UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 30, 2022 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________. Commission File No. 000-24657 MANNATECH, INCORPORATED (Exact Name of Registrant as Specified in its Charter) Texas 75-2508900 (Sta ...

For the transition period from ___________ to ___________. Commission File No. 000-24657 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 2022 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 MANNATECH, INCORPORATED (Exact Name of Registrant as Specified in its Charter) Texas 75-2508900 (St ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________to ________ Commission File No. 000-24657 MANNATECH, INCORPORATED (Exact Name of Registrant as Specified in its Charter) Texas 75-2508900 (State or other Jurisdiction ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: September 30, 2021 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________. Commission File No. 000-24657 MANNATECH, INCORPORATED (Exact Name of Registrant as Specified in its Charter) Texas 75-2508900 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 30, 2021 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________. Commission File No. 000-24657 MANNATECH, INCORPORATED (Exact Name of Registrant as Specified in its Charter) Texas 75-2508900 (Sta ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 2021 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________. Commission File No. 000-24657 MANNATECH, INCORPORATED (Exact Name of Registrant as Specified in its Charter) (State or other Juri ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________to ________ Commission File No. 000-24657 MANNATECH, INCORPORATED (Exact Name of Registrant as Specified in its Charter) Texas 75-2508900 (State or other Jurisdiction ...

(Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Washington, D.C. 20549 For the quarterly period ended: September 30, 2020 FORM 10-Q OR UNITED STATES SECURITIES AND EXCHANGE COMMISSION ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________. Commission File No. 000-24657 MANNATECH, INCORPORATED (Exact Name of Registrant as Specified in its Charter) Texas 75-2508900 ...

[Special Note Regarding Forward-Looking Statements](index=3&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) This section highlights that the report includes forward-looking statements about future performance and market conditions, which are subject to various risks and uncertainties, including the impact of the COVID-19 pandemic - The report contains forward-looking statements regarding future operations, financial performance, and market conditions, which are subject to various risks and uncertainties[6](index=6&type=chunk)[7](index=7&type=chunk) - Key factors that could cause actual results to differ materially include the impact of the COVID-19 pandemic, overall growth in the nutritional supplements industry, product development plans, changes in manufacturing costs, shifts in product mix, changes in compensation plans, ability to attract and retain associates/customers, new regulatory changes, competitive landscape, publicity, and the political, social, and economic climate in operating countries[7](index=7&type=chunk)[9](index=9&type=chunk) Part I – Financial Information [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Mannatech, Incorporated's unaudited consolidated financial statements for the three and six months ended June 30, 2020, including balance sheets, statements of operations, comprehensive income, shareholders' equity, and cash flows, along with detailed notes on significant accounting policies and specific financial line items [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and shareholders' equity as of June 30, 2020, and December 31, 2019 Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2020 (unaudited) | December 31, 2019 | | :-------------------------------- | :------------------------ | :------------------ | | Cash and cash equivalents | $20,712 | $24,762 | | Total current assets | $41,330 | $41,029 | | Total assets | $64,136 | $62,923 | | Total current liabilities | $31,497 | $28,892 | | Total liabilities | $39,497 | $35,648 | | Total shareholders' equity | $24,639 | $27,275 | - Total assets increased by **$1.2 million**, or **1.9%**, from December 31, 2019, to June 30, 2020[11](index=11&type=chunk) - Total liabilities increased by **$3.8 million**, or **10.8%**, while total shareholders' equity decreased by **$2.6 million**, or **9.7%**, over the same period[11](index=11&type=chunk) [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance, presenting net sales, gross profit, operating income, and net income for the three and six months ended June 30, 2020 and 2019 Consolidated Statements of Operations Highlights (in thousands, except per share) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $37,647 | $40,711 | $74,252 | $78,684 | | Gross profit | $28,939 | $32,596 | $58,536 | $63,142 | | Income from operations | $1,110 | $2,019 | $3,122 | $3,139 | | Net income | $1,130 | $1,987 | $3,918 | $2,675 | | Basic EPS | $0.48 | $0.83 | $1.65 | $1.12 | | Diluted EPS | $0.47 | $0.81 | $1.62 | $1.09 | - Net sales decreased by **7.5%** for the three months and **5.6%** for the six months ended June 30, 2020, compared to the prior year periods[13](index=13&type=chunk) - Net income decreased by **43.1%** for the three months but increased by **46.5%** for the six months ended June 30, 2020, primarily due to a significant income tax benefit in the six-month period[13](index=13&type=chunk) [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section details the company's comprehensive income, including net income and other comprehensive income components like foreign currency translations, for the three and six months ended June 30, 2020 and 2019 Consolidated Statements of Comprehensive Income (in thousands) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $1,130 | $1,987 | $3,918 | $2,675 | | Foreign currency translations | $548 | $(189) | $(1,086) | $(630) | | Comprehensive income | $1,678 | $1,798 | $2,832 | $2,045 | - Comprehensive income for the six months ended June 30, 2020, increased by **38.5%** to **$2.8 million**, primarily driven by higher net income despite negative foreign currency translations[15](index=15&type=chunk) [Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) This section tracks changes in the company's shareholders' equity, including net income, dividends, stock-based compensation, and stock repurchases, for the six months ended June 30, 2020 Shareholders' Equity Changes (Six Months Ended June 30, 2020, in thousands) | Item | Amount | | :-------------------------------- | :----- | | Balance at January 1, 2020 | $27,275 | | Net income | $3,918 | | Payment of cash dividends | $(599) | | Stock-based compensation charge | $117 | | Issuance of unrestricted shares | $210 | | Repurchase of common stock | $(5,195) | | Foreign currency translations | $(1,086) | | Balance at June 30, 2020 | $24,639 | - Total shareholders' equity decreased from **$27.3 million** at January 1, 2020, to **$24.6 million** at June 30, 2020, primarily due to significant common stock repurchases totaling **$5.2 million** and negative foreign currency translations, partially offset by net income[17](index=17&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2020 and 2019 Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in thousands) | Activity | 2020 | 2019 | | :----------------------- | :----- | :----- | | Operating activities | $2,480 | $3,811 | | Investing activities | $(478) | $(684) | | Financing activities | $(6,037) | $(1,338) | | Effect of currency exchange rate changes | $(1,068) | $(603) | | Net (decrease) increase in cash, cash equivalents, and restricted cash | $(5,103) | $1,186 | | Cash, cash equivalents, and restricted cash at end of period | $25,897 | $31,770 | - Net cash provided by operating activities decreased to **$2.5 million** in 2020 from **$3.8 million** in 2019[21](index=21&type=chunk) - Net cash used in financing activities significantly increased to **$6.0 million** in 2020 from **$1.3 million** in 2019, primarily due to **$5.2 million** in common stock repurchases[21](index=21&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed disclosures on Mannatech's significant accounting policies and specific financial line items, offering context to the unaudited consolidated financial statements [NOTE 1: Organization and Summary of Significant Accounting Policies](index=10&type=section&id=NOTE%201%3A%20ORGANIZATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note describes Mannatech's business operations, sales model, the impact of the COVID-19 pandemic, and key accounting policies for cash, deferred revenue, and recent accounting pronouncements - Mannatech develops, markets, and sells nutritional supplements, skin care, anti-aging, and weight-management products across three regions: Americas, EMEA, and Asia/Pacific[25](index=25&type=chunk) - The company primarily operates through an independent sales force (associates and preferred customers) and a non-direct selling e-commerce model in mainland China[26](index=26&type=chunk) - The COVID-19 pandemic has impacted operations, including workforce disruptions, supply chain challenges, and potential decreases in consumer demand, leading to office closures and remote work[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) Cash and Restricted Cash (in thousands) | Category | June 30, 2020 | December 31, 2019 | | :------------------------------------------ | :------------ | :---------------- | | Cash and cash equivalents | $20,712 | $24,762 | | Restricted cash (current & long-term) | $5,185 | $6,238 | | Total cash, cash equivalents, and restricted cash | $25,897 | $31,000 | - A significant portion of cash and cash equivalents (**$17.0 million** at June 30, 2020) is held in foreign countries, with **$19.0 million** concentrated in the Republic of Korea[36](index=36&type=chunk)[37](index=37&type=chunk) - The company received and fully repaid a **$2.2 million** Paycheck Protection Program (PPP) loan in April 2020[45](index=45&type=chunk) Deferred Revenue (in thousands) | Category | June 30, 2020 | December 31, 2019 | | :----------------------- | :------------ | :---------------- | | Total deferred revenue | $4,801 | $4,416 | | Loyalty program deferred revenue | $3,064 | $3,127 | - Sales returns have historically averaged **1.5% or less** of gross sales, with the majority occurring within **90 days** of purchase[59](index=59&type=chunk) - The company adopted ASU 2016-02 (Leases) on January 1, 2019, which increased assets by **$4.7 million** and liabilities by **$6.1 million** on the balance sheet[63](index=63&type=chunk) - ASU 2016-13 (CECL model) will be effective for the company on January 1, 2023, and is expected to apply primarily to trade receivables[66](index=66&type=chunk) [NOTE 2: Inventories](index=17&type=section&id=NOTE%202%3A%20INVENTORIES) This note details the composition of Mannatech's inventories, including raw materials and finished goods, and changes in inventory reserves Inventory Breakdown (in thousands) | Category | June 30, 2020 | December 31, 2019 | | :-------------------------- | :------------ | :---------------- | | Raw materials | $2,755 | $2,685 | | Finished goods | $11,060 | $8,341 | | Inventory reserves for obsolescence | $(496) | $(874) | | Total | $13,319 | $10,152 | - Total inventories increased by **$3.2 million**, or **31.2%**, from December 31, 2019, to June 30, 2020, primarily due to an increase in finished goods[68](index=68&type=chunk) [NOTE 3: Income Taxes](index=17&type=section&id=NOTE%203%3A%20INCOME%20TAXES) This note explains Mannatech's effective income tax rates and the impact of specific tax benefits, such as those from the CARES Act Effective Tax Rates | Period | 2020 | 2019 | | :-------------------------- | :----- | :----- | | Three months ended June 30, | 12.3% | 34.3% | | Six months ended June 30, | (24.7)% | 34.0% | - The effective tax rate for the six months ended June 30, 2020, was **negative (24.7%)** due to a **$1.2 million** benefit from the carryback of U.S. net operating losses under the CARES Act[71](index=71&type=chunk) [NOTE 4: Earnings Per Share](index=18&type=section&id=NOTE%204%3A%20EARNINGS%20PER%20SHARE) This note presents Mannatech's basic and diluted earnings per share and weighted-average common shares outstanding for the reported periods Earnings Per Share and Shares Outstanding | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $0.48 | $0.83 | $1.65 | $1.12 | | Diluted EPS | $0.47 | $0.81 | $1.62 | $1.09 | | Weighted-average common shares outstanding (Basic, in thousands) | 2,370 | 2,394 | 2,380 | 2,395 | | Weighted-average common shares outstanding (Diluted, in thousands) | 2,388 | 2,452 | 2,402 | 2,457 | - Approximately **0.3 million** and **0.6 million** stock options were excluded from diluted EPS calculation for the three and six months ended June 30, 2020, respectively, as their effect would have been antidilutive[76](index=76&type=chunk) [NOTE 5: Stock-Based Compensation](index=19&type=section&id=NOTE%205%3A%20STOCK-BASED%20COMPENSATION) This note outlines the company's stock option grants, stock-based compensation expense, and shares available under its incentive plan - The company granted **5,000** stock options with a fair value of approximately **$4.00 per share** during the six months ended June 30, 2020[84](index=84&type=chunk) Stock-Based Compensation Expense (in thousands) | Period | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total gross compensation expense | $35 | $160 | $117 | $626 | | Total net compensation expense | $31 | $148 | $110 | $590 | - As of June 30, 2020, the company had **144,393 shares** available for grant under the 2017 Stock Incentive Plan[81](index=81&type=chunk) [NOTE 6: Shareholders' Equity](index=20&type=section&id=NOTE%206%3A%20SHAREHOLDERS'%20EQUITY) This note details changes in Mannatech's shareholders' equity, including common stock repurchases, dividend payments, and accumulated other comprehensive income - The company completed a modified Dutch auction tender offer, repurchasing **294,117 shares** of common stock for **$5.0 million** at **$17.00 per share**, funded by cash on hand[86](index=86&type=chunk) - Total common stock repurchased during the three months ended June 30, 2020, was **306,123 shares**[87](index=87&type=chunk) - Dividends of **$0.125 per share** were declared and paid in both March and June 2020, totaling **$0.6 million**[90](index=90&type=chunk) Accumulated Other Comprehensive Income (in thousands) | Component | December 31, 2019 | June 30, 2020 | | :-------------------------------- | :---------------- | :------------ | | Foreign Currency Translation | $3,435 | $2,349 | | Pension Postretirement Benefit Obligation | $322 | $322 | | Total Accumulated Other Comprehensive Income, Net | $3,757 | $2,671 | [NOTE 7: Litigation](index=20&type=section&id=NOTE%207%3A%20LITIGATION) This note provides updates on Mannatech's ongoing legal proceedings, including administrative and product liability lawsuits in Korea and China - An administrative proceeding against the Busan Custom Office in Korea, regarding a **$1.0 million** assessment, is awaiting a Supreme Court decision after the Busan High Court ruled against the company[91](index=91&type=chunk)[94](index=94&type=chunk) - A product liability lawsuit in Seoul, Korea, seeks **110 million KRW (USD $90,000)** in damages, alleging a former associate instructed a cancer patient to use company products as treatment[95](index=95&type=chunk) - A product liability case in China alleges a child suffered tooth decay after consuming a company product, seeking approximately **$50,000 USD** in damages, with a judgment anticipated in Q3 2020[96](index=96&type=chunk) [NOTE 8: Leases](index=23&type=section&id=NOTE%208%3A%20LEASES) This note presents Mannatech's leased assets and liabilities, distinguishing between operating and finance leases, and their associated terms and discount rates Leased Assets and Liabilities (in thousands) | Category | June 30, 2020 | June 30, 2019 | | :-------------------------------- | :------------ | :------------ | | Net operating lease right-of-use assets | $7,332 | $4,384 | | Net finance lease right-of-use assets | $283 | $416 | | Total leased assets | $7,615 | $4,800 | | Operating lease liabilities | $8,699 | $5,910 | | Finance lease liabilities | $262 | $326 | | Total lease liabilities | $8,961 | $6,236 | - The weighted-average remaining lease term for operating leases was **5.73 years** with a discount rate of **4.1%** as of June 30, 2020[104](index=104&type=chunk) [NOTE 9: Fair Value](index=24&type=section&id=NOTE%209%3A%20FAIR%20VALUE) This note details Mannatech's financial assets measured at fair value, primarily interest-bearing deposits, and their classification within the fair value hierarchy Financial Assets Measured at Fair Value (in thousands) | Asset | June 30, 2020 (Level 1) | December 31, 2019 (Level 1) | | :-------------------------------- | :---------------------- | :-------------------------- | | Interest bearing deposits – various banks | $8,620 | $8,962 | | Money Market Funds – Fidelity, US | — | $5,000 | | Total assets | $8,620 | $13,962 | - All financial assets measured at fair value are classified within **Level 1** of the fair value hierarchy, indicating they are valued based on quoted market prices in active markets[107](index=107&type=chunk) [NOTE 10: Segment Information](index=25&type=section&id=NOTE%2010%3A%20SEGMENT%20INFORMATION) This note provides a breakdown of Mannatech's consolidated net sales and inventory balances by geographic region, highlighting its single reporting segment - Mannatech operates as a single reporting segment, selling nutritional supplements and other products through network marketing in **24 countries** and direct e-commerce in China[110](index=110&type=chunk) Consolidated Net Sales by Region (in millions, except percentages) | Region | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Americas | $10.9 (29.0%) | $12.4 (30.5%) | $22.6 (30.4%) | $24.4 (31.0%) | | Asia/Pacific | $23.5 (62.5%) | $24.8 (60.9%) | $45.0 (60.6%) | $47.6 (60.5%) | | EMEA | $3.2 (8.5%) | $3.5 (8.6%) | $6.7 (9.0%) | $6.7 (8.5%) | | Totals | $37.6 (100.0%) | $40.7 (100.0%) | $74.3 (100.0%) | $78.7 (100.0%) | Inventory Balances by Region (in millions) | Region | June 30, 2020 | December 31, 2019 | | :---------------- | :------------ | :---------------- | | Americas | $6.4 | $5.4 | | Asia/Pacific | $5.7 | $3.8 | | EMEA | $1.2 | $1.0 | | Total | $13.3 | $10.2 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's analysis of Mannatech's financial condition and operational results for the three and six months ended June 30, 2020, compared to 2019, highlighting key performance drivers, the impact of COVID-19, and non-GAAP constant dollar measures [Company Overview](index=27&type=section&id=Company%20Overview) This section provides an overview of Mannatech's business as a global wellness solution provider, its sales model, and the impact of the COVID-19 pandemic on its operations and sales - Mannatech is a global wellness solution provider selling nutritional supplements, skin care, and weight-management products primarily through a network of approximately **172,000 active associates** and preferred customers[116](index=116&type=chunk)[117](index=117&type=chunk) - Net sales decreased by **7.5%** to **$37.6 million** for the three months and **5.6%** to **$74.3 million** for the six months ended June 30, 2020, compared to the prior year, with unfavorable foreign exchange causing a **$1.5 million** and **$2.6 million** decrease, respectively[120](index=120&type=chunk) - The COVID-19 pandemic has led to a decrease in product orders (**7.0%** for Q2, **5.1%** for YTD) and challenges in the supply chain, including raw material shortages and distribution center closures[121](index=121&type=chunk)[122](index=122&type=chunk)[124](index=124&type=chunk) - The number of packs sold and associate fees paid by new and continuing independent associates and preferred customers decreased by **19.9%** for the three months and **14.1%** for the six months ended June 30, 2020[124](index=124&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) [Consolidated Operating Results](index=29&type=section&id=Consolidated%20Operating%20Results) This section presents a detailed comparison of Mannatech's consolidated net sales, gross profit, operating expenses, and net income for the three and six months ended June 30, 2020 and 2019 Consolidated Operating Results (Three Months Ended June 30, in thousands, except percentages) | Metric | 2020 Total Dollars | 2020 % of Net Sales | 2019 Total Dollars | 2019 % of Net Sales | Dollar Change | Percentage Change | | :-------------------------------- | :----------------- | :------------------ | :----------------- | :------------------ | :------------ | :---------------- | | Net sales | $37,647 | 100.0% | $40,711 | 100.0% | $(3,064) | (7.5)% | | Gross profit | $28,939 | 76.9% | $32,596 | 80.1% | $(3,657) | (11.2)% | | Total operating expenses | $27,829 | 73.9% | $30,577 | 75.1% | $(2,748) | (9.0)% | | Income from operations | $1,110 | 2.9% | $2,019 | 5.0% | $(909) | (45.0)% | | Net income | $1,130 | 3.0% | $1,987 | 4.9% | $(857) | (43.1)% | Consolidated Operating Results (Six Months Ended June 30, in thousands, except percentages) | Metric | 2020 Total Dollars | 2020 % of Net Sales | 2019 Total Dollars | 2019 % of Net Sales | Dollar Change | Percentage Change | | :-------------------------------- | :----------------- | :------------------ | :----------------- | :------------------ | :------------ | :---------------- | | Net sales | $74,252 | 100.0% | $78,684 | 100.0% | $(4,432) | (5.6)% | | Gross profit | $58,536 | 78.8% | $63,142 | 80.2% | $(4,606) | (7.3)% | | Total operating expenses | $55,414 | 74.6% | $60,003 | 76.3% | $(4,589) | (7.6)% | | Income from operations | $3,122 | 4.2% | $3,139 | 4.0% | $(17) | (0.5)% | | Net income | $3,918 | 5.3% | $2,675 | 3.4% | $1,243 | 46.5% | [Non-GAAP Financial Measures](index=30&type=section&id=Non-GAAP%20Financial%20Measures) This section introduces "Constant dollar" measures to analyze Mannatech's financial performance by excluding the impact of foreign currency translation - The company uses 'Constant dollar' measures to exclude the impact of foreign currency translation, providing an additional perspective on trends[127](index=127&type=chunk) Constant Dollar Changes (Three Months Ended June 30, in millions, except percentages) | Metric | GAAP Total $ (2020) | Constant $ (2020) | GAAP Total $ (2019) | Constant $ Change (Dollar) | Constant $ Change (Percent) | | :------------------------ | :------------------ | :---------------- | :------------------ | :------------------------- | :-------------------------- | | Net sales | $37.6 | $39.1 | $40.7 | $(1.6) | (3.9)% | | Gross profit | $28.9 | $30.0 | $32.6 | $(2.6) | (8.0)% | | Income from operations | $1.1 | $1.3 | $2.0 | $(0.7) | (35.0)% | Constant Dollar Changes (Six Months Ended June 30, in millions, except percentages) | Metric | GAAP Total $ (2020) | Constant $ (2020) | GAAP Total $ (2019) | Constant $ Change (Dollar) | Constant $ Change (Percent) | | :------------------------ | :------------------ | :---------------- | :------------------ | :------------------------- | :-------------------------- | | Net Sales | $74.3 | $76.9 | $78.7 | $(1.8) | (2.3)% | | Gross Profit | $58.5 | $60.5 | $63.1 | $(2.6) | (4.1)% | | Income from Operations | $3.1 | $3.6 | $3.1 | $0.5 | 16.1% | [Net Sales](index=32&type=section&id=Net%20Sales) This section analyzes Mannatech's consolidated net sales performance, including regional breakdowns and the impact of foreign currency exchange, for the three and six months ended June 30, 2020 - Consolidated net sales decreased by **$3.1 million (7.5%)** to **$37.6 million** for Q2 2020 and by **$4.4 million (5.6%)** to **$74.3 million** for YTD Q2 2020[131](index=131&type=chunk) - Americas net sales decreased by **12.1%** for Q2 and **7.4%** for YTD Q2, primarily due to a decline in active independent associates and preferred customers[132](index=132&type=chunk)[133](index=133&type=chunk) - Asia/Pacific net sales decreased by **5.2%** for Q2 and **5.5%** for YTD Q2, with foreign currency exchange having a negative impact of **$0.8 million** (Q2) and **$1.7 million** (YTD Q2)[137](index=137&type=chunk)[138](index=138&type=chunk) - EMEA net sales decreased by **8.6%** for Q2 but remained constant for YTD Q2, with foreign currency exchange having a negative impact of **$0.6 million** (Q2) and **$0.8 million** (YTD Q2)[139](index=139&type=chunk)[140](index=140&type=chunk) [Product Sales](index=36&type=section&id=Product%20Sales) This section details the changes in Mannatech's consolidated product sales, attributing decreases to fewer orders and lower average order values - Product sales decreased by **$2.9 million (7.3%)** for Q2 2020 and **$4.0 million (5.2%)** for YTD Q2 2020, primarily due to a decrease in the number of orders and average order value[145](index=145&type=chunk)[146](index=146&type=chunk) Product Sales (in millions, except percentages) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Consolidated product sales | $37.0 | $39.9 | $73.1 | $77.1 | [Pack Sales and Associate Fees](index=36&type=section&id=Pack%20Sales%20and%20Associate%20Fees) This section examines the decrease in Mannatech's pack sales and associate fees, along with the decline in recruitment of new independent associates and preferred customers - Total pack sales and associate fees decreased by **$0.2 million (33.3%)** to **$0.4 million** for Q2 2020 and by **$0.4 million (33.3%)** to **$0.8 million** for YTD Q2 2020[149](index=149&type=chunk)[150](index=150&type=chunk) - The total number of packs and associate fees sold decreased by **19.9%** for Q2 and **14.1%** for YTD Q2 2020[149](index=149&type=chunk)[150](index=150&type=chunk) Pack Sales and Associate Fees (in millions, except percentages) | Category | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | New | $0.1 | $0.2 | $0.2 | $0.3 | | Continuing | $0.3 | $0.4 | $0.6 | $0.9 | | Total | $0.4 | $0.6 | $0.8 | $1.2 | - Recruitment of new independent associates and preferred customers decreased **5.2%** in Q2 2020 due to COVID-19[153](index=153&type=chunk) [Other Sales](index=38&type=section&id=Other%20Sales) This section reports that Mannatech's other sales remained consistent for the three and six months ended June 30, 2020 and 2019 - Other sales remained constant at **$0.2 million** for the three months and **$0.4 million** for the six months ended June 30, 2020 and 2019[155](index=155&type=chunk)[156](index=156&type=chunk) [Gross Profit](index=38&type=section&id=Gross%20Profit) This section analyzes the decrease in Mannatech's gross profit and its percentage of net sales, primarily attributing the decline to increased product promotions - Gross profit decreased by **$3.7 million (11.2%)** to **$28.9 million** for Q2 2020 and by **$4.6 million (7.3%)** to **$58.5 million** for YTD Q2 2020[157](index=157&type=chunk)[158](index=158&type=chunk) - Gross profit as a percentage of net sales decreased to **76.9%** for Q2 2020 (from 80.1%) and **78.8%** for YTD Q2 2020 (from 80.2%), primarily due to increased product promotions[157](index=157&type=chunk)[158](index=158&type=chunk) [Commissions and Incentives](index=38&type=section&id=Commissions%20and%20Incentives) This section details the changes in Mannatech's commission expenses and incentive costs, noting their impact on the percentage of net sales - Commission expenses decreased by **$0.4 million (2.8%)** for Q2 2020 and **$1.0 million (3.5%)** for YTD Q2 2020[159](index=159&type=chunk)[160](index=160&type=chunk) - Commissions as a percentage of net sales increased to **38.9%** for Q2 2020 (from 37.0%) and **39.0%** for YTD Q2 2020 (from 38.1%)[159](index=159&type=chunk)[160](index=160&type=chunk) - Incentive costs decreased by **$0.5 million (44.9%)** for Q2 2020 and **$0.2 million (15.8%)** for YTD Q2 2020[161](index=161&type=chunk)[162](index=162&type=chunk) [Selling and Administrative Expenses](index=40&type=section&id=Selling%20and%20Administrative%20Expenses) This section explains the reduction in Mannatech's selling and administrative expenses, primarily due to decreases in payroll, marketing, and stock-based compensation costs - Selling and administrative expenses decreased by **$1.2 million (14.5%)** to **$7.2 million** for Q2 2020 and by **$1.9 million (12.1%)** to **$14.0 million** for YTD Q2 2020[165](index=165&type=chunk)[166](index=166&type=chunk) - The decrease was primarily due to reductions in payroll costs (**$0.9 million** for Q2, **$1.5 million** for YTD), marketing costs, and stock-based compensation[165](index=165&type=chunk)[166](index=166&type=chunk) [Other Operating Costs](index=40&type=section&id=Other%20Operating%20Costs) This section outlines the decrease in Mannatech's other operating costs, driven by reductions in travel, office expenses, and legal/consulting fees - Other operating costs decreased by **$0.6 million (10.9%)** to **$4.8 million** for Q2 2020 and by **$1.4 million (12.1%)** to **$10.1 million** for YTD Q2 2020[168](index=168&type=chunk)[169](index=169&type=chunk) - The decrease was mainly driven by reductions in travel and entertainment, office expenses, and legal/consulting fees[168](index=168&type=chunk)[169](index=169&type=chunk) [Depreciation and Amortization Expense](index=40&type=section&id=Depreciation%20and%20Amortization%20Expense) This section reports on the stability of Mannatech's depreciation and amortization expense for the reported periods - Depreciation and amortization expense remained stable at **$0.5 million** for Q2 2020 and increased slightly to **$1.1 million** for YTD Q2 2020 (from $1.0 million in 2019)[170](index=170&type=chunk) [Other Income (Expense), Net](index=40&type=section&id=Other%20Income%20(Expense)%2C%20Net) This section details Mannatech's other income and expense, highlighting the impact of a significant VAT refund in the prior year - Other income was **$166,000** for Q2 2020, compared to **$980,000** in Q2 2019 (which included a **$1.1 million** VAT refund)[171](index=171&type=chunk) - Other expense was **$42,000** for YTD Q2 2020, compared to other income of **$984,000** in YTD Q2 2019 (which included a **$1.1 million** VAT refund)[172](index=172&type=chunk) [Income Tax Benefit (Provision)](index=41&type=section&id=Income%20Tax%20Benefit%20(Provision)) This section explains Mannatech's effective income tax rates, including the negative rate for the six months ended June 30, 2020, due to a CARES Act benefit Effective Tax Rates | Period | 2020 | 2019 | | :-------------------------- | :----- | :----- | | Three months ended June 30, | 12.3% | 34.3% | | Six months ended June 30, | (24.7)% | 34.0% | - The negative effective tax rate for the six months ended June 30, 2020, was primarily due to a **$1.2 million** benefit from the carryback of U.S. net operating losses allowed by the CARES Act[179](index=179&type=chunk) - The effective tax rates for both periods were influenced by the mix of earnings across jurisdictions and valuation allowances on losses[178](index=178&type=chunk)[180](index=180&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses Mannatech's cash position, working capital, and cash flows from operating, investing, and financing activities, including the impact of stock repurchases and the PPP loan - Cash and cash equivalents decreased by **$4.1 million (16.4%)** to **$20.7 million** as of June 30, 2020, from December 31, 2019[182](index=182&type=chunk) - Working capital decreased from **$12.1 million** at December 31, 2019, to **$9.8 million** at June 30, 2020[184](index=184&type=chunk) Net Cash Flows (Six Months Ended June 30, in millions) | Activity | 2020 | 2019 | | :----------------------- | :----- | :----- | | Operating activities | $2.5 | $3.8 | | Investing activities | $(0.5) | $(0.7) | | Financing activities | $(6.0) | $(1.3) | - Cash used in financing activities significantly increased in 2020 due to **$5.2 million** in common stock repurchases[188](index=188&type=chunk) - The company believes existing liquidity and cash flows from operations are adequate for the next **12 months**, but acknowledges potential impacts from COVID-19 and ongoing tax/legal disputes[189](index=189&type=chunk)[190](index=190&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - The company received and fully repaid a **$2.2 million** Paycheck Protection Program (PPP) loan in April 2020[192](index=192&type=chunk) Contractual Obligations (as of June 30, 2020, in thousands) | Commitment | Remaining 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | Thereafter | Total | | :-------------------------------- | :------------- | :--- | :--- | :--- | :--- | :--- | :--------- | :------ | | Finance lease obligations | $49 | $94 | $74 | $45 | $21 | $1 | — | $284 | | Purchase obligations | $1,575 | $4,742 | $67 | — | — | — | — | $6,384 | | Operating lease obligations | $1,247 | $2,324 | $1,892 | $1,297 | $1,304 | $1,528 | $957 | $10,549 | | Note payable and other financing arrangements | $561 | $449 | — | — | — | — | — | $1,010 | | Employment agreements | $220 | $220 | — | — | — | — | — | $440 | | Royalty agreement | $29 | $7 | — | — | — | — | — | $36 | | Tax liability | — | — | — | — | — | — | $197 | $197 | | Other obligations | $217 | $33 | $181 | $24 | $121 | — | $502 | $1,078 | | Total commitments and obligations | $3,898 | $7,869 | $2,214 | $1,366 | $1,446 | $1,529 | $1,656 | $19,978 | [Critical Accounting Policies and Estimates](index=46&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section outlines Mannatech's critical accounting policies and estimates, including those for inventory reserves, long-lived assets, income taxes, revenue recognition, and stock-based compensation - Critical accounting policies involve significant management judgment and estimates, including inventory reserves, long-lived fixed assets and software capitalization, uncertain income tax positions, revenue recognition and deferred commissions, product return policy, and stock-based compensation[204](index=204&type=chunk) - Inventory reserves are based on estimates of net realizable value and obsolescence, considering factors like turnover, selling prices, and consumer demand[205](index=205&type=chunk)[206](index=206&type=chunk) - Fixed assets, including internally-developed software, are reviewed for impairment based on future projected cash flows, useful lives, and discount rates[207](index=207&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk) - Uncertain income tax positions require estimates of potential liability based on the probability of being sustained in an audit[212](index=212&type=chunk) - Revenue recognition for associate fees involves three service elements (eligibility to earn commissions, Success Tracker™ access, Mannatech+ access) allocated based on relative standalone selling price[215](index=215&type=chunk) - Deferred revenue for the loyalty program includes an estimate of forfeited or expired loyalty points[216](index=216&type=chunk) - Stock-based compensation expense is calculated using the Black-Scholes option-pricing model, requiring subjective assumptions like expected stock option life and volatility[221](index=221&type=chunk)[222](index=222&type=chunk) [Recent Accounting Pronouncements](index=50&type=section&id=Recent%20Accounting%20Pronouncements) This section discusses the future impact of ASU 2016-13 (CECL model) on Mannatech's financial statements, primarily concerning trade receivables - ASU 2016-13 (CECL model) will be effective for the company on January 1, 2023, and is expected to apply primarily to trade receivables from revenue transactions[226](index=226&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses Mannatech's exposure to market risks, primarily foreign currency exchange rate fluctuations, and the company's approach to monitoring these risks without using financial instruments for hedging - The company does not engage in trading market risk sensitive instruments or use financial instruments to manage exposure to interest rate, commodity price, or equity price risk[229](index=229&type=chunk)[231](index=231&type=chunk) - Mannatech is exposed to market risks from changes in currency exchange rates against the United States dollar, which can affect consolidated net sales and expenses[230](index=230&type=chunk) - The company maintains a portion of cash and cash equivalents in foreign currencies to satisfy anticipated working capital requirements in various regions, including the Americas, EMEA, and Asia/Pacific[231](index=231&type=chunk)[232](index=232&type=chunk) [Item 4. Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that Mannatech's disclosure controls and procedures were effective as of June 30, 2020, and reported no material changes in internal control over financial reporting, despite the shift to remote work due to the COVID-19 pandemic - Management concluded that disclosure controls and procedures were effective as of June 30, 2020[233](index=233&type=chunk) - There were no material changes in internal control over financial reporting during the quarter ended June 30, 2020, despite most employees working remotely due to COVID-19[234](index=234&type=chunk) Part II – Other Information [Item 1. Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 7 of the Notes to Unaudited Consolidated Financial Statements for detailed information on the company's ongoing legal proceedings - Information on legal proceedings is incorporated by reference from Note 7 of the financial statements[237](index=237&type=chunk) [Item 1A. Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) This section emphasizes the importance of reviewing the risk factors detailed in the company's Annual Report on Form 10-K and highlights the additional, unpredictable adverse impact of the COVID-19 pandemic - Readers should carefully consider risk factors discussed in the Annual Report on Form 10-K for the year ended December 31, 2019[238](index=238&type=chunk) - The rapid development and fluidity of the COVID-19 situation present unpredictable adverse impacts to the company[239](index=239&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details Mannatech's share repurchase activities, including a modified Dutch auction cash tender offer completed in June 2020, which resulted in the purchase of 294,117 shares for $5.0 million - The company completed a modified Dutch auction cash tender offer, purchasing **294,117 shares** of common stock at **$17.00 per share** for an aggregate of **$5.0 million**[241](index=241&type=chunk) - Total shares repurchased during the three months ended June 30, 2020, amounted to **306,123 shares**[242](index=242&type=chunk) Issuer Purchases of Equity Securities (Three Months Ended June 30, 2020) | Period | Total number of shares purchased | Average price paid per share | | :----------------------------- | :----------------------------- | :--------------------------- | | April 1, 2020 - April 31, 2020 | — | $— | | May 1, 2020 - May 30, 2020 | 100 | $13.30 | | June 1, 2020 - June 30, 2020 | 306,023 | $16.92 | | Total | 306,123 | | [Item 3. Defaults Upon Senior Securities](index=54&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[244](index=244&type=chunk) [Item 4. Mine Safety Disclosures](index=54&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Mannatech, Incorporated - This item is not applicable[245](index=245&type=chunk) [Item 5. Other Information](index=54&type=section&id=Item%205.%20Other%20Information) The company reported no other information under this item - No other information is reported under this item[246](index=246&type=chunk) [Item 6. Exhibits](index=54&type=section&id=Item%206.%20Exhibits) This section provides an index of all exhibits filed as part of the Form 10-Q, including corporate governance documents and certifications - The report includes an index of exhibits, such as Amended and Restated Articles of Incorporation, Bylaws, Specimen Certificate, and various certifications (e.g., Section 302 and 906 of Sarbanes-Oxley Act)[249](index=249&type=chunk) [Signatures](index=56&type=section&id=Signatures) This section contains the official signatures of Mannatech, Incorporated's Chief Executive Officer and Chief Financial Officer, certifying the accuracy and completeness of the report - The report is signed by Alfredo Bala, Chief Executive Officer, and David A. Johnson, Chief Financial Officer, on August 11, 2020[254](index=254&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 2020 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________. Commission File No. 000-24657 MANNATECH, INCORPORATED (Exact Name of Registrant as Specified in its Charter) Texas 75-2508900 (St ...