are also subject to extensive regulations in each country in which we operate.
Some of the country-specific regulations include the following: • the National Provincial Laws, Natural Health Product Regulations of Canada, and the Federal Competition Act in Canada; • the Therapeutic Goods Administration and the Trade Practices Act in Australia; • federal and state regulations in Australia; • national regulations including the Local Trading Standards Offices in the United Kingdom; • regulations from the Ministry of International Trade and Industry in Japan; • regulations from the Commerce Commission and the Fair Trade Act of 1993 in New Zealand; • the Fair Trade Commission, which oversees the Door to Door Sales Act and the Health and Functional Food Act enforced by the Korea Food and Drug Administration in the Republic of Korea; • the Fair Trade Law, which is enforced by the Taiwan Fair Trade Commission and the Administration of Food Hygiene, Health Food Products Administration Act enforced by the Taiwan Department of Health; • the Danish Health Board, the Danish Marketing Practice Act, the Danish Consumer Ombudsman, the Danish Executive Order on Dietary Supplements, the Guidelines for food supplements, and the Danish Act on Foodstuffs in Denmark; • the German Unfair Competition Act, German Regulation on food supplements, and German Law on food and feed; • the Vitamins and Dietary Supplement industry in South Africa falls under the legislation covering Complementary and Alternative Medicines, which is currently regulated under the Medicines and Related Substances Act, 1965 (Act No. 101 of 1965); • the Consumer Protection Act, the Sale of Food Act, and various regulations that are governed by the Ministry of Trade and Industry in Singapore; • the Austrian Trade Law (1994), the Food Safety and Consumer Protection Law (2006), and the Food Code in Austria; • the Food and Consumer Products and the Unfair Trade Practices Act, Door to Door Selling Act and Provisions of the General Dutch Civil Code relating to terms and conditions and misleading advertising in the Netherlands; • the Consumer Sales Act, Marketing Practices Act, Distance and Doorstep Sales Act, the Product Liability Act, Product Safety Act, the Companies Act and the Food Act in Sweden; • the Law on Marketing and Contract Conditions, the Law on Repentance Right, the Statutory Order on Self Inspection of Food Provisions, the Law on Food products and Food Safety, and various guidelines from the Norwegian Consumers Agency on telephone selling and internet marketing, in Norway; • the Health Law and various Official Mexican Standards, the consumer protection law, the Mexican Corporate law, the Foreign Investment Law, the Federal Labor law in Mexico, as well as various municipal and state regulations and codes; • various Business, Civil, and Labor Codes in the Czech Republic as well as the Consumer Protection Act, and regulations and edicts of various government agencies such as The Ministry of Health, National Institute of Public Health, State Institute of Drug Control and the Czech Agriculture and Food Inspection Authority; • the Consumer Protection Act in Estonia, and in the area of food supplements the Veterinary and Food Board also enforces local legislation including Estonia Food Act and Medicine Act; • the Finnish Food Act, the Finnish Food Packaging and Consumer Protection Acts, Act on Unfair Business Practice Act, Decrees and other regulations in Finland; • the Consumer Protection Act of 2007, the Distance Selling Regulations Act of 2001 in Ireland; • various European Union (“EU”) regulations and pronouncements, subject to local statutes and regulations, address both our selling activities and the sale of food supplements in EU member nations, including, primarily, the EU Food Supplement Directive (2002/46/EC) and Nutrition and Health Claims Regulations (2006/1924/EC); 16 Table of Contents • the Food and Drugs (Composition and Labeling) Regulations, the Pyramid Schemes Prohibition Ordinance, the Personal Data (Privacy) Ordinance, and the Import and Export Ordinance in Hong Kong; • the Retail Trade Act of January 15, 1996, regulating both multi-level marketing (article 22) and pyramid sales (article 23), and Spanish Law 1/2007 on Consumer Protection (“Spanish Consumers Act”), regulating consumer protection, including warranties and product liability, in Spain; • the Regulation of Act 1700 of 2013, Article 2.2.50 on December 27, 2013 governs the Activities of Network Marketing or Multilevel Marketing companies through monitoring compensation plans, contract conditions and enacting preventive suspension, in Colombia; and • the Regulation on the Prohibition of Pyramid Selling, the Regulation on Administration of Direct Sales, the Law on Protection of Consumer Rights, the Food Safety Law, and the Anti-Unfair Competition Law in China.
Some of the country-specific regulations include the following: • the National Provincial Laws, Natural Health Product Regulations of Canada, and the Federal Competition Act in Canada; • the Therapeutic Goods Administration and the Trade Practices Act in Australia; • federal and state regulations in Australia; • national regulations including the Local Trading Standards Offices in the United Kingdom; • regulations from the Ministry of International Trade and Industry in Japan; • regulations from the Commerce Commission and the Fair Trade Act of 1993 in New Zealand; • the Fair Trade Commission, which oversees the Door to Door Sales Act and the Health and Functional Food Act enforced by the Korea Food and Drug Administration in the Republic of Korea; • the Fair Trade Law, which is enforced by the Taiwan Fair Trade Commission and the Administration of Food Hygiene, Health Food Products Administration Act enforced by the Taiwan Department of Health; • the Danish Health Board, the Danish Marketing Practice Act, the Danish Consumer Ombudsman, the Danish Executive Order on Dietary Supplements, the Guidelines for food supplements, and the Danish Act on Foodstuffs in Denmark; • the German Unfair Competition Act, German Regulation on food supplements, and German Law on food and feed; • the Vitamins and Dietary Supplement industry in South Africa falls under the legislation covering Complementary and Alternative Medicines, which is currently regulated under the Medicines and Related Substances Act, 1965 (Act No. 101 of 1965); • the Consumer Protection Act, the Sale of Food Act, and various regulations that are governed by the Ministry of Trade and Industry in Singapore; • the Austrian Trade Law (1994), the Food Safety and Consumer Protection Law (2006), and the Food Code in Austria; • the Food and Consumer Products and the Unfair Trade Practices Act, Door to Door Selling Act and Provisions of the General Dutch Civil Code relating to terms and conditions and misleading advertising in the Netherlands; • the Consumer Sales Act, Marketing Practices Act, Distance and Doorstep Sales Act, the Product Liability Act, Product Safety Act, the Companies Act and the Food Act in Sweden; • the Law on Marketing and Contract Conditions, the Law on Repentance Right, the Statutory Order on Self Inspection of Food Provisions, the Law on Food products and Food Safety, and various guidelines from the Norwegian Consumers Agency on telephone selling and internet marketing, in Norway; • the Health Law and various Official Mexican Standards, the consumer protection law, the Mexican Corporate law, the Foreign Investment Law, the Federal Labor law in Mexico, as well as various municipal and state regulations and codes; • various Business, Civil, and Labor Codes in the Czech Republic as well as the Consumer Protection Act, and regulations and edicts of various government agencies such as The Ministry of Health, National Institute of Public Health, State Institute of Drug Control and the Czech Agriculture and Food Inspection Authority; • the Consumer Protection Act in Estonia, and in the area of food supplements the Veterinary and Food Board also enforces local legislation including Estonia Food Act and Medicine Act; • the Finnish Food Act, the Finnish Food Packaging and Consumer Protection Acts, Act on Unfair Business Practice Act, Decrees and other regulations in Finland; • the Consumer Protection Act of 2007, the Distance Selling Regulations Act of 2001 in Ireland; • various European Union (“EU”) regulations and pronouncements, subject to local statutes and regulations, address both our selling activities and the sale of food supplements in EU member nations, including, primarily, the EU Food Supplement Directive (2002/46/EC) and Nutrition and Health Claims Regulations (2006/1924/EC); 15 • the Food and Drugs (Composition and Labeling) Regulations, the Pyramid Schemes Prohibition Ordinance, the Personal Data (Privacy) Ordinance, and the Import and Export Ordinance in Hong Kong; • the Retail Trade Act of January 15, 1996, regulating both multi-level marketing (article 22) and pyramid sales (article 23), and Spanish Law 1/2007 on Consumer Protection (“Spanish Consumers Act”), regulating consumer protection, including warranties and product liability, in Spain; • the Food Act (B.E. 2551 and 2561), regulating the production, importation and distribution of food and dietary supplements, the Direct Selling and Direct Marketing Act (B.E. 2545) and its Third Amendment (B.E. 2560); and the Royal Ordinance on Fisheries (B.E. 2558) in Thailand; and • the Regulation on the Prohibition of Pyramid Selling, the Regulation on Administration of Direct Sales, the Law on Protection of Consumer Rights, the Food Safety Law, and the Anti-Unfair Competition Law in China.
We had approximately 145,000 active associate and preferred customer positions held by individuals that purchased our products and/or packs or paid associate fees during each of the years ended December 31, 2023, and 2022. We have a loyalty program through which consumers earn loyalty points from qualified automatic orders, which can be applied to future purchases. Independent Associate Development .
We had approximately 133,000 and 145,000 active associate and preferred customer positions held by individuals that purchased our products and/or packs or paid associate fees during the years ended December 31, 2024, and 2023, respectively. We have a loyalty program through which consumers earn loyalty points from qualified automatic orders, which can be applied to future purchases.
This policy allows the associate or preferred customer to return an order within one year of the purchase date upon voluntarily terminating his/her account. If an associate or preferred customer returns a product unopened and in good condition, he/she may receive a full refund minus a 10% processing fee.
This policy allows the associate or preferred customer to return an order within one year of the purchase date upon voluntarily terminating his/her account. If an associate or preferred customer returns a product unopened and in good condition, he/she may receive a full refund minus any shipping cost, if applicable.
Overall, as of December 31, 2023, 96 patent s have been assigned, issued, granted or validated to Mannatech in major global markets for the technology relating to our Ambrotose ® , Ambrotose AO ® , Ambrotose Life ® , GI‑ProBalance™, PhytoMatrix ® , and NutriVerus™ product formulations, as well as in the field of biomarker assays.
Overall, as of December 31, 2024, 74 p atent s have been assigned, issued, granted or validated to Mannatech in major global markets for the technology relating to our Ambrotose ® , Ambrotose AO ® , Ambrotose Life ® , GI‑ProBalance™, PhytoMatrix ® , and NutriVerus™ product formulations, as well as in the field of biomarker assays.
We believe direct selling is a channel of distribution with healthy cash flow, high return on invested capital, and long-term prospects for global expansion. According to the worldwide direct sales data published by the World Federation of Direct Selling Association, in 2022, approximately 115 million global direct sellers collectively generated annual retail sales of $172.9 billion.
We believe direct selling is a channel of distribution with healthy cash flow, high return on invested capital, and long-term prospects for global expansion. According to the worldwide direct sales data published by the World Federation of Direct Selling Associations, in 2023, approximately 103 million global direct sellers collectively generated annual retail sales of $167.6 billion.
We principally distribute our products through network marketing channels where independent associates and preferred customers purchase our products at a discounted wholesale value. Independent associates are eligible to participate in our global associate career and compensation plan. All of our associates are independent contractors.
Our sales philosophy is to distribute our products to consumers for personal consumption or resale. We principally distribute our products through network marketing channels where independent associates and preferred customers purchase our products at a discounted value. Independent associates are eligible to participate in our global associate career and compensation plan. All of our associates are independent contractors.
W e are fully committed to providing the highest level of support services to our independent associates and preferred customers and believe that we meet expectations and build customer loyalty through the following: ▪ offering highly personalized and responsive customer service; 8 Table of Contents ▪ offering a satisfaction guarantee product return policy; ▪ providing comprehensive corporate websites that provide instant access to Internet ordering, marketing, technical and educational information, and unique and innovative marketing tools (including www.mannatech.com, www.allaboutmannatech.com, library.mannatech.com, mannatechai.com, training.mannatech.com, events.mannatech.com, and www.mannafest.com); ▪ maintaining an extensive web-based downline management system called Success Tracker™ that provides access to downline organization reporting and sales reporting for our independent associates, free their first year as an associate and then at a minimal cost thereafter; ▪ providing Mannatech Now Tech, an app and web-based platform that provides a vast library of marketing resources, which are easily shareable and maintain full attribution to the associate who shares the resource.
W e are fully committed to providing the highest level of support services to our independent associates and preferred customers and believe that we meet expectations and build customer loyalty through the following: ▪ offering highly personalized and responsive customer service; ▪ offering a satisfaction guarantee product return policy; 8 ▪ providing comprehensive corporate websites that provide instant access to Internet ordering, marketing, technical and educational information, and unique and innovative marketing tools (including www.mannatech.com, www.allaboutmannatech.com, library.mannatech.com, mannatech.ai, training.mannatech.com, events.mannatech.com, and www.mannafest.com); ▪ maintaining online platforms and reporting using industry-focused partnerships that provides access to downline organization reporting and sales reporting for our independent associates; ▪ providing MannaGO, an app and web-based platform that provides a vast library of marketing resources, which are easily shareable and maintain full attribution to the associate who shares the resource.
Provide Outstanding Product Value and Results to Customers. We work to ensure that all associates and their customers have a great experience with each of our products that deliver tangible results, are supported by science, and are backed by a powerful satisfaction guarantee.
We expect that any future products we develop will further complement and enhance our existing products. Providing Outstanding Product Value and Results to Customers. We work to ensure that all associates and their customers have a great experience with each of our products that deliver tangible results, are supported by science, and are backed by a powerful satisfaction guarantee.
We continue our research efforts and strive to ensure that all of our products are made from high quality, effective ingredients that contain one or more of our proprietary compounds, which we believe supports our goal to be a cutting-edge industry leader. We expect that any future products we develop will further complement and enhance our existing products.
We continue our research efforts and strive to ensure that all of our products are made from high quality, effective ingredients in which many formulas contain one or more of our proprietary compounds or a combination of ingredients, which we believe supports our goal to be a cutting-edge industry leader.
Employees At December 31, 2023 and 2022, we employed 213 and 228 people, respectively, as set forth below: 2023 2022 Americas 123 133 Asia/Pacific 83 83 EMEA 7 12 Total 213 228 2023 2022 Full-time employees 213 228 Total 213 228 These numbers do not include our independent associates, who are independent contractors and are not employees. 22 Table of Contents
Employees At December 31, 2024 and 2023, we employed 189 and 213 people, respectively, as set forth below: 2024 2023 Americas 107 123 Asia/Pacific 75 83 EMEA 7 7 Total 189 213 2024 2023 Full-time employees 189 213 Total 189 213 These numbers do not include our independent associates, who are independent contractors and are not employees. 21
Customs regulations in China include purchase limits to ensure that purchased products are for personal consumption. In June 2023, the Company launched a tiered affiliate program in the United States under the brand name, “Trulu™” (“Trulu”). The Trulu brand is operated by our wholly owned subsidiary, New Economy Marketing Opportunities, LLC (“NEMO”), and is separate from our network marketing business.
Customs regulations in China include purchase limits to ensure that purchased products are for personal consumption. In July 2024, the Company ceased operating its tiered affiliate program in the United States which conducted business under the brand name, “Trulu™” (“Trulu”) and was operated by our wholly owned subsidiary, New Economy Marketing Opportunities, LLC.
As of December 31, 2023, we had 13 patents for technology related to our Ambrotose ® formulation, all of which are in 11 f oreign jurisdictions.
As of December 31, 2024, we had 17 p atents for technology related to our Ambrotose ® formulation, all of which are in 15 f oreign jurisdictions.
Due to the unique nature of this ingredient and important components used in the formulation of our Ambrotose products, we are unable to identify an alternative supplier at this time for this ingredient. 6 Table of Contents Industry Overview Nutrition Industry.
Due to the unique nature of this ingredient and important components used in the formulation of our Ambrotose products, we are unable to identify an alternative supplier at this time for this ingredient. 6 Industry Overview Nutrition Industry. We operate in the nutritional supplement industry and distribute and primarily sell our products through our own global network marketing channel.
In some cases, such statements must be accompanied by a statutory statement that the claim has not been evaluated by the FDA and that the product is not intended to treat, cure, mitigate, or prevent any disease, and the FDA must be notified of such claim within 30 days of first use. 14 Table of Contents The FDA oversees product safety, manufacturing, and product information, such as claims on a company's website, product’s label, package inserts, and accompanying literature.
In some cases, such statements must be accompanied by a statutory statement that the claim has not been evaluated by the FDA and that the product is not intended to treat, cure, mitigate, or prevent any disease, and the FDA must be notified of such claim within 30 days of first use.
A team of professionals, some of whom have extensive experience in the pharmaceutical industry, leads our in-house quality assurance program and continually monitors the quality of our products, including the production process.
These controls include a comprehensive supplier audit and surveillance program, third-party certifications, and continuous product monitoring. A team of professionals, some of whom have extensive experience in the pharmaceutical industry, leads our in-house quality assurance program and continually monitors the quality of our products, including the production process.
Certifications and guidelines that our contract manufacturers are required to carry and/or follow include: • the FDA’s current Good Manufacturing Practices (as defined below) for manufacturing, packaging, labeling, and holding of dietary supplements; • the FDA’s Good Manufacturing Practices for human food; • the requirements of the Natural Health Products Directorate of Canada; • the Korean Food and Drug Administration; • certification by the Therapeutic Goods Administration of Australia, when necessary; • the European Union’s Food Supplement Directive and Nutrition and Health Claims Regulations, as well as individual member state legislation; • the Taiwan Food and Drug Administration; • the Japan Ministry of Health Labor and Welfare; • the Singapore Health Sciences Authority; • the South African Department of Health and the South African Health Products Regulatory Authority Board; • the Hong Kong Food and Environmental Hygiene Department and Department of Health Drug Office; and • the China Food and Drug Administration.
Certifications and guidelines that our contract manufacturers are required to carry and/or follow include: • the FDA’s current Good Manufacturing Practices (as defined below) for manufacturing, packaging, labeling, and holding of dietary supplements; • the FDA’s Good Manufacturing Practices for human food; • the requirements of the Natural Health Products Directorate of Canada; • the Korean Food and Drug Administration; • certification by the Therapeutic Goods Administration of Australia, when necessary; • the Taiwan Food and Drug Administration; • the Japan Ministry of Health Labor and Welfare; • the Singapore Health Sciences Authority; • the South African Department of Health and the South African Health Products Regulatory Authority Board; • the Hong Kong Food and Environmental Hygiene Department and Department of Health Drug Office; and • Thailand Food and Drug Administration We have an established quality assurance program designed to ensure our manufacturers’ compliance with these certifications and guidelines, and to ensure that proper controls are maintained during the manufacturing, evaluation, packaging, storage, and distribution of our products.
Our global associate career and compensation plan is designed to comply with Australian law and the requirements of Australia’s Trade Practices Act. The Australian Trade Practices Administration and various other governmental entities regulate our business and trade practices, as well as those of our independent associates.
The Australian Trade Practices Administration and various other governmental entities regulate our business and trade practices, as well as those of our independent associates. Australia’s Therapeutic Goods Act, together with the Trade Practices Act, regulates any claims or representations relating to our products and our global associate career and compensation plan.
We are required to register before the Mexican System for Business Information at the appropriate Business Chamber under the Organizations Law. 17 Table of Contents In Australia, our network marketing system is subject to Australia’s federal and local regulations.
We are required to register before the Mexican System for Business Information at the appropriate Business Chamber under the Organizations Law. 16 In Australia, our network marketing system is subject to Australia’s federal and local regulations. Our global associate career and compensation plan is designed to comply with Australian law and the requirements of Australia’s Trade Practices Act.
Furthermore, scientists discovered that these monosaccharides attach themselves to certain proteins, which then form a molecule called glycoprotein or glycans . Harper’s Biochemistry, a leading and nationally recognized biochemistry reference, has recognized that these molecules are found in human glycoproteins, and are believed to be essential in helping to promote and provide effective cell-to-cell communication in the human body.
Harper’s Biochemistry, a leading and nationally recognized biochemistry reference, has recognized that these molecules are found in human glycoproteins, and are believed to be essential in helping to promote and provide effective cell-to-cell communication in the human body.
As of December 31, 2023, we had 36 registered trademarks in the United States and five trademark applications pending with the United States Patent and Trademark Office. As of December 31, 2023, we had 559 registered trademarks in 35 foreign jurisdictions and 42 trademark applications pending in 11 foreign jurisdictions.
As of December 31, 2024, we had 38 registered trademarks in the United States and three trademark applications pending with the United States Patent and Trademark Office. As of December 31, 2024, we had 532 registered trademarks in 35 foreign jurisdictions and 28 trademark applications pending in 10 f oreign jurisdictions.
These patent rights are usually enforced in a court, which, in most jurisdictions, holds the authority to stop patent infringement. The protection is granted for a limited period, generally 20 years.
These patent rights are usually enforced in a court, which, in most jurisdictions, holds the authority to stop patent infringement. The protection is granted for a limited period, generally 20 years. In most jurisdictions, renewal annuities or maintenance fees must be paid regularly during the term of the patent to keep the patent in force. Associate Distribution System Overview .
Weight and Fitness , which offers products designed to curb appetite and burn fat, build lean muscle tissue, and support recovery from overexertion.
Weight and Fitness , which offers products designed to curb appetite and burn fat, build lean muscle tissue, and support recovery from overexertion. Skin Care , which offers a K-Beauty inspired line, designed to enhance skin vitality through advanced Korean skincare principles.
Nutritional supplements are available through mass-market retailers, drug stores, supermarkets, discount stores, health food stores, direct-to-consumer companies, and direct sales organizations.
Under DSHEA, vendors of dietary supplements are now able to educate consumers regarding the effects of certain component ingredients. Nutritional supplements are available through mass-market retailers, drug stores, supermarkets, discount stores, health food stores, direct-to-consumer companies, and direct sales organizations.
We also ship our products to customers in the following countries: Belgium, France, Greece, Italy, Luxembourg, and Poland.
We also ship our products to customers in the following countries: Belgium, France, Greece, Italy, Luxembourg, and Poland. During the second quarter of 2024, the Company liquidated its entity in Sweden, Mannatech Sverige AB.
Trulu affiliates earn commissions on the sale of Trulu products under a commission plan that is separate from the Mannatech network marketing commission plan. Although Trulu’s affiliate program is a separate business model with its own compensation structure, our Mannatech associates may participate in the Trulu affiliate program and earn commissions on the sale of Trulu products.
The affiliate program business was separate from our network marketing business. Trulu affiliates earned commissions on the sale of Trulu products under a commission plan that was separate from the Mannatech network marketing commission plan.
We periodically update our substantiation program for evidence for each of our product claims and notify the FDA of certain types of performance claims made in connection with our products. In certain markets, including the United States, specific claims made with respect to a product may change the regulatory status of a product.
In certain markets, including the United States, specific claims made with respect to a product may change the regulatory status of a product.
We operate in the nutritional supplement industry and distribute and primarily sell our products through our own global network marketing channel. The nutritional supplement industry is fast paced, highly fragmented, and intensely competitive. It includes companies that manufacture and distribute products that are intended to support the body’s performance and well-being.
The nutritional supplement industry is fast paced, highly fragmented, and intensely competitive. It includes companies that manufacture and distribute products that are intended to support the body’s performance and well-being. Nutritional supplements include vitamins, minerals, dietary supplements, herbs, botanicals, and compounds derived therefrom.
Nutritional supplements include vitamins, minerals, dietary supplements, herbs, botanicals, and compounds derived therefrom. Prior to 1990, all dietary supplements in the United States were tightly regulated by the FDA and only included essential nutrients such as vitamins, minerals, and proteins.
Prior to 1990, all dietary supplements in the United States were tightly regulated by the FDA and only included essential nutrients such as vitamins, minerals, and proteins. In 1990, the Nutrition Labeling and Education Act expanded the category to include “herbs or similar nutritional substances,” but the FDA maintained control over pre-market approval.
DSHEA was instrumental in expanding the category of dietary supplements to further include herbal and botanical supplements and ingredients such as ginseng, fish oils, enzymes, and various mixtures of these ingredients. Under DSHEA, vendors of dietary supplements are now able to educate consumers regarding the effects of certain component ingredients.
However, in 1994, the Dietary Supplement Health and Education Act of 1994 (“DSHEA”) was passed in the United States, drastically changing the dietary supplement marketplace. DSHEA was instrumental in expanding the category of dietary supplements to further include herbal and botanical supplements and ingredients such as ginseng, fish oils, enzymes, and various mixtures of these ingredients.
Once the FDA issues the requisite rule-making, cosmetic manufacturers will be required to comply with cosmetics-specific current Good Manufacturing Processes. We develop and maintain product substantiation dossiers, which contain the scientific literature pertinent to each product and its ingredients. An independent scientist reviews these dossiers, which provide the scientific basis for product claims.
MoCRA also grants the FDA the authority to initiate mandatory product recalls as well as the authority to suspend facility registration when warranted. Cosmetic manufacturers are required to comply with cosmetics specific current Good Manufacturing Processes. We develop and maintain product substantiation dossiers, which contain the scientific literature pertinent to each product and its ingredients.
Scientists have discovered that a healthy body consists of many sophisticated components working in harmony to achieve optimal health and wellness and requires cellular communication to function at an optimal level. Scientists also discovered that there are more than 200 monosaccharides that form naturally. Specific monosaccharides are considered vital components for cellular communication in the human body.
Mannatech’s subsidiary in China, Meitai, operates under a cross-border e-commerce model, where consumers in China can buy Mannatech products directly from Meitai via the internet. Products. Scientists have discovered that a healthy body consists of many sophisticated components working in harmony to achieve optimal health and wellness and requires cellular communication to function at an optimal level.
Korea had numerous product launches, including: MannaTea, MultiVItaGummy, Immune Jelly, Luminovation Glyco, Collagen Capsule Kit, Waterfull Sun milk and Pet Food. Additionally, our subsidiary, NEMO, launched the Trulu AM/PM product. Mannatech offers products that include glyconutrients, a unique category of nutrients sourced from plants and designed to provide a variety of health benefits.
Korea had numerous product launches, including: MannaTea, MultiVItaGummy, Immune Jelly, Luminovation Glyco, Collagen Capsule Kit, Waterfull Sun milk and Pet Food. Additionally, our subsidiary, NEMO, launched the Trulu AM/PM product. • In 2024, Mannatech's latest product launches included TruEdge Coffee, TruEdge Energy and TruHealth Satiety in the United States. Women's Premier All-in-One was launched in Korea.
The FDA has promulgated regulations governing the labeling and marketing of dietary and nutritional supplement products.
The FDA oversees product safety, manufacturing, and product information, such as claims on a company's website, product’s label, package inserts, and accompanying literature. The FDA has promulgated regulations governing the labeling and marketing of dietary and nutritional supplement products.
Once fully implemented, MoCRA will require adverse event recordkeeping and reporting, manufacturer facility registration, product listing, records supporting safety substantiation, minor label modifications including contact information for adverse event reporting and labeling of fragrance allergens. MoCRA also grants the FDA the authority to initiate mandatory product recalls as well as the authority to suspend facility registration when warranted.
The Modernization of Cosmetics Regulation Act of 2022, ("MoCRA"), was signed into law in December 2022. MoCRA expands the FDA’s oversight of the cosmetic industry. MoCRA requires adverse event recordkeeping and reporting, manufacturer facility registration, product listing, records supporting safety substantiation, minor label modifications including contact information for adverse event reporting and labeling of fragrance allergens.
Removed
Mannatech’s subsidiary in China, Meitai, operates under a cross-border e-commerce model, where consumers in China can buy Mannatech products directly from Meitai via the internet. Mannatech's subsidiary, NEMO, operates an affiliate business model under the brand name, “Trulu”, in the United States. Products.
Added
Scientists also discovered that there are more than 200 monosaccharides that form naturally. Specific monosaccharides are considered vital components for cellular communication in the human body. Furthermore, scientists discovered that these monosaccharides attach themselves to certain proteins, which then form a molecule called glycoprotein or glycans .
Removed
Skin Care , which offers several products formulated with more than 30 botanical ingredients that are designed to give the skin a more natural, youthful appearance by moisturizing, hydrating and reducing the appearance of fine lines and wrinkles.
Added
Luminovation was launched in multiple markets including Thailand, Mexico, Australia and South Africa. Osolin launched in Thailand. Mannatech offers products that include glycan nutrients, a unique category of nutrients sourced from plants and designed to provide a variety of health benefits.
Removed
Essentials , a sub-category of Targeted Health, offers a variety of dietary supplements that are formulated with a simpler ingredient profile, at a price point that is intended to be a value-add for preferred customers and associates. Home Living , a category of products designed to make homes a peaceful haven that supplement wellness.
Added
Focused on deep hydration, moisture retention, and barrier support, these formulations help promote a naturally radiant, youthful complexion, while reducing the appearance of fine lines and wrinkles.
Removed
In 1990, the Nutrition Labeling and Education Act expanded the category to include “herbs or similar nutritional substances,” but the FDA maintained control over pre-market approval. However, in 1994, the Dietary Supplement Health and Education Act of 1994 (“DSHEA”) was passed in the United States, drastically changing the dietary supplement marketplace.
Added
If we discover abuse of the refund policy, we may terminate the associate's or preferred customer's account. Artificial Intelligence We utilize advanced artificial intelligence (“AI”) algorithms and technologies to enhance various aspects of our operations. These enhancements include improving customer experience, optimizing our marketing execution, and enabling more effective analysis and use of our operating and financial data.
Removed
We have an established quality assurance program designed to ensure our manufacturers’ compliance with these certifications and guidelines, and to ensure that proper controls are maintained during the manufacturing, evaluation, packaging, storage, and distribution of our products. These controls include a comprehensive supplier audit and surveillance program, third-party certifications, and continuous product monitoring.
Added
Given the evolving nature and complexity of AI technologies, there remains inherent operational and legal risks.
Removed
In most jurisdictions, renewal annuities or maintenance fees must be paid regularly during the term of the patent to keep the patent in force. 10 Table of Contents Associate Distribution System Overview . Our sales philosophy is to distribute our products to consumers for personal consumption or resale.
Added
For more details, refer to Item 1A – Risk Factors – “We may use artificial intelligence in our business, and challenges with properly managing its use could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations,” which highlights potential challenges in managing AI use, including reputational harm, competitive harm, legal liability and potential adverse effects on our results of operations.
Removed
If we discover abuse of the refund policy, we may terminate the associate's or preferred customer's account.
Added
An independent scientist reviews these dossiers, which provide the scientific basis for product claims. We periodically update our substantiation program for evidence for each of our product claims and notify the FDA of certain types of performance claims made in connection with our products.
Removed
The Modernization of Cosmetics Regulation Act of 2022, ("MoCRA"), was signed into law in December 2022. MoCRA expands the FDA’s oversight of the cosmetic industry. Most requirements under MoCRA will be effective in December 2023.
Removed
Australia’s Therapeutic Goods Act, together with the Trade Practices Act, regulates any claims or representations relating to our products and our global associate career and compensation plan.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

47 edited+33 added−29 removed169 unchanged
Biggest changeRegarded as China’s version of the GDPR, the PIPL lays out a comprehensive set of rules on how business operators should collect, use, process, share, and transfer personal information in China. Our failure or inability to comply with data protection regimes domestically and in foreign countries could result in fines, penalties, injunctions, or material litigation expenditures.
Biggest changeOn August 20, 2021, the Personal Information Protection Law (“PIPL”) became effective in China. PIPL is designed to protect online users’ data privacy. Regarded as China’s version of the GDPR, PIPL lays out a comprehensive set of rules on how business operators should collect, use, process, share, and transfer personal information in China.
DSA, we are required to adhere to a code of ethics that protects our associates and their customers, and ensures all DSA members remain accountable to regulators, consumers, independent distributors, and the public. On January 4, 2019, the DSA established a third party self-regulatory program to be administered by the Council of Better Business Bureaus.
DSA, we are required to adhere to a code of ethics that protects our associates and their customers, and ensures all DSA members remain accountable to regulators, consumers, independent distributors, and the public. On January 4, 2019, the DSA established a third party self-regulatory program administered by the Council of Better Business Bureaus.
Factors that could detrimentally impact our access to liquidity sources include credit availability through commercial banking, foreign exchange controls, limitations on the repatriation of funds, and changes in currency policies or practices of foreign jurisdictions. Deterioration in economic conditions may increase our cost of funding and limit our access to some sources of liquidity.
Factors that could detrimentally 28 impact our access to liquidity sources include credit availability through commercial banking, foreign exchange controls, limitations on the repatriation of funds, and changes in currency policies or practices of foreign jurisdictions. Deterioration in economic conditions may increase our cost of funding and limit our access to some sources of liquidity.
We currently sell our products in the international markets of Canada, Mexico, Austria, the Czech Republic, Denmark, Estonia, Finland, Germany, the Republic of Ireland, Namibia, Netherlands, Norway, South Africa, Spain, Sweden, the United Kingdom, Australia, Japan, New Zealand, the Republic of Korea, Singapore, Taiwan, Hong Kong and China.
We currently sell our products in the international markets of Canada, Mexico, Austria, the Czech Republic, Denmark, Estonia, Finland, Germany, the Republic of Ireland, Namibia, Netherlands, Norway, South Africa, Spain, Sweden, the United Kingdom, Australia, Japan, New Zealand, the Republic of Korea, Singapore, Taiwan, Hong Kong, Thailand and China.
These regulations primarily involve the following: • the formulation, manufacturing, packaging, labeling, distribution, importation, sale, and storage of our products; • the health and safety of dietary supplements, cosmetics and foods; • trade practice laws and network marketing laws (e.g., licensing and registration requirements; regulations pertaining to commission payments); • our product claims and advertising by our independent associates; • our network marketing system; • pricing restrictions regarding transactions with our foreign subsidiaries or other related parties and similar regulations that affect our level of foreign taxable income; 33 Table of Contents • the assessment of customs duties; • further taxation of our independent associates, which may obligate us to collect additional taxes and maintain additional records; and • export and import restrictions.
These regulations primarily involve the following: • the formulation, manufacturing, packaging, labeling, distribution, importation, sale, and storage of our products; • the health and safety of dietary supplements, cosmetics and foods; • trade practice laws and network marketing laws (e.g., licensing and registration requirements; regulations pertaining to commission payments); • our product claims and advertising by our independent associates; • our network marketing system; 32 • pricing restrictions regarding transactions with our foreign subsidiaries or other related parties and similar regulations that affect our level of foreign taxable income; • the assessment of customs duties; • further taxation of our independent associates, which may obligate us to collect additional taxes and maintain additional records; and • export and import restrictions.
Any substantial compromise of our data security, whether externally or internally, or misuse of associate, customer, or employee data, could cause considerable damage to our 28 Table of Contents reputation, cause the public disclosure of confidential information, and result in lost sales, significant costs, and litigation, which would negatively affect our financial position and results of operations.
Any substantial compromise of our data security, whether externally or internally, or misuse of associate, customer, or employee data, could cause considerable damage to our reputation, cause the public disclosure of confidential information, and result in lost sales, significant costs, and litigation, which would negatively affect our financial position and results of operations.
Specifically, we are susceptible to adverse or negative publicity regarding: • the nutritional supplements industry; • skeptical consumers; • competitors; • the safety and quality of our products and/or our ingredients; • regulatory investigations of our products or our competitors’ products; • the actions of our independent associates; 27 Table of Contents • the direct selling/network marketing industry; and • scandals or regulatory investigations regarding the business practices or products or our competitors, specifically those competitors within the direct selling channel.
Specifically, we are susceptible to adverse or negative publicity regarding: • the nutritional supplements industry; • skeptical consumers; • competitors; • the safety and quality of our products and/or our ingredients; • regulatory investigations of our products or our competitors’ products; • the actions of our independent associates; • the direct selling/network marketing industry; and • scandals or regulatory investigations regarding the business practices or products or our competitors, specifically those competitors within the direct selling channel.
We may be subject to challenges by private parties, including our independent associates and preferred customers, to the form of our network marketing system or elements of our business.
Challenges by private parties to the form of our network marketing system could harm our business. We may be subject to challenges by private parties, including our independent associates and preferred customers, to the form of our network marketing system or elements of our business.
We regularly assess the likely outcomes of these audits in order to determine the appropriateness of our tax provision. The amounts ultimately paid upon 35 Table of Contents resolution of these or subsequent tax audits could be materially different from the amount previously included in our income tax provision, and, therefore, could have a material impact on our profitability.
We regularly assess the likely outcomes of these audits in order to determine the appropriateness of our tax provision. The amounts ultimately paid upon 34 resolution of these or subsequent tax audits could be materially different from the amount previously included in our income tax provision, and, therefore, could have a material impact on our profitability.
In addition, the Texas Business Organization Code restricts, subject to exceptions, business combinations with any “affiliated shareholder.” Any or all of these provisions could delay, deter or help prevent a takeover of our Company and could limit the price investors are willing to pay for our common stock. 36 Table of Contents Our failure to comply with The Nasdaq Global Select Market continued listing standards may adversely affect the price and liquidity of our shares of common stock as well as our ability to raise capital in the future.
In addition, the Texas Business Organization Code restricts, subject to exceptions, business combinations with any “affiliated shareholder.” Any or all of these provisions could delay, deter or help prevent a takeover of our Company and could limit the price investors are willing to pay for our common stock. 35 Our failure to comply with The Nasdaq Capital Market continued listing standards may adversely affect the price and liquidity of our shares of common stock as well as our ability to raise capital in the future.
For example, general economic conditions, such as the COVID-19 pandemic, recession or interest rate or currency rate fluctuations in the United States or abroad, could negatively affect the market price of our common stock in the future. Certain shareholders, directors, and officers own a significant amount of our stock, which could allow them to influence corporate transactions and other matters.
For example, general economic conditions, recession or interest rate or currency rate fluctuations in the United States or abroad, could negatively affect the market price of our common stock in the future. Certain shareholders, directors, and officers own a significant amount of our stock, which could allow them to influence corporate transactions and other matters.
As of December 31, 2023, we had approximately 145,000 active associates and preferred customer positions held by individuals who purchased our products and/or packs or paid associate fees within the last 12 months, of which 159 occupied the highest associate levels under our global compensation plan. These independent associate leaders are important in maintaining and growing our revenue.
As of December 31, 2024, we had approximately 133,000 active associates and preferred customer positions held by individuals who purchased our products and/or packs or paid associate fees within the last 12 months, of which 155 occupied the highest associate levels under our global compensation plan. These independent associate leaders are important in maintaining and growing our revenue.
The United States and global economies may slow dramatically as a result of a variety of problems, including turmoil in the credit and financial markets, concerns regarding the stability and viability of major financial institutions, the state of the housing markets, and volatility in worldwide stock markets.
The United States and global economies may slow dramatically as a result of a variety of problems, including turmoil in the credit and financial markets, concerns regarding the stability and viability of major financial institutions, the state of the 25 housing markets, volatility in worldwide stock markets, or another pandemic.
We have rigorous product safety and quality standards, 25 Table of Contents which we expect our third-party contract manufacturers to meet. However, despite our commitment to product safety and quality, our contract manufacturers may not always meet these standards, particularly as we expand our manufacturing operations and product offerings.
We have rigorous product safety and quality standards, which we expect our third-party contract manufacturers to meet. However, despite our commitment to product safety and quality, our contract manufacturers may not always meet these standards, particularly as we expand our manufacturing operations and product offerings.
For example, our 2023 net sales decreased 2.1% on a Constant dollar basis (see Item 7, Non-GAAP Financial Measures ), and unfavorable foreign exchange caused a $2.3 million decrease in GAAP net sales as compared to 2022. In other words, 2023 sales would have been $2.3 million higher than the reported value, except for the impact of foreign exchange.
For example, our 2024 net sales decreased 8.6% on a Constant dollar basis (see Item 7, Non-GAAP Financial Measures ), and unfavorable foreign exchange caused a $2.7 million decrease in GAAP net sales as compared to 2023. In other words, 2024 sales would have been $2.7 29 million higher than the reported value, except for the impact of foreign exchange.
Foreign Corrupt Practices Act, and similar anti-bribery and corruption acts and regulations in many of the markets in which we operate; • trademark availability and registration issues; • changes in exchange rates; • changes in taxation; • wars, civil unrest, acts of terrorism, conflicts and other hostilities; • political, economic, and social conditions; • the continuing effects of COVID-related factors; 29 Table of Contents • changes to trade practice laws or regulations governing direct selling and network marketing; • increased government scrutiny surrounding direct selling and network marketing; • changes in the perception of network marketing; and • risk of our independent associates offering business opportunities in China.
Foreign Corrupt Practices Act, and similar anti-bribery and corruption acts and regulations in many of the markets in which we operate; • trademark availability and registration issues; • changes in exchange rates; • changes in taxation; • wars, civil unrest, acts of terrorism, conflicts and other hostilities; • political, economic, and social conditions; • a pandemic; • changes to trade practice laws or regulations governing direct selling and network marketing; • increased government scrutiny surrounding direct selling and network marketing; • changes in the perception of network marketing; and • risk of our independent associates offering business opportunities in China.
Currently, the Republic of Korea is our largest market. An economic decline in the market, a shift in consumer demand for our products or business opportunity, or regulatory changes affecting our business model, products, or compensation plan in this market could have a material adverse effect on our earnings, cash flows, and financial position.
An economic decline in the market, a shift in consumer demand for our products or business opportunity, or regulatory changes affecting our business model, products, or compensation plan in this market could have a material adverse effect on our earnings, cash flows, and financial position.
We are also subject to delays caused by any interruption in the production of these materials including weather, disease, crop conditions, climate change, energy costs, currency fluctuations, logistics service capacities, transportation interruptions, and natural disasters or other catastrophic events.
We are also subject to delays caused by any interruption in the production of these materials including weather, disease, crop conditions, climate change, energy costs, currency fluctuations, logistics service capacities, transportation interruptions, and natural disasters or other catastrophic events. We maintain supply agreements with our suppliers and manufacturers.
If federal, state, or local laws and regulations or the interpretation of those laws and regulations require us to treat our independent associates or Trulu affiliates as employees, or if they are deemed by local regulatory authorities in one or more of the jurisdictions in which we operate to be our employees rather than independent contractors, under existing laws and interpretations, we may be deemed to be responsible for a variety of obligations that are imposed upon employers relating to their employees, including social security and related taxes in those jurisdictions, wages, employee benefits, plus any related assessments and penalties, which could harm our financial position and operations. 32 Table of Contents Challenges by private parties to the form of our network marketing system could harm our business.
If federal, state, or local laws and regulations or the interpretation of those laws and regulations require us to treat our independent associates as employees, or if they are deemed by local regulatory authorities in one or more of the jurisdictions in 31 which we operate to be our employees rather than independent contractors, under existing laws and interpretations, we may be deemed to be responsible for a variety of obligations that are imposed upon employers relating to their employees, including social security and related taxes in those jurisdictions, wages, employee benefits, plus any related assessments and penalties, which could harm our financial position and operations.
While U.S. state laws generally cover specific categories of sensitive personal data (e.g., social security numbers, bank account numbers, and credit card numbers), the GDPR notification requirements will apply to incidents involving any personal data, meaning any data related to an identified person.
While U.S. state laws generally cover specific categories of sensitive personal data (e.g., social security numbers, bank account numbers, and credit card numbers), the GDPR notification requirements will apply to incidents involving any personal data, meaning any data related to an identified person. 26 Other countries have enacted and will be enacting similar laws.
As of December 31, 2023 and 2022, cash and cash equivalents held in bank accounts in foreign countries totaled $3.5 million and $11.3 million, respectively.
As of December 31, 2024 and 2023, cash and cash equivalents held in bank accounts in foreign countries totaled $5.1 million and $3.5 million, respectively.
As of December 31, 2023, we had 13 pat ents for the technology relating to our Ambrotose ® formulation, all of which were issued, granted, and validated in 11 foreign jurisdictions. In addition, we have entered into confidentiality agreements with our independent associates, suppliers, manufacturers, directors, officers, and consultants to help protect our proprietary rights.
As of December 31, 2024, we had 17 patents for the technology relating to our Ambrotose ® formulation, all of which were issued, granted, and validated in 15 foreign jurisdictions. In addition, we have entered into confidentiality agreements with our independent associates, suppliers, manufacturers, directors, officers, and consultants to help protect our proprietary rights.
The payment of commissions and incentives, including bonuses and prizes, is our most significant expense. Together, our commissions and incentives range from 35% to 43% of our consolidated net sales. We closely monitor the amount of commissions and incentives as a percentage of net sales and may periodically adjust our compensation plan to better manage these costs.
Together, our commissions and incentives range from 35% to 43% of our consolidated net sales. We closely monitor the amount of commissions and incentives as a percentage of net sales and may periodically adjust our compensation plan to better manage these costs.
Under PIPEDA, an organization must notify individuals of any breach of the security of safeguards involving their personal information if it is reasonable to believe that the breach creates a “real risk of significant harm.” Concurrently, the organization must also report to the Privacy Commissioner of Canada. As noted above, many states have enacted data protection requirements.
Under PIPEDA, an organization must notify individuals of any breach of the security of safeguards involving their personal information if it is reasonable to believe that the breach creates a “real risk of significant harm.” Concurrently, the organization must also report to the Privacy Commissioner of Canada.
As of December 31, 2023, our directors and executive officers collectively with their families and affiliates, beneficially owned approximately 45.1% of our total outstanding common stock.
As of December 31, 2024, our directors and executive officers collectively with their families and affiliates, beneficially owned approximately 43.81% of our total outstanding common stock.
Failure to satisfy minimum purchase requirements could result in the loss of exclusivity, which could adversely affect our business. If we are exposed to product liability claims, we may be liable for damages and expenses, which could affect our overall financial condition, results of operations and cash flows.
Failure to purchase minimum amounts could adversely affect our business and operating results. 24 If we are exposed to product liability claims, we may be liable for damages and expenses, which could affect our overall financial condition, results of operations and cash flows.
However, changes could be viewed negatively by some independent associates, could cause failure to achieve desired long-term results and have a negative impact on revenue. 23 Table of Contents An increase in the amount of commissions and incentives paid to independent associates could adversely affect our earnings.
However, changes could be viewed negatively by some independent associates, could cause failure to achieve desired long-term results and have a negative impact on revenue. 22 An increase in the amount of commissions and incentives paid to independent associates could adversely affect our earnings. The payment of commissions and incentives, including bonuses and prizes, is our most significant expense.
For the year ended December 31, 2023, we recognized 77.1% of net sales in markets outside of the United States and 67.6% in markets outside of the Americas. For the year ended December 31, 2022, we recognized 78.3% of net sales in markets outside of the United States and 69.7% in markets outside of the Americas.
For the year ended December 31, 2024, we recognized 76.3% of net sales in markets outside of the United States and 66.3% in markets outside of the Americas. For the year ended December 31, 2023, we recognized 77.2% of net sales in markets outside of the United States and 67.6% in markets outside of the Americas.
Additional funding may not be available or may only be available on unfavorable terms. We are subject to liquidity risk, which could adversely affect our financial condition and results of operations Effective liquidity management is essential for the operation of our business.
We are subject to liquidity risk, which could adversely affect our financial condition and results of operations Effective liquidity management is essential for the operation of our business.
Although we maintain policies and processes surrounding the protection of sensitive data, which we believe to be adequate, there can be no assurances that we will not be subject to such claims in the future. We rely upon our existing cash balances and cash flow from operations to fund our business and meet our contractual obligations.
Although we maintain policies and processes surrounding the protection of sensitive data, which we believe to be adequate, there can be no assurances that we will not be subject to such claims in the future.
Factors that could affect our ability to continue to introduce new products include, among others, government regulations, the inability to attract and retain qualified research and development staff, the termination of third-party research and collaborative arrangements, proprietary protections of competitors that may limit our ability to offer comparable products, and the difficulties in anticipating changes in consumer tastes and buying preferences.
Factors that could affect our ability to continue to introduce new products include, among others, government regulations, the inability to attract and retain qualified research and development staff, the termination of third-party research and collaborative arrangements, proprietary protections of competitors that may limit our ability to offer comparable products, and the difficulties in anticipating changes in consumer tastes and buying preferences. 23 Our failure to appropriately respond to changing consumer preferences and demand for new products or product enhancements could significantly harm our relationship with independent associates and preferred customers, our product sales, as well as our financial condition and operating results.
The formatting issues, which have been corrected, centered on stating “O g” or “0%” instead of “ In some foreign countries, nutritional products are considered foods, while other countries consider them drugs.
The first Import Alert for Ambrotose Life powder asserted that formatting issues on the supplement facts panel. The formatting issues, which were immediately corrected, centered on stating “O g” or “0%” instead of “ In some foreign countries, nutritional products are considered foods, while other countries consider them drugs.
Our common stock is currently listed on The Nasdaq Global Select Market. Continued listing of a security on Nasdaq is conditioned upon compliance with various continued listing standards. There can be no assurance that we will continue to satisfy the requirements for maintaining listing on Nasdaq.
All companies listed on The Nasdaq Capital Market must meet certain financial requirements and adhere to Nasdaq’s corporate governance standards. Continued listing of a security on Nasdaq is conditioned upon compliance with various continued listing standards. There can be no assurance that we will continue to satisfy the requirements for maintaining listing on Nasdaq.
With increased frequency in recent years, cyber-attacks against companies have resulted in breaches of data security. Our business requires the storage and transmission of suppliers’ data and our independent associates’ and customers’ personal, credit card, and other confidential information. Our information technology systems are susceptible to a growing and evolving threat of cybersecurity risk.
The FTC and state attorneys general also review privacy and data protection for consumers. With increased frequency in recent years, cyber-attacks against companies have resulted in breaches of data security. Our business requires the storage and transmission of suppliers’ data and our independent associates’ and customers’ personal, credit card, and other confidential information.
A downturn in the economy, including as a result of continuing COVID-related factors such as variants and post-COVID conditions, or other communicable and rapidly spreading diseases could affect consumer purchases of discretionary items such as the health and wellness products that we offer, which could have an adverse effect on our business, financial condition, profitability, and cash flows.
A downturn in the economy, could affect consumer purchases of discretionary items such as the health and wellness products that we offer, which could have an adverse effect on our business, financial condition, profitability, and cash flows. We appeal to a wide demographic consumer profile and offer a broad selection of health and wellness products.
Certain of our supply agreements contain exclusivity clauses for the supply of certain raw materials and products, some of which are conditioned upon compliance with minimum purchase requirements. One of our supply agreements, under which the supplier provides us with certain aloe vera-based raw materials, requires us to purchase raw materials in an aggregate amount of $4.2 million through 2024.
One of our supply agreements, under which the supplier provides us with certain aloe vera-based raw materials, requires us to purchase raw materials in an aggregate amount of $1.1 million through 2025.
The new entity, the Direct Selling Self-Regulatory Council (“DSSRC”), will engage in active monitoring of the entire direct selling marketplace, including websites and social media of direct selling companies and their respective independent distributors in the areas of income representations and product claims.
The new entity, the Direct Selling Self-Regulatory Council (“DSSRC”), monitors the entire direct selling marketplace, including websites and social media of direct selling companies and their respective independent distributors in the areas of income representations and product claims. The DSSRC reports potentially non-compliant companies to the appropriate government agencies and manages consumer/company complaint resolution.
The suspension of issuing direct selling licenses continues. Many direct selling companies operating in China are still experiencing negative effects to their business operations including limited sales meetings, media scrutiny, and unfavorable consumer sentiment towards direct selling companies.
Many direct selling companies operating in China are still experiencing negative effects to their business operations including limited sales meetings, media scrutiny, and unfavorable consumer sentiment towards direct selling companies. Chinese officials of various ministries and agencies stated that they will continue to monitor healthcare product and direct 33 selling companies.
Chinese officials of various ministries and agencies stated that they will continue to monitor healthcare product and direct 34 Table of Contents selling companies. The suspension on issuing direct selling licenses remains in effect and it is unclear whether there will be changes to the application processes if and when the suspension is lifted.
The suspension on issuing direct selling licenses remains in effect and it is unclear whether there will be changes to the application processes if and when the suspension is lifted.
The DSSRC will report potentially non-compliant companies to the appropriate government agencies and will manage consumer/company complaint resolution. Legal and regulatory requirements concerning network marketing systems, however, involve a high level of subjectivity, are inherently fact-based, and are subject to judicial interpretation.
Legal and regulatory requirements concerning network marketing systems, however, involve a high level of subjectivity, are inherently fact-based, and are subject to judicial interpretation.
The letter is the first step in a process for the FTC to impose “civil monetary penalties of up to $43,792 per violation.” Nearly all Direct Selling Association (“DSA”) member companies received the notice along with non-members of the DSA in the direct selling channel, gig companies, franchise companies, and other companies offering business opportunities. 31 Table of Contents In March 2022 the FTC issued an Advanced Notice of Public Rulemaking: Trade Regulation Rule on the Use of Earnings Claims that proposes to regulate how the Company and its associates advertise and represent the business.
The letter is the first step in a process for the FTC to impose “civil monetary penalties of up to $43,792 per violation.” Nearly all Direct Selling Association (“DSA”) member companies received the notice along with non-members of the DSA in the direct selling channel, gig companies, franchise companies, and other companies offering business opportunities. 30 In January 2025, the FTC issued a Notice of Proposed Rulemaking: Earnings Claim Rule Regarding Multi-Level Marketing, which proposes to ensure that prospective distributors have an accurate understanding of their potential for earnings under a multi-level marketing company’s compensation plan.
For example, COVID-19 variants have caused some of the pandemic’s negative impacts to return, and COVID-related factors affected our business in some of our Asian markets. 30 Table of Contents Risks Related to Regulation If government regulations regarding network marketing change or are interpreted or enforced in a manner adverse to our business, we may be subject to new enforcement actions and material limitations regarding our overall business model.
To date, we have not entered into any hedging contracts or participated in any hedging or derivative activities. Risks Related to Regulation If government regulations regarding network marketing change or are interpreted or enforced in a manner adverse to our business, we may be subject to new enforcement actions and material limitations regarding our overall business model.
Concentration Risk A significant portion of our revenue is derived from our Ambrotose, Ambrotose Life ® , TruHealth ™ , Manapol®, and Optimal Support Packets products.
Concentration Risk A significant portion of our revenue is derived from our Ambrotose Life ® , TruHealth ™ , Ambrotose, and Optimal Support Packets products. A decline in sales value of such products could have a material adverse effect on our earnings, cash flows, and financial position.
A decline in sales value of such products could have a material adverse effect on our earnings, cash flows, and financial position. 26 Table of Contents Our business is not currently exposed to customer concentration risk given that no independent associate has ever accounted for more than 10% of our consolidated net sales.
Our business is not currently exposed to customer concentration risk given that no independent associate has ever accounted for more than 10% of our consolidated net sales. Currently, the Republic of Korea is our largest market.
We appeal to a wide demographic consumer profile and offer a broad selection of health and wellness products. A downturn in the economy, including as a result of the continuation of COVID-related factors or other rapidly spreading communicable diseases, could adversely impact consumer purchases of discretionary items such as health and wellness products.
A downturn in the economy could adversely impact consumer purchases of discretionary items such as health and wellness products.
Additionally, in November 2022, the FTC issued an Advanced Notice of Public Rulemaking regarding changes to the Business Opportunity Rule, which requires business opportunity sellers to give prospective buyers specific information to help evaluate a business or work-from-home opportunity. As a direct selling company, we are currently exempt from the Business Opportunity Rule.
Additionally, in January 2025, the FTC issued a Notice of Public Rulemaking regarding changes to the Business Opportunity Rule, which would expand the scope to cover money-making opportunities and proposed a definition of “earnings” and “earnings claims” and includes recordkeeping and substantiation requirements. As a direct selling company, we are currently exempt from the Business Opportunity Rule.
However, our business, profitability, and growth prospects could be adversely affected if we fail to receive adequate protection of our proprietary rights. Although several patents pertaining to our Ambrotose ® technology have expired, Mannatech continues to actively explore additional patent protection of its technology and pursue expanded patent protection strategies.
However, our business, profitability, and growth prospects could be adversely affected if we fail to receive adequate protection of our proprietary rights. Our inability to develop and introduce new products that gain independent associate, preferred customer, and market acceptance could harm our business.
Removed
As previously disclosed, on January 8, 2024, we were notified by David A. Johnson, the Company's Chief Financial Officer, of his resignation from his position effective January 22, 2024. Additionally, as previously disclosed, on March 13, 2024, the Company announced the retirement of Alfredo (Al) Bala, the Chief Executive Officer, on April 1, 2024.
Added
On December 31, 2024, the South Korean Personal Information Protection Commission announced draft Consolidated Guidelines on Personal Information Processing for the recently amended Personal Information Protection Act. The South Africa Protection of Personal Information Act (“POPI”) went effective on July 1, 2021. POPI shares similarities with both the EU GDPR and the California Consumer Privacy Act (“CCPA”).
Removed
Landen Fredrick will be promoted to President and Chief Executive Officer, and he will continue to serve as interim Chief Financial Officer. We are conducting a search for a permanent Chief Financial Officer, but there is no assurance that we will be able to identify, attract or hire a replacement in a timely manner.
Added
Our failure or inability to comply with data protection regimes domestically and in foreign countries could result in fines, penalties, injunctions, or material litigation expenditures. As noted above, many states have enacted data protection requirements. California enacted CCPA, effective on January 1, 2020, as amended by the California Privacy Rights Act to provide enhanced data privacy protections to California residents.
Removed
Our Ambrotose ® product formulation has proprietary elements and we have contractual arrangements with certain suppliers affording us exclusive access to certain ingredients in those formulations. If we fail to maintain exclusivity with those suppliers, our business could be adversely affected. We have a number of pending patent applications for additional protection of Ambrotose ® -related technology.
Added
CCPA applies to companies with annual gross revenues in excess of $25 million and other thresholds.Virginia, Colorado, Connecticut, Utah, Iowa, Indiana, Tennessee, Montana, Texas, Florida, Delaware, and Oregon all have adopted laws introducing privacy obligations and many other states are considering similar legislation. A broad range of legislative measures also have been introduced at the federal level.
Removed
The pending patent applications are at various stages of processing, depending on the timeline of each market’s patent offices.
Added
Our information technology systems are susceptible to a growing and evolving threat of cybersecurity risk.
Removed
Most of our patents for the Ambrotose AO ® , GI-ProBalance ® ™, PhytoMatrix ® , NutriVerus™, and PhytoBlend ® formulations and our patents in the field of biomarker assays do not expire for another two or more years. 24 Table of Contents Our inability to develop and introduce new products that gain independent associate, preferred customer, and market acceptance could harm our business.
Added
We use artificial intelligence in our business, and challenges with properly managing its use could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations. We incorporate various artificial intelligence (“AI”) solutions into our digital infrastructure, services, offerings and features, and these applications are becoming important in our operations.
Removed
Our inability to develop products, sales platforms, affiliate opportunities, and other initiatives or maintain an affiliate salesforce and market acceptance for our new Trulu brand and products could harm our business. The failure of our Trulu brand and products to attract or gain acceptance from affiliates or consumers could negatively affect our operating results.
Added
We have not established definitive policies regarding the use of AI platforms and algorithms in our business and with our data and information, and we do not have systems in place that inventory all of the AI-based applications that may be in use in our enterprise.
Removed
Our operating results have been and could be adversely affected if the Trulu products, affiliate platform, and business opportunity do not generate sufficient enthusiasm and financial benefit to attract affiliates who are interested in selling the Trulu products, building a customer base, and promoting the affiliate program. In 2023, our Trulu product sales and affiliate participation were below expectations.
Added
Our competitors or other third parties may incorporate AI into their products and operations more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations.
Removed
Potential factors affecting interest in the Trulu affiliate program and its products include, among other things, perceived product quality and value, similarities to other products, product effectiveness, growth of the gig economy, perceived economic success in the affiliate business opportunity, our technology infrastructure and capabilities, restrictions in social or digital media for sharing products and attracting consumers, and regulatory restrictions on claims.
Added
Additionally, if the content, analyses, search results or recommendations that AI applications assist in producing are, or are alleged to be, deficient, inaccurate, biased or in violation of third parties’ intellectual property rights, our business, reputation, financial condition, and results of operations could be adversely affected.
Removed
If we are unable to anticipate changes in consumer preferences and trends, our business, financial condition, and operating results could be materially adversely affected. Additionally, if we are unable to anticipate changes in the gig and sharing economies and adapt our business opportunity accordingly, our ability to capture growth trends in the social-selling e-commerce marketplace could be materially adversely affected.
Added
The use of AI applications may result in cybersecurity incidents that implicate the personal data of consumers. Any such cybersecurity incidents related to our use of AI applications could adversely affect our reputation and results of operations.
Removed
Our failure to appropriately respond to changing consumer preferences and demand for new products or product enhancements could significantly harm our relationship with independent associates and preferred customers, our product sales, as well as our financial condition and operating results.
Added
AI also presents emerging ethical issues, such as the proper use of copyrighted material with AI applications, and if our use of AI becomes controversial, we may experience brand or reputational harm, competitive harm, or legal liability.
Removed
For example, in March 2020, the WHO declared the outbreak of COVID-19 as a pandemic, which spread throughout our international regions and throughout the United States.
Added
The rapid evolution of AI, including the government regulation of AI, will require significant resources to develop, test and maintain our platform, offerings, services, and features to help us implement AI ethically in order to minimize unintended, harmful impact. Interruption or failure of our information technology and communications systems could impair the delivery of our service and harm our business.
Removed
Beginning in 2020 and continuing through 2023 , the Company experienced challenges in getting certain materials and ingredients to our contract manufacturers and finished products to our distribution centers resulting from reductions in global transportation capacity and other logistical issues within the supply chain.
Added
We rely on our own systems and systems of third party vendors to assist our business. Any degradation in the quality, or any failure, of our systems could reduce our revenues, cause us to lose customers and damage our brands.
Removed
The extent to which COVID-related factors impact our future operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the continued use of updated COVID-19 vaccines, the impact of variants of COVID-19 and post-COVID conditions often referred to as “Long COVID” or “long-haul COVID,” among others.
Added
Although we have implemented practices designed to maintain the availability of the information technology and service delivery systems we rely on and mitigate the harm of any unplanned interruptions, we cannot anticipate all eventualities. We occasionally experience 27 unplanned outages or technical difficulties.
Removed
In particular, the spread of new COVID-19 variants or other rapidly spreading communicable diseases globally could adversely impact our operations, including among others, our manufacturing and supply chain, sales and marketing and clinical trial operations and could have an adverse impact on our business and our financial results. We maintain supply agreements with our suppliers and manufacturers.
Added
We could also experience loss of data or processing capabilities, which could cause us to lose customers and could harm our reputation and operating results. We rely on internal systems and external systems maintained by manufacturers, distributors and service providers to take, fulfill and handle customer service requests and host certain online activities.
Removed
The California Consumer Privacy Act ("CCPA"), a state statute signed into law on June 28, 2018 and effective on January 1, 2020, provides enhanced data privacy protections to California residents. The CCPA applies to companies with annual gross revenues in excess of $25 million. The South Africa Protection of Personal Information Act (“POPI”) went effective on July 1, 2021.
Added
Any interruption or failure of our internal or external systems could prevent us from servicing customers or cause data to be unintentionally disclosed. Our services have experienced, and we expect them to continue to experience, periodic service interruptions and delays involving our own systems and those of our vendors.
Removed
POPI shares similarities with both the EU GDPR and the CCPA. Most recently, China passed the PIPL on August 20, 2021. The PIPL is designed to protect online users’ data privacy, effective on November 1, 2021.
Added
Our data centers and our information technology and communications systems are vulnerable to damage or interruption from natural disasters, malicious attacks, fire, power loss, telecommunications failures, computer viruses or other attempts to harm our systems.
Removed
To date, we have not entered into any hedging contracts or participated in any hedging or derivative activities. COVID-related factors and the possibility of other epidemics or rapidly spreading communicable disease may continue to negatively impact our business.

… 29 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+0 added−0 removed9 unchanged
Biggest changeOur Senior Director of IT Operations oversees a team of analysts and operations support personnel and has extensive experience with the company’s applications and infrastructure. Our senior director reports to our President and Chief Operating Officer, who then communicates directly with the Nominating/Governance and Compliance Committee and the Board.
Biggest changeOur Senior Director of IT Operations oversees a team of analysts and operations support personnel and has extensive experience with the company’s applications and infrastructure. Our senior director reports to the Senior Vice President of Global Operations, who communicates to the President and CEO who then communicates directly with the Nominating/Governance and Compliance Committee and the Board.
We have implemented and maintain comprehensive processes designed to manage and mitigate material cybersecurity threats to ensure that the company operates in a protected, compliant environment. Management Oversight Our cybersecurity governance program is led by the Senior Director of IT Operations.
We have implemented and maintain comprehensive processes 36 designed to manage and mitigate material cybersecurity threats to ensure that the company operates in a protected, compliant environment. Management Oversight Our cybersecurity governance program is led by the Senior Director of IT Operations.
Specifically, management analyzes the following: a. effectiveness of (i) the Company’s overall cybersecurity risk management, (ii) management’s procedures for identifying, measuring, and reporting on cybersecurity risk, and (iii) the incorporation of cybersecurity risk considerations into corporate strategy; b. the Company’s cybersecurity risk profile and risk tolerance; 37 Table of Contents c. significant policies, programs and plan documents related to the management of cybersecurity risk and proposed changes to any of such documents; d. the Company’s controls to prevent, detect and respond to cyberattacks or information or data breaches; e. reports from senior management and/or appropriate external subject matter experts related to the monitoring and analysis of the Company’s current threat environment, vulnerability assessments related to cybersecurity risk management, and existing and expected future trends related to cybersecurity relevant to the organization; f. the Company’s cyber-resiliency, including cybersecurity crisis preparedness, incident response plans, communication plans, and disaster recovery capabilities; g. the capabilities and qualifications of the Company’s cyber and data privacy personnel; and h. the Company’s cybersecurity strategy, related priorities and objectives, and the appropriateness of the resources allocated thereto, including, but not limited to, investments in cybersecurity infrastructure.
Specifically, management analyzes the following: a. effectiveness of (i) the Company’s overall cybersecurity risk management, (ii) management’s procedures for identifying, measuring, and reporting on cybersecurity risk, and (iii) the incorporation of cybersecurity risk considerations into corporate strategy; b. the Company’s cybersecurity risk profile and risk tolerance; c. significant policies, programs and plan documents related to the management of cybersecurity risk and proposed changes to any of such documents; d. the Company’s controls to prevent, detect and respond to cyberattacks or information or data breaches; e. reports from senior management and/or appropriate external subject matter experts related to the monitoring and analysis of the Company’s current threat environment, vulnerability assessments related to cybersecurity risk management, and existing and expected future trends related to cybersecurity relevant to the organization; f. the Company’s cyber-resiliency, including cybersecurity crisis preparedness, incident response plans, communication plans, and disaster recovery capabilities; g. the capabilities and qualifications of the Company’s cyber and data privacy personnel; and h. the Company’s cybersecurity strategy, related priorities and objectives, and the appropriateness of the resources allocated thereto, including, but not limited to, investments in cybersecurity infrastructure.
This oversight includes compliance with disclosure obligations and requirements, cooperation with law enforcement, and related effects on financial risks and is responsible for reporting its findings and recommendations to the full board for its consideration.
This oversight includes compliance with disclosure obligations and requirements, cooperation with law enforcement, and related effects on financial risks and is responsible for reporting its findings and recommendations to the full board for its 37 consideration.
Governance Our Board of Directors engages in the assessment, oversight, and management of materials risks that could affect the company. The board has delegated to the Nominating/Governance and Compliance Committee the oversight responsibility for our cybersecurity risk management program to ensure that cybersecurity risks are identified, assessed, managed, and monitored.
Governance Our Board of Directors engages in the assessment, oversight, and management of material risks that could affect the company. The board has delegated to the Nominating/Governance and Compliance Committee the oversight responsibility for our cybersecurity risk management program to ensure that cybersecurity risks are identified, assessed, managed, and monitored.
Our IT operations team and other members of management discuss cyber risks and trends, and if they arise, any material incidents with senior executives and the Nominating/Governance and Compliance Committee. 38 Table of Contents
Our IT operations team and other members of management discuss cyber risks and trends, and if they arise, any material incidents with senior executives and the Nominating/Governance and Compliance Committee. 38

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed2 unchanged
Biggest changeLeonards, Australia (Australian headquarters) 1,668 sq. feet June 2026 Minago-Ku Tokyo, Japan (Shinagawa Grand Central Tower) 3,497 sq. feet April 2025 Yeongnam Tower, Sincheon-dong, (Daegu Center) 3,557 sq. feet June 2024 Gangnam-gu, Seoul, Korea (Republic of Korea headquarters) 10,596 sq. feet June 2025 Gangnam-gu Seoul, Korea (Seoul training center) 18,441 sq. feet June 2025 Haewoondae-gu, Busan, Korea (Pusan training center) 6,800 sq. feet March 2027 Incheon, South Korea (Incheon training center) 7,754 sq. feet May 2024 Taipei, Taiwan (Taiwan headquarters) 260 sq. feet January 2024 Taiwan Bldg 13F Taipei City (Shu-Yeng CHEN) 93 sq. feet August 2024 Tsuen Wan, New Territories, Hong Kong (office) 5,306 sq. feet July 2025 Hengqin, Zhuhai, China (office) 930 sq. feet September 2024 Tianhe, Guangzhou, China (office) 110 sq. feet July 2024 Richmond, British Columbia, Canada (Canada training center) 1,963 sq. feet September 2025 Markham, Ontario, Canada (office) 1,714 sq. feet September 2024 Bedfordview, South Africa (office) 4,123 sq. feet N/A (1) Guadalajara, Mexico (customer service center) 4,187 sq. feet March 2024 Mexico City, 1st flr Mexico (customer service center) 1,324 sq. feet August 2024 Mexico City, 3rd flr Mexico (office) 1,324 sq. feet August 2024 Monterrey, Mexico (office) 1,259 sq. feet May 2024 Colima, Mexico (office) 732 sq. feet December 2024 Amsterdam, Netherlands (shared office space) 50 sq.feet August 2024 Bangkok, Thailand 192 sq. feet March 2025 (1) Renewable monthly.
Biggest changeLeonards, Australia (Australian headquarters) 1,668 sq. feet June 2026 Minago-Ku Tokyo, Japan (Shinagawa Grand Central Tower) 3,497 sq. feet April 2025 Yeongnam Tower, Sincheon-dong, (Daegu Center) 3,557 sq. feet June 2025 Gangnam-gu, Seoul, Korea (Republic of Korea headquarters) 10,596 sq. feet June 2025 Gangnam-gu Seoul, Korea (Seoul training center) 18,441 sq. feet June 2025 Haewoondae-gu, Busan, Korea (Pusan training center) 6,800 sq. feet March 2027 Incheon, South Korea (Incheon training center) 7,754 sq. feet April 2025 Taiwan Bldg 13F Taipei City (Shu-Yeng CHEN) 93 sq. feet August 2025 Tsuen Wan, New Territories, Hong Kong (office) 5,306 sq. feet July 2025 Hengqin, Zhuhai, China (office) 930 sq. feet September 2025 Tianhe, Guangzhou, China (office) 110 sq. feet July 2026 Richmond, British Columbia, Canada (Canada training center) 1,963 sq. feet September 2025 Bedfordview, South Africa (office) 4,123 sq. feet N/A (1) Guadalajara, Mexico (customer service center) 4,187 sq. feet March 2026 Mexico City, 1st flr Mexico (customer service center) 1,324 sq. feet August 2025 Mexico City, 3rd flr Mexico (office) 1,324 sq. feet August 2025 Colima, Mexico (office) 732 sq. feet December 2025 Amsterdam, Netherlands (shared office space) 50 sq.feet August 2025 Bangkok, Thailand (CW Tower) (Unit 404) 397 sq. feet March 2026 (1) Renewable monthly.
By entering into these third-party distribution facility agreements, our offices maintain flexible operating capacity, minimize shipping costs, and are able to process an order within 24-hours after order placement and receipt of payment. 39 Table of Contents
By entering into these third-party distribution facility agreements, our offices maintain flexible operating capacity, minimize shipping costs, and are able to process an order within 24-hours after order placement and receipt of payment. 39

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

1 edited+0 added−0 removed2 unchanged
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Market for Our Common Stock . On February 12, 1999, we completed our initial public offering. Our common stock is currently trading on Nasdaq under the symbol “MTEX.” Holders . As of February 29, 2024, there were 1,063 s hareholders of record. Dividends .
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Market for Our Common Stock . On February 12, 1999, we completed our initial public offering. Our common stock is currently trading on Nasdaq under the symbol “MTEX.” Holders . As of March 18, 2025, there were 1,031 s hareholders of record. Dividends .

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

69 edited+11 added−10 removed42 unchanged
Biggest changeCurrency impact is determined as the difference between the actual GAAP results and the recalculated results for the current year at the constant dollar rates (in millions, except percentages). 2023 2022 Constant Dollar Change GAAP Measure: Total $ Translation Adjustment Non-GAAP Measure: Constant $ GAAP Measure: Total $ Dollar Percent Net sales $ 132.0 $ 2.3 $ 134.3 $ 137.2 $ (2.9) (2.1) % Gross profit $ 102.9 $ 1.7 $ 104.6 $ 104.1 $ 0.5 0.5 % Loss from operations $ (1.0) $ 0.6 $ (0.4) $ (0.4) $ — — % 43 Table of Contents Net Sales in Dollars and as a Percentage of Consolidated Net Sales Consolidated net sales by region for the years ended December 31, 2023 and 2022 were as follows (in millions, except percentages) : 2023 2022 Americas $ 42.8 32.4 % $ 41.6 30.3 % Asia/Pacific 79.4 60.2 % 83.8 61.1 % EMEA 9.8 7.4 % 11.8 8.6 % Total $ 132.0 100.0 % $ 137.2 100.0 % Consolidated domestic and foreign net sales for the years ended December 31, 2023 and 2022 were as follows (in millions, except percentages) : 2023 2022 Domestic $ 30.2 22.9 % $ 29.8 21.7 % Foreign 101.8 77.1 % 107.4 78.3 % Total $ 132.0 100.0 % $ 137.2 100.0 % Net sales decreased by $5.2 million, or 3.8%, for 2023, as compared to 2022.
Biggest changeA reconciliation of non-GAAP financial measures to GAAP results for the year ended December 31, 2024 and 2023 is presented as follows (in millions, except percentages): 2024 2023 Constant Dollar Change GAAP Measure: Total $ Translation Adjustment Non-GAAP Measure: Constant $ GAAP Measure: Total $ Dollar Percent Net sales $ 117.9 $ 2.7 $ 120.6 $ 132.0 $ (11.4) (8.6) % Gross profit $ 91.5 $ 2.2 $ 93.7 $ 102.9 $ (9.2) (8.9) % Income (loss) from operations $ 1.4 $ 0.8 $ 2.2 $ (1.0) $ 3.2 (320.0) % 43 Net Sales by Region For the years ended December 31, 2024, our operations outside of the Americas accounted for 66.3% of our consolidated net sales, as compared to 67.6% in 2023.
New pack sales and the receipt of new associate fees in connection with new positions in our network are leading indicators for the long-term success of our business. New associate or preferred customer positions are created in our network when our associate fees are paid or products and packs are purchased for the first time under a new account.
New pack sales and the receipt of new associate fees in connection with new positions in our network are leading indicators for the long-term success of our business. New associate or preferred customer positions are created in our network when our associate fees are paid, or packs and products are purchased for the first time under a new account.
We review and analyze net sales by geographical location and by products and packs on a consolidated basis. Each of our subsidiaries sells similar products and exhibits similar economic characteristics, such as selling prices and gross margins.
We review and analyze net sales by geographical location and by packs and products on a consolidated basis. Each of our subsidiaries sells similar products and exhibits similar economic characteristics, such as selling prices and gross margins.
Other sales consisted of: (i) sales of promotional materials; (ii) monthly fees collected for the Success Tracker™ and Mannatech+ customized electronic business-building and educational materials, databases and applications; (iii) training and event registration fees; and (iv) a reserve for estimated sales refunds and returns.
Other Sales Other sales consisted of: (i) sales of promotional materials; (ii) monthly fees collected for the Success Tracker™ and Mannatech+ customized electronic business-building and educational materials, databases and applications; (iii) training and event registration fees; and (iv) a reserve for estimated sales refunds and returns.
We currently sell our products in three regions: (i) the Americas (the United States, Canada and Mexico); (ii) Europe/the Middle East/Africa (“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, Taiwan, Hong Kong, and China).
We currently sell our products in three regions: (i) the Americas (the United States, Canada and Mexico); (ii) Europe/the Middle East/Africa (“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, Taiwan, Hong Kong, and China).
We continuously monitor our compliance with the Nasdaq continued listing rules. MARKET RISKS Please see “Quantitative and Qualitative Disclosure about Market Risk” under Item 7A of this Form 10-K for additional information about our Market Risks. CRITICAL ACCOUNTING ESTIMATES Our consolidated financial statements are prepared in accordance with GAAP.
We continuously monitor our compliance with the Nasdaq continued listing rules. 49 MARKET RISKS Please see “Quantitative and Qualitative Disclosure about Market Risk” under Item 7A of this Form 10-K for additional information about our Market Risks. CRITICAL ACCOUNTING ESTIMATES Our consolidated financial statements are prepared in accordance with GAAP.
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 sale of the product.
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.
Because we sell our products principally through network marketing distribution channels, the opportunities and challenges that affect us most are: recruitment of new and retention of active associates and preferred customers that occupy sales or purchasing positions in our network; entry into new markets and growth of existing markets; niche market development; new product introduction; and investment in our infrastructure.
Because we sell our products principally through network marketing distribution channels, the opportunities and challenges that affect us most are: recruitment of new and retention of current associates and preferred customers that occupy sales or purchasing positions in our network; entry into new markets and growth of existing markets; niche market development; new product introduction; and investment in our infrastructure.
We have identified the following applicable critical estimates as of December 31, 2023: Inventory Reserves Inventory consists 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. We record the amounts charged by the vendors as the costs of inventory.
We have identified the following applicable critical estimates as of December 31, 2024: Inventory Reserves Inventory consists 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. We record the amounts charged by the vendors as the costs of inventory.
We have historically funded our business objectives, operations, and expansion of our operations through net cash flows from operations rather than incurring long-term debt. Working Capital Working capital represents total current assets less total current liabilities. At December 31, 2023, our working capital was $1.9 million as compared to $5.1 million at December 31, 2022.
We have historically funded our business objectives, operations, and expansion of our operations through net cash flows from operations rather than incurring long-term debt. Working Capital Working capital represents total current assets less total current liabilities. At December 31, 2024, our working capital was $5.2 million as compared to $1.9 million at December 31, 2023.
We attribute the lower number of orders processed in 2023 to the loss of continuing independent associates and preferred customers as compared to the recruitment of new independent associates and preferred customers. As a group, continuing independent associates and preferred customers place more orders than new recruits.
We attribute the lower number of orders processed in 2024 to the loss of continuing independent associates and preferred customers as compared to the recruitment of new independent associates and preferred customers. As a group, continuing independent associates and preferred customers place more orders than new recruits.
For more information see Note 1, Organization and Summary of Significant Accounting Policies, Note 7, Income Taxes , Note 11, Commitments and Contingencies, and Note 12, Litigation to our Consolidated Financial Statements.
For more information see Note 1, Organization and Summary of Significant Accounting Policies, Note 7, Income Taxes , Note 12, Commitments and Contingencies, and Note 13, Litigation to our Consolidated Financial Statements.
In addition, as of December 31, 2023, we had net deferred tax assets, after valuation allowance and deferred tax liabilities, totaling $1.6 million , which may not be realized if our assumptions and estimates change, which would affect our effective income tax rate and cash flows in the period of discovery or resolution. 50 Table of Contents Transfer Pricing In many countries, including the U.S., we are subject to transfer pricing and other tax regulations designed to ensure that appropriate levels of income are reported as earned by our U.S. and foreign entities and are taxed accordingly.
In addition, as of December 31, 2024, we had net deferred tax assets, after valuation allowance and deferred tax liabilities, totaling $1.8 million , which may not be realized if our assumptions and estimates change, which would affect our effective income tax rate and cash flows in the period of discovery or resolution. 50 Transfer Pricing In many countries, including the U.S., we are subject to transfer pricing and other tax regulations designed to ensure that appropriate levels of income are reported as earned by our U.S. and foreign entities and are taxed accordingly.
The current portion of restricted cash was $0.9 million at December 31, 2023 and 2022. The Company is required to restrict cash for (i) direct selling insurance premiums and credit card sales in the Republic of Korea; (ii) reserve on credit card sales in the United States and Canada; and (iii) Australia building lease collateral.
The Company is required to restrict cash for (i) direct selling insurance premiums and credit card sales in the Republic of Korea; (ii) reserve on credit card sales in the United States and Canada; and (iii) Australia building lease collateral. The current portion of restricted cash was $0.6 million and $0.9 million at December 31, 2024 and 2023, respectively.
The method for estimating the sales returns and allowance liability has remained consistent as a result of adopting ASC Topic 606. 52 Table of Contents
The method for estimating the sales returns and allowance liability has remained consistent as a result of adopting ASC Topic 606. 52
The associate may return or exchange the product based on the associate product return policy. In China, where we sell our products under a cross-border e-commerce model, we have a 14-day return policy. 51 Table of Contents • Associate and Preferred Customer Product Return Policy.
The associate may return or exchange the product based on the associate product return policy. In China, where we sell our products under a cross-border e-commerce model, we have a 14-day return policy. 51 • Associate and Preferred Customer Product Return Policy.
Therefore, the decline in continuing independent associates and preferred customers had a larger impact on the number of orders we received in 2023.
Therefore, the decline in continuing independent associates and preferred customers had a larger impact on the number of orders we received in 2024.
The decrease was related to travel incentives in the Americas and Asia/Pacific. The costs of incentives, as a percentage of net sales, decreased to 2.0% for the year ended December 31, 2023, as compared to 2.2% for the same period in 2022. Selling and Administrative Expenses Selling and administrative expenses include a combination of both fixed and variable expenses.
The decrease was related to travel incentives in the Americas and Asia/Pacific. The costs of incentives, as a percentage of net sales, decreased to 1.8% for the year ended December 31, 2024, as compared to 2.0% for the same period in 2023. Selling and Administrative Expenses Selling and administrative expenses include a combination of both fixed and variable expenses.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion is intended to assist in the understanding of our consolidated financial position and our results of operations for each of the two years ended December 31, 2023 and 2022.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion is intended to assist in the understanding of our consolidated financial position and our results of operations for each of years ended December 31, 2024 and 2023.
Net Cash Flows Our net consolidated cash flows consisted of the following, for the years ended December 31 (in millions) : Provided by / (used in): 2023 2022 Operating activities $ (2.4) $ (2.6) Investing activities $ (0.7) $ (1.1) Financing activities $ (1.9) $ (4.3) Operating Activities Cash used in operating activities was $2.4 million for the year ended December 31, 2023, as compared to $2.6 million in the prior year.
Net Cash Flows Our net consolidated cash flows consisted of the following, for the years ended December 31 (in millions) : Provided by / (used in): 2024 2023 Operating activities $ 2.3 $ (2.4) Investing activities $ (0.3) $ (0.7) Financing activities $ 2.0 $ (1.9) Operating Activities Cash provided in operating activities was $2.3 million for the year ended December 31, 2024, as compared to a use of cash of $2.4 million in the prior year.
Promotional materials, training, database applications and business management tools are utilized to support our independent associates, which in turn helps stimulate product sales. For the years ended December 31, 2023 and 2022, other sales were $1.1 million and $0.8 million, respectively.
Promotional materials, training, database applications and business management tools are utilized to support our independent associates, which in turn helps stimulate product sales. For the years ended December 31, 2024 and 2023, other sales were $1.5 million and $1.1 million, respectively.
As of December 31, 2023, we maintained a valuation allowance for deferred tax assets arising from our operations of $10.3 million because they did not meet the “more likely than not” criteria as defined by the recognition and measurement provisions of FASB ASC Topic 740, Income Taxes.
As of December 31, 2024, we maintained a valuation allowance for deferred tax assets arising from our operations of $6.9 million because they did not meet the “more likely than not” criteria as defined by the recognition and measurement provisions of FASB ASC Topic 740, Income Taxes.
Provision for Income Taxes Provision for income taxes include current and deferred income taxes for both our domestic and foreign operations.
Income Tax (Provision) Benefit Provision for income taxes include current and deferred income taxes for both our domestic and foreign operations.
This increase was primarily due to a 4.4% increase in revenue per active independent associate and preferred customer, which was partially offset by a 1.4% decline in the number of active independent associates and preferred customers. Sales in the Americas includes the Mexico region.
This decrease was primarily due to a 8.6% decline in the number of active independent associates and preferred customers, which was partially offset by a 1.5% increase in revenue per active independent associate and preferred customer. Sales in the Americas includes the Mexico region.
The decrease in working capital principally reflects the decrease in our cash balance which was utilized to fund our operations in 2023, as well as pay down our current liabilities and fund financing activities .
The increase in working capital principally reflects the increase in our cash balance which was utilized to fund our operations in 2024, as well as pay down our current liabilities and fund financing activities .
We conduct our business as a single reporting segment and primarily sell our products through a network of approximately 145,000 active associates and preferred customer positions held by individuals that purchased our products and/or packs or paid associate fees during the last 12 months, who we refer to as active associates and preferred customers .
We conduct our business as a single operating segment and primarily sell our products through a network of approximately 133,000 active associates and preferred customer positions held by individuals that purchased our products and/or packs or paid associate fees during the last twelve months, who we refer to as current associates and preferred customers .
This policy allows the associate or preferred customer to return an order within one year of the purchase date upon voluntarily terminating his/her account. If an associate or preferred customer returns a product unopened and in good condition, he/she may receive a full refund minus a 10% processing fee.
This policy allows the associate or preferred customer to return an order within one year of the purchase date upon voluntarily terminating his/her account. If an associate or preferred customer returns a product unopened and in good condition, he/she may receive a full refund minus any shipping cost, if applicable.
We incurred an operating loss of $1.0 million for the year ended December 31, 2023, as compared to $0.4 million for the same period last year. Our 2023 operating loss, on a Constant dollar basis (see Non-GAAP Financial Measures, below), was $0.4 million.
We generated operating income of $1.4 million for the year ended December 31, 2024, as compared to an operating loss of $ 1.0 million for the same period last year. Our 2024 operating income, on a Constant dollar basis (see Non-GAAP Financial Measures, below), was $2.2 million.
Commission and Incentives Commission expenses decreased $1.5 million, or 2.9%, to $51.0 million, for the year ended December 31, 2023, as compared to $52.5 million for the same period in 2022. Commissions are earned on sales. Commission expense in dollar terms decreased in 2023 primarily due to a decline in our sales in the year.
Commission and Incentives Commission expenses decreased $4.8 million, or 9.4%, to $46.2 million, for the year ended December 31, 2024, as compared to $51.0 million for the same period in 2023. Commissions are earned on sales. Commission expense in dollar terms decreased in 2024 primarily due to a decline in our sales in the year.
The market price of our common stock may also be adversely affected by the above factors. 47 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Cash and Cash Equivalents Cash and cash equivalents was $7.7 million at December 31, 2023, as compared to $13.8 million as of December 31, 2022.
The market price of our common stock may also be adversely affected by the above factors. 47 LIQUIDITY AND CAPITAL RESOURCES Cash and Cash Equivalents Cash and cash equivalents was $11.4 million at December 31, 2024, as compared to $7.7 million as of December 31, 2023.
Foreign currency exchange had the effect of decreasing revenue in 2023 by $1.9 million, as compared to the same period in 2022. The currency impact is primarily due to the weakening of the Korean Won, Japanese Yen and Australian Dollar.
Foreign currency exchange had the effect of decreasing revenue in 2024 by $2.7 million, as compared to the same period in 2023. The currency impact is primarily due to the weakening of the Korean Won and Japanese Yen.
Investing Activities For the year ended December 31, 2023 and 2022, we invested $0.7 million and $1.1 million, respectively. During the year ended December 31, 2023, we invested approximately $0.7 million in back-office software projects and equipment, reported as property and equipment. During the year ended December 31, 2022, we invested $1.1 million in computer hardware and software.
Investing Activities For the years ended December 31, 2024 and 2023, we invested $0.3 million and $0.7 million, respectively. During the years ended December 31, 2024 and 2023, we invested approximately $0.3 million and $0.7 million in back-office software projects and equipment, reported as property and equipment, respectively.
Our sales mix for the years ended December 31, was as follows (in millions, except percentages): 2023 2022 Constant Dollar Change GAAP Measure: Total $ Translation Adjustment Non-GAAP Measure: Constant $ GAAP Measure: Total $ Dollar Percent Product sales $ 125.3 $ 2.2 127.5 $ 130.2 $ (2.7) (2.1) % Pack sales and associate fees 5.6 0.1 5.7 6.2 (0.5) (8.1) % Other 1.1 — 1.1 0.8 0.3 37.5 % Total $ 132.0 $ 2.3 $ 134.3 $ 137.2 $ (2.9) (2.1) % 44 Table of Contents Our product sales consist primarily of sales made to our independent associates and preferred customers at published wholesale prices.
Our sales mix for the years ended December 31, was as follows (in millions, except percentages): 2024 2023 Constant Dollar Change GAAP Measure: Total $ Translation Adjustment Non-GAAP Measure: Constant $ GAAP Measure: Total $ Dollar Percent Product sales $ 112.3 $ 2.5 $ 114.8 $ 125.3 $ (10.5) (8.4) % Pack sales and associate fees 4.1 0.2 4.3 5.6 (1.3) (23.2) % Other 1.5 — 1.5 1.1 0.4 36.4 % Total $ 117.9 $ 2.7 $ 120.6 $ 132.0 $ (11.4) (8.6) % 44 Product Sales Our product sales consist primarily of sales made to our independent associates and preferred customers at published wholesale prices.
The approximate number of active new and continuing active associates and preferred customers who purchased our products or packs or paid associate fees during the twelve months ended December 31 was as follows: 2023 2022 New 79,000 54.5 % 75,000 51.7 % Continuing 66,000 45.5 % 70,000 48.3 % Total 145,000 100.0 % 145,000 100.0 % The Company collects associate fees in lieu of selling packs in certain markets.
The approximate number of active new and continuing active associates and preferred customers who purchased our products or packs or paid associate fees during the twelve months ended December 31 was as follows: 2024 2023 New 63,000 47.4 % 79,000 54.5 % Continuing 70,000 52.6 % 66,000 45.5 % Total 133,000 100.0 % 145,000 100.0 % Pack Sales and Associate Fees The Company collects associate fees in lieu of selling packs in certain markets.
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.
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.
Our statutory income tax rates by jurisdiction are as follows, for the years ended December 31: Country 2023 2022 China 25.0 % 25.0 % Hong Kong 16.5 % 16.5 % Japan 36.1 % 34.6 % Republic of Korea 20.9 % 22.0 % United States (1) 22.2 % 22.2 % (1) Includes blended state effective rate of 1.2% for 2023 and 2022 in addition to the U.S federal statutory rate of 21% and is now taxed at the full.
Our statutory income tax rates by jurisdiction are as follows, for the years ended December 31: Country 2024 2023 China 25.0 % 25.0 % Hong Kong 16.5 % 16.5 % Japan 34.6 % 34.6 % Republic of Korea 20.9 % 22.0 % United States (1) 22.2 % 22.2 % (1) Includes blended state effective rate of 1.2% for 2024 and 2023 in addition to the U.S federal statutory rate of 21%. 46 Income from our international operations is subject to taxation in the countries in which we operate.
Gross Profit For the year ended December 31, 2023, gross profit decreased by $1.3 million, or 1.2%, to $102.9 million, as compared to $104.1 million for the same period in 2022. The decrease in gross profit in dollar terms is principally due to the decline in sales.
Gross Profit For the year ended December 31, 2024, gross profit decreased by $11.4 million, or 11.1%, to $91.5 million, as compared to $102.9 million for the same period in 2023. The decrease in gross profit in dollar terms is principally due to the 45 decline in sales.
Our 2023 net sales declined $2.9 million, or 2.1%, on a Constant dollar basis (see Non-GAAP Financial Measures, below), and unfavorable foreign exchange caused a $2.3 million decrease in GAAP net sales as compared to 2022.
Our 2024 net sales declined $11.4 million, or 8.6%, on a Constant dollar basis (see Non-GAAP Financial Measures, below), and unfavorable foreign exchange caused a $2.7 million decrease in GAAP net sales as compared to 2023.
We have operating lease liabilities for the property and equipment we use in our business operations. These operating lease liabilities represent our minimum future payment obligations on operating leases, including imputed interest.
These agreements do not require us to purchase any minimum quantities. We have operating lease liabilities for the property and equipment we use in our business operations. These operating lease liabilities represent our minimum future payment obligations on operating leases, including imputed interest.
Foreign currency exchange had the effect of decreasing revenue by $0.9 million for the year ended December 31, 2023, as compared to the same period in 2022. The currency impact is primarily due to the weakening of the South African Rand.
Foreign currency exchange had the effect of increasing revenue by $0.1 million for the year ended December 31, 2024, as compared to the same period in 2023. The currency impact is primarily due to the strengthening of the South African Rand and British Pound.
Commissions as a percentage of net sales was 38.6% for the year ended December 31, 2023 and 38.2% for the same period in the prior year. 45 Table of Contents Incentive costs decreased for the year ended December 31, 2023 by 13.3%, or $0.4 million, to $2.6 million as compared to $3.0 million for the same period in 2022.
Commissions as a percentage of net sales was 39.2% for the year ended December 31, 2024 and 38.6% for the same period in the prior year. Incentive costs decreased for the year ended December 31, 2024 by 19.2%, or $0.5 million, to $2.1 million as compared to $2.6 million for the same period in 2023.
Fluctuations in currency rates produced a decrease of $0.8 million in cash and cash equivalents in 2023. Our principal use of cash is to pay for operating expenses, including commissions and incentives, capital assets, inventory purchases, and periodic cash dividends.
The long-term portion of restricted cash was $0.6 million and $0.7 million at December 31, 2024 and 2023, respectively. Fluctuations in currency rates produced a decrease of $0.8 million in cash and cash equivalents in 2024. Our principal use of cash is to pay for operating expenses, including commissions and incentives, capital assets, inventory purchases, and periodic cash dividends.
As a result of the strengthening of the Mexican Peso in 2023, foreign currency exchange had the effect of increasing revenue by $0.5 million for the year ended December 31, 2023, as compared to the same period in 2022. During 2023, Asia/Pacific sales decreased by $4.4 million, or 5.3%, to $79.4 million as compared to $83.8 million for 2022.
As a result of the weakening of the Mexican Peso in 2024, foreign currency exchange had the effect of decreasing revenue by $0.1 million for the year ended December 31, 2024, as compared to the same period in 2023. During 2024, Asia/Pacific sales decreased by $10.4 million, or 13.1%, to $69.0 million as compared to $79.4 million for 2023.
The decrease in product sales in 2023 reflects a 7.2% decrease in the number of orders processed, partially offset by an increase in the average order value of $180, as compared to $175 for the same period in 2022.
The decrease in product sales in 2024 reflects a 7.2% decrease in the number of orders processed and a decrease in the average order value of $172, as compared to $180 for the same period in 2023.
Product sales for the year ended December 31, 2023 decreased by $4.9 million, or 3.8%, to $125.3 million, as compared to $130.2 million for the same period in 2022. On a constant dollar basis, product sales in 2023 decreased $2.7 million, or 2.1%, as compared to 2022.
Product sales for the year ended December 31, 2024 decreased by $13.0 million, or 10.4%, to $112.3 million, as compared to $125.3 million for the same period in 2023. On a constant dollar basis, product sales in 2024 decreased $10.5 million, or 8.4%, as compared to 2023.
Furthermore, our management has established a plan to improve margin through a price increase, continued focus on supply chain costs, and certain compensation plan adjustments, as well as to reorganize certain functional operations and reduce our fixed selling and administrative overhead.
In this regard, our management has established a 2024 business reorganization plan focusing on revenue growth, margin improvement and cost control and reduction, including a plan to improve margin through a price increase, continued focus on supply chain costs, and certain compensation plan adjustments, as well as to reorganize certain functional operations and reduce our fixed selling and administrative overhead.
However, if our reorganization plans are not successful, or if we are unable to renegotiate a favorable outcome to our minimum purchase commitment contracts, or if we experience prolonged workforce disruptions, disruption in our supply chain, and/or potential decreases in consumer demands, our sales and our overall liquidity in the next twelve months could be negatively impacted.
However, if our reorganization plans are not successful, or if we experience further or unexpected disruption in our supply chain, and/or potential decreases in consumer demands, our sales and our overall liquidity in the next twelve months could be negatively impacted.
For the year ended December 31, 2023, we used approximately $1.0 million in the repayment of finance lease obligations and other long-term liabilities, $0.7 million in the payment of dividends to shareholders, and $0.2 million in the repurchase of common stock.
For the year ended December 31, 2023 , we used approximately $1.0 million in the repayment of finance lease obligations and other long-term liabilities, $0.7 million in the payment of dividends to shareholders, and $0.2 million for the repurchase of common stock. 48 General Liquidity and Cash Flows Short Term Liquidity As of December 31, 2024 and 2023, our c ash and cash equivalents totaled $11.4 million and $7.7 million, respectively.
Depreciation and Amortization Expense For each of the years ended December 31, 2023 and 2022, depreciation and amortization expense remained constant at $1.6 million. Other Expense, net Primarily due to foreign exchange losses, other expense wa s $0.2 million for each of the years ended December 31, 2023 and 2022.
Depreciation and Amortization Expense At December 31, 2024 and 2023, depreciation and amortization expense was $1.5 million and $1.6 million, respectively. Other Income (expense), net Primarily due to foreign exchange gains, other income wa s $2.6 million for the year ended December 31, 2024. At December 31, 2023, other expense was $0.2 million, primarily due to foreign exchange losses.
At each of December 31, 2023 and 2022, our inventory reserves were $0.4 million .
At December 31, 2024 and 2023, our inventory reserves were $0.6 million and $0.4 million, respectively.
Current Economic Conditions and Recent Developments Consolidated net sales for the year ended December 31, 2023 was $132.0 million, as compared to $137.2 million for the year ended December 31, 2022 . Net sales decreased $5.2 million, or 3.8%, for 2023, as compared to 2022 .
Current Economic Conditions and Recent Developments Consolidated net sales for the year ended December 31, 2024 was $117.9 million , as compared to $132.0 million for the year ended December 31, 2023 . Net sales decreased $14.1 million, or 10.7%, for 2024, as compared to 2023 .
In addition, net sales in the Asia/Pacific region was negatively impacted by a 12.2% decrease in revenue per active independent associate and preferred customer, which was partially due to the foreign exchange rate. Offsetting these declines, the number of active independent associates and preferred customers in the Asia/Pacific region increased 7.9% in 2023 as compared to 2022 .
In addition, net sales in the Asia/Pacific region was negatively impacted by a 4.5% decrease in revenue per active independent associate and preferred customer. The number of active independent associates and preferred customers in the Asia/Pacific region decreased 9.0% in 2024 as compared to 2023 .
As our primary source of liquidity has historically been our cash flows from operations, our liquidity is dependent on our ability to maintain and/or continue to improve revenue as compared to our operational expenses. In this regard, our management has established a 2024 business reorganization plan focusing on revenue growth, margin improvement and cost control and reduction.
As our primary source of liquidity has historically been our cash flows from operations, our liquidity is dependent on our ability to maintain and/or continue to improve revenue as compared to our operational expenses.
However, if our existing capital resources or cash flows become insufficient to meet anticipated business plans and existing capital requirements, we may be required to raise additional funds, which may not be available on favorable terms, if at all. 49 Table of Contents Our future access to the capital markets may be adversely impacted if we fail to maintain compliance with the Nasdaq Marketplace Rules for the continued listing of our stock.
However, if our existing capital resources or cash flows become insufficient to meet anticipated business plans and existing capital requirements, we may be required to raise additional funds, which may not be available on favorable terms, if at all.
For the years ended December 31, 2023 and 2022, overall selling and administrative expenses were $48.6 million and $47.4 million, respectively.
For the years ended December 31, 2024 and 2023, overall selling and administrative expenses were $41.7 million and $50.2 million, respectively.
We also ship our products to customers in the following countries: Belgium, France, Greece, Italy, Luxembourg, and Poland.
We also ship our products to customers in the following countries: Belgium, France, Greece, Italy, Luxembourg, and Poland. During the second quarter of 2024, the Company liquidated its entity in Sweden, Mannatech Sverige AB.
Financing Activities For the year ended December 31, 2023, we utilized $1.9 million for financing activities as compared to $4.3 million for the same period of 2022.
Financing Activities For the year ended December 31, 2024, our financing activities provided cash of $2.0 million as compared to a use of cash of $1.9 million for the same period of 2023.
These expenses consist of compensation and benefits for employees, temporary and contract labor and marketing-related expenses, accounting, legal, and consulting fees, travel and entertainment expenses, credit card processing fees, off-site storage fees, utilities, bad debt, and other miscellaneous operating expenses.
These expenses consist of compensation and benefits for employees; temporary and contract labor; accounting, legal and consulting fees; compensation to our board of directors; warehouse and fulfillment costs; depreciation and amortization; marketing-related expenses; travel and entertainment expenses; credit card processing fees; costs for software maintenance agreements; insurance; charitable contributions; office lease expense; utilities; bad debt; and other miscellaneous operating expenses.
Excluding the startup loss of NEMO from the consolidated operating loss on a Constant dollar basis, we would have generated an operating profit of approximately $0.7 million in 2023, as compared to an operating loss of $0.4 million in 2022 . 42 Table of Contents RESULTS OF OPERATIONS Year Ended December 31, 2023 compared to Year Ended December 31, 2022 The tables below summarize our consolidated operating results in dollars and as a percentage of net sales for the years ended December 31, 2023 and 2022 (in thousands, except percentages) . 2023 2022 Change Total Dollars % of net sales Total Dollars % of net sales Dollar Percentage Net sales $ 131,955 100.0 % $ 137,208 100.0 % $ (5,253) (3.8) % Cost of sales 29,090 22.0 % 33,060 24.1 % (3,970) (12.0) % Gross profit 102,865 78.0 % 104,148 75.9 % (1,283) (1.2) % Operating expenses: Commissions and incentives 53,588 40.6 % 55,483 40.4 % (1,895) (3.4) % Selling and administrative expenses 48,613 36.8 % 47,443 34.6 % 1,170 2.5 % Depreciation and amortization 1,628 1.2 % 1,627 1.2 % 1 0.1 % Total operating expenses 103,829 78.7 % 104,553 76.2 % (724) (0.7) % Loss from operations (964) (0.7) % (405) (0.3) % (559) 138.0 % Interest income 4 — % 88 0.1 % (84) (95.5) % Other expense, net (170) (0.2) % (162) (0.1) % (8) 4.9 % Loss before income taxes (1,130) (0.9) % (479) (0.3) % (651) 135.9 % Income tax provision (1,109) (0.8) % (4,011) (2.9) % 2,902 (72.4) % Net loss $ (2,239) (1.7) % $ (4,490) (3.3) % $ 2,251 50.1 % Non-GAAP Financial Measures To supplement our financial results presented in accordance with generally accepted accounting principles in the United States ("GAAP"), the table below summarizes operating results that have been adjusted to exclude the impact of changes due to the translation of foreign currencies into U.S. dollars, including changes in: Net Sales, Gross Profit, and Loss from Operations.
This resulted in net income of $2.5 million, or $1.32 per diluted share, for the year ended December 31, 2024, as compared to a net loss of $2.2 million, or $1.20 per diluted share for the year ended December 31, 2023. 42 RESULTS OF OPERATIONS Year Ended December 31, 2024 compared to Year Ended December 31, 2023 The tables below summarize our consolidated operating results in dollars and as a percentage of net sales for the years ended December 31, 2024 and 2023 (in thousands, except percentages) . 2024 2023 Change Total Dollars % of net sales Total Dollars % of net sales Dollar Percentage Net sales $ 117,866 100.0 % $ 131,955 100.0 % $ (14,089) (10.7) % Cost of sales 26,406 22.4 % 29,090 22.0 % (2,684) (9.2) % Gross profit 91,460 77.6 % 102,865 78.0 % (11,405) (11.1) % Operating expenses: Commissions and incentives 48,309 41.0 % 53,588 40.6 % (5,279) (9.9) % Selling and administrative expenses 41,722 35.4 % 50,241 38.1 % (8,519) (17.0) % Total operating expenses 90,031 76.4 % 103,829 78.7 % (13,798) (13.3) % Income (loss) from operations 1,429 1.2 % (964) (0.7) % 2,393 (248.2) % Interest (expense) income (279) (0.2) % 4 — % (283) (7,075.0) % Other income (expense), net 2,590 2.2 % (170) (0.1) % 2,760 1,623.5 % Income (loss) before income taxes 3,740 3.2 % (1,130) (0.9) % 4,870 431.0 % Income tax provision (1,250) (1.1) % (1,109) (0.8) % (141) 12.7 % Net income (loss) $ 2,490 2.1 % $ (2,239) (1.7) % $ 4,729 211.2 % Non-GAAP Financial Measures To supplement our financial results presented in accordance with generally accepted accounting principles in the United States ("GAAP"), the table below summarizes operating results that have been adjusted to exclude the impact of changes due to the translation of foreign currencies into U.S. dollars, including changes in: Net Sales, Gross Profit, and Income (Loss) from Operations.
For each of the years ended December 31, 2023 and 2022, the Company’s effective tax rate was (98.1)% and (837.4)%, respectively. In 2023, the Company’s effective tax rate differed from the statutory rate due to the mix of earnings across jurisdictions and the associated valuation allowances recorded on losses in certain jurisdictions.
In 2024 and 2023, the Company’s effective tax rate differed from the statutory rate due to the mix of earnings across jurisdictions and the associated valuation allowances recorded on losses in certain jurisdictions. SEASONALITY We believe the impact of seasonality on our consolidated results of operations is minimal.
Income from our international operations is subject to taxation in the countries in which we operate. Although we may receive foreign income tax credits that would reduce the total amount of income taxes owed in the United States, we may not be able to fully utilize our foreign income tax credits in the United States.
Although we may receive foreign income tax credits that would reduce the total amount of income taxes owed in the United States, we may not be able to fully utilize our foreign income tax credits in the United States. For the years ended December 31, 2024 and 2023, the Company’s effective tax rate was 33.4% and (98.1)%, respectively.
For the year ended December 31, 2023, EMEA sales decreased by $2.0 million, or 16.9%, to $9.8 million as compared to $11.8 million for 2022. This decrease was primarily due to a 14.5% decrease in the number of active independent associates and preferred customers, and a 2.9% decrease in revenue per active independent associate and preferred customer.
This decrease was primarily due to a 6.9% decrease in the number of active independent associates and preferred customers, which was partially offset by a 0.9% increase in revenue per active independent associate and preferred customer.
Gross profit as a percentage of net sales increased to 78.0% for 2023, as compared to 75.9% for 2022, largely due to reduced costs of freight and shipping and other supply chain initiatives, partially offset by certain raw materials price increases.
Gross profit as a percentage of net sales decreased to 77.6% for 2024, as compared to 78.0% for 2023, largely due to increased costs related to supply chain challenges, including increased product costs and increased freight costs.
At December 31, 2023, our operating lease liabilities were $4.3 million, of which $1.7 million was recorded in Accrued expenses and $2.6 million was recorded in Other long-term liabilities. We also have finance lease liabilities of $1.2 million and lease restoration liabilities of $0.4 million.
At December 31, 2024, our operating lease liabilities were $2.8 million, of which $1.2 million is presented as the current portion and $1.6 million is presented as Operating lease liabilities excluding current portion on our Consolidated Balance Sheets. We also have finance lease liabilities of $1.0 million and lease restoration liabilities of $0.3 million.
For the year ended December 31, 2023, our operations outside of the Americas accounted for 67.6% of our consolidated net sales, as compared to 69.7% in 2022. Sales for the Americas increased by $1.2 million, or 2.9%, to $42.8 million for 2023 as compared to $41.6 million for the same period in 2022.
For the year ended December 31, 2024, EMEA sales decreased by $0.6 million, or 6.1%, to $9.2 million as compared to $9.8 million for 2023.
The increase of $1.2 million primarily includes $0.9 million increase in legal and consulting fees related to the start-up of our NEMO business, $0.8 million increase in marketing costs, $0.5 million increase in our provision of bad debt, offset by a $1.0 million decrease in payroll and benefits costs .
The decrease of $8.5 million primarily includes a $3.2 million decrease in payroll related costs, $1.6 million decrease in legal and consulting fees, $1.5 million decrease in marketing costs, $0.6 million decrease in miscellaneous operating expenses, $0.5 million decrease in travel and entertainment costs, $0.5 million decrease in office expenses, $0.4 million decrease in credit card fees and a $0.2 million decrease in contract labor costs.
At December 31, 2023, we have one supply agreement that requires the Company to purchase an aggregate of $4.2 million through 2024, with no purchase commitments thereafter. We are currently negotiating with the supplier to amend the agreement to meet current demand levels for these materials.
At December 31, 2024, we have one supply agreement which was amended on April 18, 2024, that requires the Company to purchase an aggregate of $1.1 million through 2025, with no purchase commitments thereafter. We also maintain other supply agreements and manufacturing agreements to protect our products, regulate product costs, and help ensure quality control standards.
For the year ended December 31, 2022, we used approximately $0.8 million in the repayment of finance lease obligations and other long-term liabilities, $1.5 million in the payment of dividends to shareholders, and $2.0 million for the repurchase of common stock. 48 Table of Contents General Liquidity and Cash Flows Short Term Liquidity We believe our existing liquidity and projected cash flows from operations are adequate to fund our normal expected future business operations for the next 12 months.
We believe our existing liquidity and cash flows from operations are adequate to fund our normal expected future business operations for the next twelve months.
We recognize revenue from shipped packs and products upon receipt by the customer. We estimate order delivery dates using weighted averages of historical delivery data periodically provided by our freight carriers. We record the value of orders shipped but not yet delivered to customers as Deferred Revenue on our Consolidated Balance Sheet.
Previously, the Company's shipping terms were Free on Board ("FOB") destination, so the Company recognized revenue upon delivery of the product to the customer and we recorded the value of orders shipped but not yet delivered to customers as Deferred Revenue on our Consolidated Balance Sheets. Corporate-sponsored event revenue is recognized when the event is held.
Removed
In June 2023, the Company launched a tiered affiliate program in the United States under the brand name, “Trulu™.” The Trulu brand is operated by our wholly owned subsidiary, “NEMO”, and is separate from our network marketing business.
Added
On a consolidated basis, the strength of the U.S. dollar against the Korean Won during 2024, provided a foreign currency gain of $2.6 million in other income.
Removed
For the year ended December 31, 2023 , we incurred an operating loss of $1.1 million in connection with the start-up of our NEMO business.
Added
Currency impact is determined as the difference between the actual GAAP results and the recalculated results for the current year at the constant dollar rates At December 31, 2024, our net sales declined $11.4 million, or 8.6% on a Constant dollar basis (see reconciliation of Non-GAAP Financial Measures in the table below); unfavorable foreign exchange caused a $2.7 million decrease in GAAP net sales as compared to the same period in 2023.
Removed
In 2022, the Company's effective rate differed from the statutory rate due to additional taxes assessed as a result of the settlement of the income tax audit in Korea, the Company recording a valuation allowance on U.S. deferred tax assets largely driven by changes in expected earnings mix between jurisdictions and the relative impact of these items on decreased earnings. 46 Table of Contents SEASONALITY We believe the impact of seasonality on our consolidated results of operations is minimal.
Added
Consolidated net sales by region for the years ended December 31, 2024 and 2023 were as follows (in millions, except percentages) : 2024 2023 Americas $ 39.7 33.7 % $ 42.8 32.4 % Asia/Pacific 69.0 58.5 % 79.4 60.2 % EMEA 9.2 7.8 % 9.8 7.4 % Total $ 117.9 100.0 % $ 132.0 100.0 % Consolidated domestic and foreign net sales for the years ended December 31, 2024 and 2023 were as follows (in millions, except percentages) : 2024 2023 Domestic $ 28.0 23.7 % $ 30.2 22.9 % Foreign 89.9 76.3 % 101.8 77.1 % Total $ 117.9 100.0 % $ 132.0 100.0 % Sales for the Americas decreased by $3.1 million, or 7.2%, to $39.7 million for 2024 as compared to $42.8 million for the same period in 2023.
Removed
As of December 31, 2023 and 2022, c ash and cash equivalents totaled $7.7 million and $13.8 million, respectively. While our cash utilization in 2022 and 2023 has reduced our short-term liquidity, we do not believe the impact will prohibit us from meeting our obligations or from executing our business strategy.
Added
Pack sales and associate fees for the year ended December 31, 2024 decreased by $1.5 million, or 26.8%, to $4.1 million, as compared to $5.6 million for the same period in 2023. On a constant dollar basis, pack sales and associate fees in 2024 decreased $1.3 million, or 23.2%, as compared to 2023.
Removed
See “Item 1A – Risk Factors – Risks Affecting Our Business and Industry - We are subject to liquidity risk, which could adversely affect our financial condition and results of operations.” We have contractual purchase commitments with certain raw material suppliers to purchase minimum quantities and to ensure exclusivity of our raw materials and the proprietary nature of our products.
Added
The decrease in pack sales and associate fees in 2024 reflects a 3.7% decrease in the number of orders processed and a 24.2% decrease in the average order value of $49, as compared to $65 for the same period in 2023.
Removed
We also maintain other supply agreements and manufacturing agreements to protect our products, regulate product costs, and help ensure quality control standards. These agreements do not require us to purchase any minimum quantities.

… 10 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed8 unchanged
Biggest changeThe current (spot) rate, average currency exchange rates, and the low and high of such currency exchange rates as compared to the United States dollar, for each of these countries as of and for the year ended December 31, 2023 were as follows: Year ended December 31, 2023 As of December 31, 2023 Country (foreign currency name) Low High Average Spot Australia (Australian Dollar) 0.62970 0.71173 0.66457 0.68183 Canada (Canadian Dollar) 0.72082 0.76071 0.74118 0.75491 China (Renminbi) 0.13623 0.14921 0.14149 0.14145 Colombia (Peso) 0.00020 0.00026 0.00023 0.00026 Czech Republic (Koruna) 0.04258 0.04735 0.04509 0.04470 Denmark (Kroner) 0.14041 0.15087 0.14517 0.14808 Hong Kong (Hong Kong Dollar) 0.12739 0.12837 0.12774 0.12807 Japan (Yen) 0.00659 0.00782 0.00714 0.00709 Mexico (Peso) 0.05134 0.05996 0.05646 0.05895 New Zealand (New Zealand Dollar) 0.58055 0.65089 0.61435 0.63207 Norway (Krone) 0.08911 0.10181 0.09484 0.09831 Republic of Korea (Won) 0.00074 0.00082 0.00077 0.00077 Singapore (Singapore Dollar) 0.72789 0.76520 0.74487 0.75805 South Africa (Rand) 0.05064 0.05957 0.05431 0.05470 Sweden (Krona) 0.08938 0.10053 0.09434 0.09922 Switzerland (Franc) 1.06165 1.19050 1.11343 1.18866 Taiwan (New Taiwan Dollar) 0.03082 0.03367 0.03213 0.03278 Thailand (Dollar) 0.02698 0.03063 0.02879 0.02912 United Kingdom (British Pound) 1.18342 1.31132 1.24378 1.27324 Various countries (1) (Euro) 1.04717 1.12401 1.08158 1.10381 (1) Austria, Germany, the Netherlands, Estonia, Finland, the Republic of Ireland and Spain 53 Table of Contents
Biggest changeThe current (spot) rate, average currency exchange rates, and the low and high of such currency exchange rates as compared to the United States dollar, for each of these countries as of and for the year ended December 31, 2024 were as follows: Year ended December 31, 2024 As of December 31, 2024 Country (foreign currency name) Low High Average Spot Australia (Australian Dollar) 0.62159 0.69255 0.66007 0.62297 Canada (Canadian Dollar) 0.69390 0.75493 0.73032 0.69524 China (Renminbi) 0.13703 0.14264 0.13918 0.13703 Colombia (Peso) 0.00022 0.00027 0.00025 0.00023 Czech Republic (Koruna) 0.04114 0.04471 0.04311 0.04137 Denmark (Kroner) 0.13920 0.15005 0.14511 0.13968 Hong Kong (Hong Kong Dollar) 0.12759 0.12884 0.12816 0.12882 Japan (Yen) 0.00619 0.00712 0.00661 0.00635 Mexico (Peso) 0.04840 0.06121 0.05495 0.04890 New Zealand (New Zealand Dollar) 0.56299 0.63593 0.60537 0.56486 Norway (Krone) 0.08774 0.09832 0.09311 0.08812 Republic of Korea (Won) 0.00068 0.00077 0.00073 0.00068 Singapore (Singapore Dollar) 0.73267 0.78078 0.74868 0.73631 South Africa (Rand) 0.05179 0.05847 0.05465 0.05337 Sweden (Krona) 0.09032 0.09924 0.09469 0.09083 Switzerland (Franc) 1.08754 1.19005 1.13663 1.10728 Taiwan (New Taiwan Dollar) 0.03045 0.03278 0.03117 0.03052 Thailand (Dollar) 0.02694 0.03097 0.02840 0.02935 United Kingdom (British Pound) 1.23557 1.33890 1.27830 1.25672 Various countries (1) (Euro) 1.03845 1.11940 1.08228 1.04172 (1) Austria, Germany, the Netherlands, Estonia, Finland, the Republic of Ireland and Spain 53
The regions and countries in which we currently have exposure to foreign currency exchange rate risk include (i) North America/South America (Canada, Colombia and Mexico); (ii) EMEA (Austria, the Czech Republic, Denmark, Estonia, Finland, Germany, the Republic of Ireland, the Netherlands, Norway, South Africa, Spain, Sweden, Switzerland and the United Kingdom); and (iii) Asia/Pacific (Australia, Japan, New Zealand, the Republic of Korea, Singapore, Taiwan, Hong Kong and China).
The regions and countries in which we currently have exposure to foreign currency exchange rate risk include (i) North America/South America (Canada, Colombia and Mexico); (ii) EMEA (Austria, the Czech Republic, Denmark, Estonia, Finland, Germany, the Republic of Ireland, the Netherlands, Norway, South Africa, Spain, Sweden, Switzerland and the United Kingdom); and (iii) Asia/Pacific (Australia, Japan, New Zealand, the Republic of Korea, Singapore, Taiwan, Hong Kong, Thailand and China).

Other MTEX 10-K year-over-year comparisons