mtex-20230630

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, 2023

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

For the transition period from ___________ to ___________.

Commission File No. 000-24657

MANNATECH, INCORPORATED

(Exact Name of Registrant as Specified in its Charter)


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

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

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


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

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

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

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging Growth Company

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

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

Yes o No x

As of July 31, 2023, the number of shares outstanding of the registrant’s sole class of common stock, par value $0.0001 per share, was 1,864,881.

MANNATECH, INCORPORATED

TABLE OF CONTENTS


Special Note Regarding Forward-Looking Statements			1
Part I – FINANCIAL INFORMATION
Item 1. Financial Statements			2
Consolidated Balance Sheets as of June 30, 2023 (unaudited) and December 31, 2022			2
Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022 (unaudited)			3
Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2023 and 2022 (unaudited)			3
Consolidated Statements of Shareholders’ Equity for the Three and Six Months ended June 30, 2023 and 2022 (unaudited)			4
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022 (unaudited)			5
Notes to Unaudited Consolidated Financial Statements			7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			20
Company Overview			20
Results of Operations			21
Liquidity and Capital Resources			29
Significant Accounting Policies and Critical Estimates			31


Item 3. Quantitative and Qualitative Disclosures About Market Risk			34

Item 4. Controls and Procedures			35

Part II – OTHER INFORMATION
Item 1. Legal Proceedings			36

Item 1A. Risk Factors			36

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			37

Item 3. Defaults Upon Senior Securities			37

Item 4. Mine Safety Disclosures			37

Item 5. Other Information			37

Item 6. Exhibits			37

Signatures			39

Table of Contents

Special Note Regarding Forward-Looking Statements

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

•management’s plans and objectives for future operations;

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

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

•the realization of net deferred tax assets;

•the ability to curtail operating expenditures;

•global statutory tax rates remaining unchanged;

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

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

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

•the outcome of new or existing litigation matters;

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

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

Although we believe that the expectations included in these forward-looking statements are reasonable, these forward-looking statements are subject to certain events, risks, assumptions, and uncertainties, including those discussed below, the “Risk Factors” section in Part I, Item 1A of our Form 10-K for the year ended December 31, 2022, and elsewhere in this Form 10-Q and the documents incorporated by reference herein. If one or more of these risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results and developments could materially differ from those expressed in or implied by such forward-looking statements. For example, any of the following factors could cause actual results to vary materially from our projections:

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

•plans for expected future product development;

•changes in manufacturing costs;

•shifts in the mix of packs and products;

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

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

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

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

our product safety and quality standards or applicable law;

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

•publicity related to our products or network marketing; and

•the political, social and economic climate of the countries in which we operate, including, the COVID-19

pandemic.

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

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

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

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

MANNATECH, INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)


ASSETS	June 30, 2023 (unaudited)		December 31, 2022
Cash and cash equivalents	$	9,374	$	13,777
Restricted cash	938		944
Accounts receivable, net of allowance of $1,109 and $973 in 2023 and 2022, respectively	645		218
Income tax receivable	422		423
Inventories, net	15,838		14,726
Prepaid expenses and other current assets	2,183		2,389
Deferred commissions	1,852		2,476

Total current assets	31,252		34,953
Property and equipment, net	4,689		3,759

Long-term restricted cash	460		476
Other assets	7,834		8,439
Deferred tax assets, net	1,164		1,501
Total assets	$	45,399	$	49,128
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current portion of finance leases	$	274	$	61
Accounts payable	5,825		4,361
Accrued expenses	6,930		7,510
Commissions and incentives payable	8,734		9,256
Taxes payable	1,738		3,281

Current notes payable	411		263
Deferred revenue	4,330		5,106
Total current liabilities	28,242		29,838
Finance leases, excluding current portion	1,115		88


Other long-term liabilities	4,400		5,026
Total liabilities	33,757		34,952

Commitments and contingencies

Shareholders’ equity:
Preferred stock, $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding	—		—
Common stock, $0.0001 par value, 99,000,000 shares authorized, 2,742,857 shares issued and 1,866,212 shares outstanding as of June 30, 2023 and 2,742,857 shares issued and 1,858,800 shares outstanding as of December 31, 2022	—		—
Additional paid-in capital	33,294		33,377
Retained earnings	437		1,686
Accumulated other comprehensive (loss) income	(1,658)		(208)
Treasury stock, at average cost, 876,645 shares as of June 30, 2023 and 884,057 shares as of December 31, 2022	(20,431)		(20,679)
Total shareholders’ equity	11,642		14,176
Total liabilities and shareholders’ equity	$	45,399	$	49,128

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

MANNATECH, INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS – (UNAUDITED)

(in thousands, except per share information)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net sales	$	32,594	$	34,976	$	66,708	$	67,360
Cost of sales	7,004		7,920		14,417		15,011
Gross profit	25,590		27,056		52,291		52,349

Operating expenses:
Commissions and incentives	13,465		14,137		27,022		27,245
Selling and administrative expenses	7,257		6,914		13,673		13,823
Depreciation and amortization expense	387		301		774		633
Other operating costs	5,435		4,851		11,063		9,760
Total operating expenses	26,544		26,203		52,532		51,461

(Loss) income from operations	(954)		853		(241)		888
Interest (expense) income, net	(10)		23		14		38
Other income (expense), net	150		(84)		483		1
(Loss) income before income taxes	(814)		792		256		927

Income tax provision	(291)		(98)		(757)		(99)
Net (loss) income	$	(1,105)	$	694	$	(501)	$	828

(Loss) income per common share:
Basic	$	(0.59)	$	0.36	$	(0.27)	$	0.43
Diluted	$	(0.59)	$	0.34	$	(0.27)	$	0.40

SEC Form 10-Q filed by Mannatech Incorporated