MANNATECH INC

For the period ended Dec 31, 2023. Filed Mar 28, 2024.

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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.

FY2023 · Filed Mar 28, 2024

MTEX$8.95+10.4%Stored close · as of Nov 9, 2026

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Contents

Index to Consolidated Financial Statements

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2023 and 2022	F-4
Consolidated Statements of Operations for the years ended December 31, 2023 and 2022	F-5
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2023 and 2022	F-5
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2023 and 2022	F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022	F-7
Notes to Consolidated Financial Statements	F-9

Shareholders and Board of Directors

Mannatech, Incorporated

Flower Mound, Texas

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Mannatech, Incorporated (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, shareholders’ equity, and cash flows for each of the years then ended and the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of the Company’s Determination of Transfer Pricing Policies

As described in Note 1 to the consolidated financial statements, the Company is subject to transfer pricing tax regulations designed to ensure the appropriate allocation of income between the U.S. and foreign entities and that the Company is taxed accordingly. As disclosed in Note 7 to the consolidated financial statements, the Company’s loss before income taxes of $1.1 million for the year ended December 31, 2023 comprised of a loss before income taxes of $5.4 million in the United States and income before income taxes of $4.3 million outside of the United States. This is a function of the Company’s transfer pricing policies, which govern the allocation of taxable income among the Company’s various tax jurisdictions.

We identified the Company’s determination of transfer pricing policies as a critical audit matter. The principal consideration for our determination was that the tax regulations that exist over transfer pricing are subjective and vary by jurisdiction. Auditing management’s transfer pricing studies and transfer pricing policies was especially challenging and required significant auditor judgement, including the involvement of tax professionals with specialized knowledge and skill.

The primary procedures we performed to address this critical audit matter included:

Utilizing personnel with specialized knowledge and skill in transfer pricing regulations to assist in evaluating (i) the Company’s transfer pricing policies, which is based on comparisons to comparable companies and precedents set by the various taxing authorities that govern the jurisdictions in which the Company operates, and (ii) jurisdictional profit margins to ensure that the Company’s intercompany transactions and other income allocation methodologies are appropriate and comply with the Company’s transfer pricing policies.

/s/ BDO USA, P.C.

We have served as the Company's auditor since 2007.

Dallas, Texas

March 28, 2024

(in thousands, except share information)

	December 31, 2023	December 31, 2022
ASSETS
Cash and cash equivalents	$7,731	$13,777
Restricted cash	938	944
Accounts receivable, net of allowance of $1,278 and $973 in 2023 and 2022, respectively	91	218
Income tax receivable	465	423
Inventories, net	14,535	14,726
Prepaid expenses and other current assets	1,774	2,389
Deferred commissions	2,130	2,476
Total current assets	27,664	34,953
Property and equipment, net	4,147	3,759
Long-term restricted cash	718	476
Other assets	7,066	8,439
Deferred tax assets, net	1,611	1,501
Total assets	$41,206	$49,128
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current portion of finance leases	$269	$61
Accounts payable	4,010	4,361
Accrued expenses	6,779	7,510
Commissions and incentives payable	8,175	9,256
Taxes payable	1,521	3,281
Current notes payable	240	263
Deferred revenue	4,786	5,106
Total current liabilities	25,780	29,838
Finance leases, excluding current portion	956	88
Other long-term liabilities	3,986	5,026
Total liabilities	30,722	34,952
Commitments and contingencies (Note 11)
Shareholders’ equity:
Preferred stock, $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding	—	—
Common stock, $0.0001 par value, 99,000,000 shares authorized, 2,742,857 shares issued and 1,860,154 shares outstanding as of December 31, 2023 and 2,742,857 shares issued and 1,858,800 shares outstanding as of December 31, 2022	—	—
Additional paid-in capital	33,309	33,377
Retained earnings (accumulated deficit)	(1,301)	1,686
Accumulated other comprehensive (loss)	(1,015)	(208)
Treasury stock, at average cost, 882,703 shares as of December 31, 2023 and 884,057 shares as of December 31, 2022	(20,509)	(20,679)
Total shareholders’ equity	10,484	14,176
Total liabilities and shareholders’ equity	$41,206	$49,128

(in thousands, except per share information)

	For the years ended December 31,
	2023	2022
Net sales	$131,955	$137,208
Cost of sales	29,090	33,060
Gross profit	102,865	104,148
Operating expenses:
Commissions and incentives	53,588	55,483
Selling and administrative expenses	48,613	47,443
Depreciation and amortization	1,628	1,627
Total operating expenses	103,829	104,553
Loss from operations	(964)	(405)
Interest income	4	88
Other expense, net	(170)	(162)
Loss before income taxes	(1,130)	(479)
Income tax provision	(1,109)	(4,011)
Net loss	$(2,239)	$(4,490)
(Loss) per common share:
Basic	$(1.20)	$(2.35)
Diluted	$(1.20)	$(2.35)
Weighted-average common shares outstanding:
Basic	1,866	1,913
Diluted	1,866	1,913

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

For the years ended December 31,

	2023	2022
Net loss	$(2,239)	$(4,490)
Other comprehensive loss, net of tax:
Foreign currency translations loss	(819)	(2,546)
Pension obligations, net of tax provision of $6 and $10 in 2023 and 2022, respectively	12	19
Other comprehensive Loss	$(807)	$(2,527)
Comprehensive loss	$(3,046)	$(7,017)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(amounts in thousands, except share data)

	Common Stock, $0.0001 par value
	Number of Shares	Amount	Additionalpaid incapital	Retained earnings (accumulated deficit)	Accumulatedothercomprehensiveincome (loss)	Treasurystock	Totalshareholders’equity
Balance at December 31, 2021	1,940,687	$—	$33,277	$7,708	$2,342	$(18,915)	$24,412
Net loss	—	—	—	(4,490)	—	—	(4,490)
Payment of cash dividends	—	—	—	(1,532)	—	—	(1,532)
Charge related to stock-based compensation	—	—	78	—	—	—	78
Issuance of unrestricted shares	6,072	—	97	—	—	143	240
Stock option exercises (cashless)	11,334	—	(75)	—	—	75	—
Repurchase of common stock	(99,293)	—	—	—	—	(1,982)	(1,982)
Disposition of foreign entity	—	—	—	—	(23)	—	(23)
Foreign currency translation	—	—	—	—	(2,546)	—	(2,546)
Pension obligations, net of $10 tax	—	—	—	—	19	—	19
Balance at December 31, 2022	1,858,800	$—	$33,377	$1,686	$(208)	$(20,679)	$14,176
Net loss	—	—	—	(2,239)	—	—	(2,239)
Payment of cash dividends	—	—	—	(748)	—	—	(748)
Charge related to stock-based compensation	—	—	43	—	—	—	43
Issuance of unrestricted shares	12,808	—	(76)	—	—	299	223
Stock option exercises	2,000	—	(35)	—	—	47	12
Repurchase of common stock	(13,454)	—	—	—	—	(176)	(176)
Foreign currency translation	—	—	—	—	(819)	—	(819)
Pension obligations, net of $6 tax	—	—	—	—	12	—	12
Balance at December 31, 2023	1,860,154	$—	$33,309	$(1,301)	$(1,015)	$(20,509)	$10,484

	For the years ended December 31,
	2023	2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$(2,239)	$(4,490)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,628	1,627
Non-cash operating lease expense	1,904	1,868
Provision for inventory losses	463	543
(Recovery of) Provision for doubtful accounts	519	(26)
Loss on disposal of assets	7	3
Gain on disposal of subsidiary	—	(23)
Stock-based compensation expense	278	337
Deferred income taxes	121	1,226
Changes in operating assets and liabilities:
Accounts receivable	(391)	(102)
Income tax receivable	(42)	(81)
Inventories	(272)	(3,249)
Prepaid expenses and other current assets	1,354	1,296
Deferred commissions	346	(107)
Other assets	(226)	768
Accounts payable	(351)	392
Accrued expenses and other long-term liabilities	(2,308)	(3,592)
Taxes payable	(1,760)	1,127
Commissions and incentives payable	(1,081)	(355)
Deferred revenue	(320)	239
Net cash used in operating activities	(2,370)	(2,599)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment	(748)	(1,063)
Proceeds from sale of assets	1	—
Cash used in investing activities	(747)	(1,063)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock options exercised	12	—
Repurchase of common stock	(176)	(1,982)
Payment of cash dividends	(748)	(1,532)
Repayment of finance lease obligations and other financing obligations	(991)	(817)
Cash used in financing activities	(1,903)	(4,331)
Effect of currency exchange rate changes on cash and cash equivalents and restricted cash	(790)	(2,442)
Decrease in cash and cash equivalents and restricted cash	(5,810)	(10,435)
Cash and cash equivalents and restricted cash at the beginning of the year	15,197	25,632
Cash and cash equivalents and restricted cash at the end of the year	$9,387	$15,197

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:	For the years ended December 31,
	2023	2022
Income taxes paid, net	$2,551	$715
Interest paid on finance leases and other financing obligations	$100	$32
Assets acquired through other financing arrangements	$739	$798
Right of use assets acquired in exchange for new operating lease liabilities	$305	$1,855
Finance lease right of use assets acquired in exchange for new finance lease liabilities	$1,305	$93
Treasury shares exchanged for stock options exercised	$—	$75

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