What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-03-15 compared with 2021-03-19 · 159 added, 234 removed, 1019 unchanged (28% of the section changed)

26 unchanged sentences

Report of Independent Registered Public Accounting Firm:

BDO USA, LLP;

Dallas, Texas;

Consolidated Balance Sheets as of December 31, 2021 and 2020 F- 4

Consolidated Statements of Operations for the years ended December 31, 2021 and 2020 F- 5

Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2020 and 2019 F- 5

Consolidated Statements of Comprehensive Income for the years ended December 31, 2021 and 2020 F- 5

Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2021 and 2020 F- 6

121 unchanged sentences

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Mannatech, Incorporated (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for the years then ended, and the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of Mannatech, Incorporated (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for the years then ended, and the related notes and schedule (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, 2021 and 2020, and the results of its operations and its cash flows for the years then ended , in conformity with accounting principles generally accepted in the United States of America.

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As described in Note 15 to the consolidated financial statements, the Company sells products in twenty-five countries around the world, and a substantial majority of the Company’s consolidated net sales in 2021, were generated outside of the United States.

As described in Note 7 to the consolidated financial statements, $4.9 million of the Company’s $5.7 million in consolidated income before taxes is generated in the United States.

As described in Note 7 to the consolidated financial statements, $6.9 million of the Company’s $8.9 million in consolidated income before income taxes is generated in the United States.

This is largely a function of the Company’s transfer pricing policies, which govern the allocation of taxable income among the Company’s various tax jurisdictions.

35 unchanged sentences

Finance leases, excluding current portion 66 129

Deferred tax liabilities 3 3

Long-term notes payable — 363

Other long-term liabilities 5,049 7,245

5 unchanged sentences

Additional paid-in capital 33,277 33,795

Retained Earnings (accumulated deficit) 2,213 ( 690 )

Retained earnings 7,708 2,213

Accumulated other comprehensive income 2,342 5,150

Treasury stock, at average cost, 671,776 shares as of December 31, 2020 and 361,726 shares as of December 31, 2019, respectively ( 15,186 ) ( 9,935 )

Treasury stock, at average cost, 802,170 shares as of December 31, 2021 and 671,776 shares as of December 31, 2020 ( 18,915 ) ( 15,186 )

Total shareholders’ equity 24,412 25,972

15 unchanged sentences

Income from operations 9,049 4,491

Interest income (expense) 83 ( 16 )

Other income (expense), net 1,151 ( 681 )

Interest income 66 83

Other (expense) income, net ( 223 ) 1,151

Income before income taxes 8,892 5,725

Income tax benefit (provision) 536 ( 2,447 )

Income tax (provision) benefit 950 536

Net income $ 9,842 $ 6,261

8 unchanged sentences

Net income $ 9,842 $ 6,261

Other comprehensive income, net of tax:

Foreign currency translations gain (loss) ( 2,832 ) 1,358

Pension obligations, net of tax provision of $13 and $19 in 2021 and 2020, respectively

Other comprehensive income $ ( 2,808 ) $ 1,393

Comprehensive income $ 7,034 $ 7,654

4 unchanged sentences

stock Additional

capital Retained earnings (accumulated deficit)

capital Retained earnings (accumulated deficit) Accumulated

comprehensive

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Issuance of unrestricted shares — ( 157 ) — — 367 210

Release of restricted stock — ( 71 ) — — 71 —

Stock option exercises — ( 39 ) — — 48 9

Stock option exercises (cashless) — ( 315 ) — — 315 —

Repurchase of common stock — — — — ( 5,933 ) ( 5,933 )

Other — — 3 — — 3

Foreign currency translation — — — 1,358 — 1,358

5 unchanged sentences

Issuance of unrestricted shares — ( 44 ) — — 254 210

Repurchase of common stock — — — — ( 6,256 ) ( 6,256 )

Stock option exercises — ( 419 ) — — 964 545

Stock option exercises (cashless) — (105) — — 105 —

Repurchase of common stock — — — — ( 5,052 ) ( 5,052 )

Foreign currency translation — — — ( 2,832 ) — ( 2,832 )

9 unchanged sentences

Net income $ 9,842 $ 6,261

Adjustments to reconcile net income (loss) to net cash provided by operating activities :

Adjustments to reconcile net income to net cash provided by operating activities :

Depreciation and amortization 1,719 1,990

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CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from stock options exercised 545 —

Repurchase of common stock ( 5,052 ) ( 5,933 )

Payment of cash dividends ( 4,347 ) ( 3,358 )

Proceeds of Paycheck Protection Program Note Payable 2,244 —

Proceeds from Paycheck Protection Program Note Payable — 2,244

Repayment of Paycheck Protection Program Note Payable — ( 2,244 )

Repayment of finance lease obligations and other long term liabilities ( 628 ) ( 1,220 )

Repayment of finance lease obligations and other financing obligations ( 435 ) ( 628 )

Net cash used in financing activities ( 9,289 ) ( 9,919 )

Effect of currency exchange rate changes on cash, cash equivalents and restricted cash 1,333 ( 567 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 3,503 ) 416

Cash, cash equivalents and restricted cash at the beginning of the year 31,000 30,584

Cash, cash equivalents and restricted cash at the end of the year $ 27,497 $ 31,000

Effect of currency exchange rate changes on cash and cash equivalents and restricted cash ( 2,700 ) 1,333

Net decrease in cash and cash equivalents and restricted cash ( 1,865 ) ( 3,503 )

Cash and cash equivalents and restricted cash at the beginning of the year 27,497 31,000

Cash and cash equivalents and restricted cash at the end of the year $ 25,632 $ 27,497

See accompanying notes to consolidated financial statements.

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Accrued asset purchases $ — $ 709

Operating lease right of use assets recorded upon adoption of ASC 842 $ — $ 4,638

Finance lease right of use assets recorded upon adoption of ASC 842 $ — $ 103

Operating lease right of use assets acquired in exchange for new operating lease liabilities $ 3,189 $ 2,574

Right of use assets acquired in exchange for new operating lease liabilities $ 70 $ 3,189

Finance lease right of use assets acquired in exchange for new finance lease liabilities $ — $ 47

Treasury shares exchanged for stock options exercised $ 105 $ 315

See accompanying notes to consolidated financial statements.

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Meitai cannot legally conduct a direct selling business in China unless it acquires a direct selling license in China.

In March 2020, the World Health Organization (“WHO”) declared the outbreak of COVID-19 as a pandemic, which has spread throughout our international regions and the United States.

We closed some offices and have worked remotely.

As a response to COVID-19, we closed some offices and worked remotely.

The Company depends on an independent sales force of distributors to market and sell its products to consumers.

Developments such as social distancing and shelter-in-place directives have impacted and may continue to impact their ability to engage with potential and existing customers.

The adverse economic effects of COVID-19 may also materially decrease demand for the Company’s products based on changes in consumer behavior or the restrictions in place by governments trying to curb the outbreak.

For example, the Company has rescheduled corporate sponsored events, and in some cases, our associates have canceled sales meetings.

For some products, the Company experienced shortages of raw materials, packaging supplies and ingredients.

We have experienced challenges in getting these materials and ingredients to our contract manufacturers and finished products to our distribution centers resulting from reductions in global transportation capacity.

Developments such as social distancing and shelter-in-place directives impacted, and may continue to impact, their ability to engage with potential and existing customers.

The adverse economic effects of COVID-19 have had an impact on demand for the Company’s products due to government restrictions and changes in consumer behavior.

Moreover, the Company has rescheduled corporate sponsored events, and in some cases, our associates have cancelled sales meetings.

For some products the Company experienced shortages of raw materials, packaging supplies and ingredients and we successfully worked through challenges in getting these materials and ingredients to our contract manufacturers and finished products to our distribution centers.

Despite the impact on the global supply chain, the Company has overcome obstacles in shipping to our customers.

While the conditions described above are expected to be temporary, prolonged workforce disruptions, continued disruption in our supply chain and potential decreases in consumer demands negatively impacted our sales in fiscal year 2020 and may continue to negatively impact sales in fiscal year 2021 as well as the Company’s overall liquidity.

We are actively monitoring the global situation with a focus on our financial condition, liquidity, operations, suppliers, industry, and workforce.

While the conditions described above are expected to be temporary, prolonged workforce disruptions, continued disruption in our supply chain and potential changes in consumer demands could negatively impact our sales as well as the Company’s overall liquidity.

We are managing with a focus on our financial condition, liquidity, operations, suppliers, industry, and workforce.

Principles of Consolidation

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The foreign currency translation adjustment is recorded as a separate component of shareholders’ equity and is included in accumulated other comprehensive income.

Transaction gains totaled approximately $ 1.1 million for the year ended December 31, 2020 and transaction losses totaled approximately $ 0.7 million for the year ended December 31, 2019, and are included in other income (expense), net in the Company’s consolidated statements of operations.

Transaction losses totaled approximately $ 0.2 million for the year ended December 31, 2021 and transaction gains totaled approximately $ 1.1 million for the year ended December 31, 2020, and are included in other (expense) income, net in the Company’s consolidated statements of operations.

Cash and Cash Equivalents

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Long-term restricted cash at beginning of period 4,346 5,295

Cash, cash equivalents, and restricted cash at beginning of period $ 31,000 $ 30,584

Cash and cash equivalents and restricted cash at beginning of period $ 27,497 $ 31,000

Cash and cash equivalents at end of period $ 24,185 $ 22,207

1 unchanged sentence

Long-term restricted cash at end of period 503 4,346

Cash, cash equivalents, and restricted cash at end of period $ 27,497 $ 31,000

Cash and cash equivalents and restricted cash at end of period $ 25,632 $ 27,497

Accounts Receivable

Accounts receivable are carried at their estimated collectible amounts.

Receivables are created upon shipment of an order if the credit card payment is rejected or does not match the order total.

As of December 31, 2021 and 2020, receivables consisted primarily of amounts due from preferred customers and associates.

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Prepaid expenses and other current assets were $ 2.9 million and $ 3.0 million at December 31, 2021 and 2020, respectively.

Included in the December 31, 2020 and 2019 balances were $ 1.1 million and $ 0.8 million in other prepaid assets, respectively.

Included in each of the December 31, 2021 and 2020 balances were $ 1.1 million in other prepaid assets.

Also included in the balances at December 31, 2021 and 2020 were $ 0.5 million and $ 1.1 million for other prepaid deposits, respectively.

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See Note 5, Leases for more information.

Included in each of the December 31, 2020 and 2019 balances were deposits for building leases in various locations of $ 2.2 million.

Included in the December 31, 2021 and 2020 balances were deposits for building leases in various locations of $ 1.9 million and $ 2.2 million, respectively.

Also included in the December 31, 2021 and 2020 balances were $ 2.4 million and $ 2.6 million, respectively, representing a deposit with Mutual Aid Cooperative and Consumer in the Republic of Korea, an organization established by the Republic of Korea’s Fair Trade Commission’s approval to compensate and protect consumers who participate in network marketing activities from damages.

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Notes payable were $ 0.2 million and $ 0.6 million as of December 31, 2021 and December 31, 2020, respectively, as a result of funding from a capital financing agreement related to our investment in leasehold improvements, computer hardware and software and other financing arrangements.

Payments are made monthly according to the terms of the agreements which have a weighted average effective interest rate of 6.0 % and are collateralized by leasehold improvements and computer hardware and software.

At December 31, 2020 , the current portion was $ 0.6 million and the long-term portion was $ 0.0 million.

At December 31, 2019, the current portion was $ 0.7 million and the long-term portion was $ 0.4 million.

On April 10, 2020, the Company received loan proceeds of $ 2.2 million (the “Loan”) under the Paycheck Protection Program (“PPP”).

The PPP was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), enacted on March 27, 2020, and is administered by the U.S.

Small Business Administration (the “SBA”).

The Loan to the Company was made through JPMorgan Chase Bank, N.

A., the Company’s existing banker (the “Lender”).

At the time the Company applied for and received the Loan, the Company planned to use the Loan proceeds for covered payroll costs, rent and utilities in accordance with the relevant terms and conditions of the CARES Act.

After the Company received the proceeds of the Loan, the SBA provided subsequent guidance interpreting the PPP.

Based on such subsequent guidance, the Company made the determination to repay the Loan in full, which it did on April 30, 2020.

Payments are made monthly according to the terms of the agreements which have a weighted average effective interest rate of 5.7 % and are collateralized by leasehold improvements and computer

hardware and software.

At December 31, 2021 and December 31, 2020 , the current portion was $ 0.2 million and $ 0.6 million, respectively.

Other Long-Term Liabilities

Other long-term liabilities were $ 7.2 million and $ 6.2 million for the years ending December 31, 2020 and 2019, respectively.

Other long-term liabilities were $ 5.0 million and $ 7.2 million as of December 31, 2021 and 2020, respectively.

At December 31, 2021 and 2020, we recorded long-term lease liabilities related to operating leases of $ 4.3 million and $ 6.1 million, respectively.

See Note 5, Leases for more information.

At each of December 31, 2020 and 2019, we recorded $ 0.2 million, respectively, in other long-term liabilities related to uncertain income tax positions (see Note 7, Income Taxes ).

At December 31, 2021, there was nothing recorded in other long-term liabilities related to uncertain income tax positions.

At December 31, 2020, we recorded $ 0.2 million in long-term liabilities related to uncertain income tax positions (see Note 7, Income Taxes ).

Certain operating leases for the Company’s regional office facilities contain a restoration clause that requires the Company to restore the premises to its original condition.

At each of December 31, 2021 and 2020, accrued restoration costs related to these leases amounted to $ 0.3 million.

At December 31, 2020 and 2019, government mandated severance accruals in certain international offices amounted to $ 0.5 million and $ 0.4 million, respectively.

At each of December 31, 2021 and 2020, government mandated severance accruals in certain international offices amounted to $ 0.5 million.

The Company also recorded a long-term liability for an estimated defined benefit obligation related to a non-U.S.

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With regard to both of the aforementioned contracts, the Company determines the standalone selling prices based on our overall pricing objectives, taking into consideration market conditions and other factors, including the value of the contracts.

Our sales mix for the years ended December 31, was as follows (in millions, except percentages) :

O ur sales mix for the years ended December 31, was as follows (in millions, except percentages) :

2021 Percentage 2020 Percentage

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Deferred Commissions

The Company defers commissions on (i) the sales of products shipped but not received by customers by the end of the

respective period and (ii) the loyalty program.

The Company defers commissions on (i) the sales of products shipped but not received by customers by the end of the respective period and (ii) the loyalty program.

Deferred commissions are incremental costs and are amortized to expense consistent with how the related revenue is recognized.

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The Company expenses advertising and promotions in selling and administrative expenses when incurred.

Advertising and promotional expenses remained constant at $ 3.5 million for each of the years ended December 31, 2020 and 2019.

Educational and promotional items, called sales aids, are sold to associates to assist in their sales efforts and are included in inventories and charged to cost of sales when sold.

Advertising and promotional expenses remained constant a t $ 3.5 million for each of the years ended December 31, 2021 and 2020.

Educational and promotional items are sold to associates to assist in their sales efforts and are included in inventories and charged to cost of sales when sold.

Research and Development Expenses

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Research and development expenses related to new product development, enhancement of existing products, clinical studies and trials, Food and Drug Administration compliance studies, general supplies, internal salaries, third-party contractors, and consulting fees were approximately $ 1.2 million and $ 0.8 million, respectively, for the years ended December 31, 2021 and 2020.

Salaries and contract labor are included in selling and administrative expenses and all other research and development costs are included in other operating costs.

Salaries and contract labor are included in selling and administrative expenses and all other research and development costs are included in other operating costs, including $0.3 million expenditure into clinical studies of Ambrotose ® and Manapol ® .

Stock-Based Compensation

The Company currently has one active stock-based compensation plan, the Mannatech, Incorporated 2017 Stock Incentive Plan, which was adopted by the Company’s Board of Directors (the "Board") on April 17, 2017 and was approved by its shareholders on June 8, 2017, and subsequently amended by the Board at its February 2019 special meeting, which amendment was approved by the Company's shareholders on June 11, 2019 (as amended, the "2017 Plan").

The 2017 Plan supersedes the Mannatech, Incorporated 2008 Stock Incentive Plan (as amended the "2008 Plan"), which was set to expire on February 20, 2018.

The Board has reserved a maximum of 370,000 shares of the Company's common stock that may be issued under the 2017 Plan (subject to adjustments for stock splits, stock dividends or other changes in corporate capitalization).

The 2017 Plan provides for grants of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock and performance stock units to our employees, board members, and consultants.

However, only employees of the Company and its corporate subsidiaries are eligible to receive incentive stock options.

The exercise price per share for all stock options will be no less than the market value of a share of common stock on the date of grant.

Any incentive stock option granted to an employee owning more than 10 % of our common stock will have an exercise price of no less than 110 % of our common stock’s market value on the grant date.

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

At date of grant, the Company determines the fair value of the stock option award and recognizes compensation expense over the requisite service period, or the vesting period of the award.

The fair value of the stock option award is calculated using the Black-Scholes option-pricing model.

The Company records stock-based compensation expense in selling and administrative expenses.

Software Development Costs

See Note 10, Stock Based Compensation.

S oftware Development Costs

The Company capitalizes qualifying internal payroll and external contracting and consulting costs related to the development of internal use software that are incurred during the application development stage, which includes design of the software configuration and interfaces, coding, installation, and testing.

Costs incurred during the preliminary project along with post-implementation stages of internal use software are expensed as incurred.

During the years ended December 31, 2020 and 2019, the Company capitalized $ 0.3 million and $ 0.2 million, respectively, of qualifying internal payroll costs.

During each of the years ended December 31, 2021 and 2020, the Company capitalized $ 0.3 million of qualifying internal payroll costs.

The Company amortizes such costs over the estimated useful life of the software, which is three to five years once the software is placed in service.

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Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources and includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.

The Company’s comprehensive income consists of the Company’s net income, foreign currency translation adjustments from its Japan, Republic of Korea, Taiwan, Denmark, Norway, Sweden, Colombia, Mexico and China operations, remeasurement of intercompany balances classified as equity from its Taiwan, Mexico and Cyprus operations, and changes in the pension obligation for its Japanese employees.

The Company’s comprehensive income consists of the Company’s net income, foreign currency translation adjustments from its Japan, Republic of Korea, Taiwan, Denmark, Norway, Sweden, Colombia, Mexico and China operations, remeasurement of intercompany balances of a long-term-investment nature from its Taiwan, Mexico and Cyprus operations, and changes in the pension obligation for its Japanese employees.

Concentration Risk

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18,010 11.3 % 16,263 10.7 %

Manapol ® Powder

13,141 8.2 % 7,187 4.7 %

Advanced Ambrotose ®

11,158 7.0 % 14,662 9.7 %

Optimal Support Packets 7,996 5.3 % 4,110 2.6 %

GI-Pro (MicroBiome) 8,478 5.3 % 7,513 5.0 %

9 unchanged sentences

The Company utilizes financial institutions that the Company considers to be of high credit quality and periodically evaluates the credit rating of such institutions and the allocation of their investments to minimize exposure to credit concentration risk.

Reclassification of Prior Year Presentation

Certain prior year amounts have been reclassified for consistency with the current year presentation.

These reclassifications had no effect on the reported balances or results of operations.

An adjustment has been made to the Consolidated Balance Sheet for fiscal year ended December 31, 2020, to reclassify the Deferred Tax Liabilities to Deferred Tax Assets.

Fair Value of Financial Instruments

1 unchanged sentence

See Note 2 to our Consolidated Financial Statements, Fair Value , for more information.

Recently Adopted Accounting Pronouncements

The Company adopted Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842) ( "ASU 2016-02" ) as of January 1, 2019 and applied it on a modified retrospective basis approach and elected to not adjust periods prior to January 1, 2019.

The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which, among other things, allowed the carry forward of the historical lease classification.

This new standard requires companies to recognize right of use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements.

ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions.

Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases.

The adoption increased assets, net of a lease incentive, by $4.7 million and increased liabilities by $6.1 million on our consolidated balance sheets and did not have a significant impact on our consolidated statement of operations and statements of cash flows.

These leases primarily relate to office buildings and office equipment.

See Note 5, Leases for more information.

In February 2018, the Financial Accounting Standards Board ("FASB") issued ASU 2018-02, Income Statement - Reporting Comprehensive Income, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (Topic 220) ("ASU 2018-02") , which amended its standard on comprehensive income to provide an option for an entity to reclassify the stranded tax effects of the Tax Cuts and Jobs Act (the "TCJA") that was passed in December of 2017 from accumulated other comprehensive income directly to retained earnings.

The stranded tax effects result from the remeasurement of deferred tax assets and liabilities which were originally recorded in comprehensive income but whose remeasurement is reflected in the income statement.

This is a one-time amendment applicable only to the changes resulting from the TCJA.

The Company adopted this standard on January 1, 2019.

The overall financial impact of adopting this standard did not have a material effect on our consolidated financial statements.

Accounting Pronouncements Issued But Not Yet Effective

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2020 Level 1 Level 2 Level 3 Total

Money Market Funds – Fidelity, US $ 5,000 $ — $ — $ 5,000

Interest bearing deposits – various banks $ 6,385 $ — $ — $ 6,385

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PROPERTY AND EQUIPMENT

For the year ended December 31, 2020 and 2019, construction in progress remained constant at $ 0.9 million, which is primarily comprised of back-office software projects within service dates that are currently indeterminable.

As of December 31, 2021 and 2020, construction in progress was $ 1.4 million and $ 0.9 million, respectively, which is primarily comprised of back-office software projects with service dates that are currently indeterminable.

As of December 31, 2021 and 2020, property and equipment consisted of the following (in thousands) :

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Leasehold improvements 4,292 4,508

ROU Assets- Financing 260 269

ROU Assets- finance leases 177 260

55,256 55,708

3 unchanged sentences

Total $ 4,239 $ 5,358

The Company leases office space and equipment from third-party lessors.

On January 1, 2019, the Company adopted ASC Topic 842, Leases, ("Topic 842") and related disclosures.

See note 5 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2019.

As of December 31, 2020 , the Company had net operating lease right of use ("ROU") assets of $ 6.9 million and net finance lease right of use assets of $ 0.3 million.

At December 31, 2020 , our operating lease liabilities were $ 8.2 million and our finance lease liabilities were $ 0.2 million.

If a contract conveys the right to control the use of identified PP&E (an identified asset) for a period of time in exchange for consideration, the Company considers the contract to be a lease, or to contain a lease, in accordance with ASC Topic 842.

The Company accounts for lease components, such as office space, separately from the non-lease components, such as maintenance service fees, based on estimated costs from the lessor.

ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make future lease payments arising from the lease.

Operating lease liabilities and finance lease liabilities are recorded at the present value of lease payments over the lease term at the commencement date.

The related ROU assets are recorded on the same date at the amount of the initial liability, adjusted for incentives received, prepayments made to the lessor, and any initial direct costs incurred, as applicable.

The Company leases office space and equipment from third-party lessors and accounts for leases in accordance with ASC Topic 842, determining whether an arrangement is a lease, or contains an embedded lease, at the inception of the contract.

Right of use assets represent the Company’s right to use an underlying asset over the lease term and lease liabilities represent the Company’s obligation to make future lease payments arising from the lease.

Operating lease liabilities and finance lease liabilities with terms greater than 12 months are recorded at the present value of the lease payments at the commencement date.

The related right of use assets are recorded on the same date at the amount of the initial liability, adjusted for incentives received, prepayments made to the lessor, and any initial direct costs incurred, as applicable.

The Company uses the discount rate implicit in the lease when it is readily determinable.

When it is not readily available, the Company discounts future lease payments using the incremental borrowing rate available to the Company as of the commencement date of the contract, or as of January 1, 2019 in the case of existing leases at the adoption of ASC 842.

When it is not readily available, future lease payments are discounted using the incremental borrowing rate available to the Company.

The incremental borrowing rate is the rate available to the Company for a fully collateralized, fully amortizing loan with the same term as the lease.

Operating lease costs are recognized on a straight-line basis over the lease term.

Finance lease costs are composed of the amortization of the ROU asset and the amounts recorded as interest.

Leases with an initial term of 12 months or less are considered short term and are not recorded on the balance sheet.

The Company recognizes a lease expense for short term leases on a straight-line basis over the lease term.

Lease components, such as office space, are accounted for separately from the non-lease components, such as maintenance fees.

Certain of the Company's leases may also include rent escalation clauses or options to extend or terminate the lease.

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None of the Company’s current leases contain guarantees of residual value.

The Company determines whether an arrangement is a lease at the inception of the contract.

Resulting operating lease right of use assets are recorded on the Consolidated Balance Sheets as a component of "Other assets" and resulting operating lease liabilities are recorded as a component of "Accrued expenses" and "Other long-term liabilities".

Generally, the Company’s operating leases relate to office space used in Mannatech’s operations, including its headquarters in Flower Mound, Texas, as well as office space in other locations around the globe in which the Company does business.

Finance lease assets are recorded on the Consolidated Balance Sheets as a component of “Property and equipment, net” with related liabilities recorded as “Current portion of finance leases” or as “Finance leases, excluding current portion”.

Leases with an initial term of 12 months or less are considered short term and are not recorded on the balance sheet.

The Company recognizes a lease expense for short term leases on a straight-line basis over the lease term.

At December 31, 2021 and 2020, net operating lease right of use assets were $ 4.6 million and $ 6.9 million, respectively, and operating lease liabilities were $ 5.8 million and $ 8.2 million, respectively.

The Company presents right of use assets related to operating leases in its Consolidated Balance Sheets as a component of "Other assets".

The current portion of operating lease liabilities is presented as a component of "Accrued expenses" and the long-term portion is presented as a component of "Other long-term liabilities".

Generally, the Company’s operating leases relate to office space used in Mannatech’s operations, including its headquarters in Flower Mound, Texas and office space in international locations in which the Company does business.

At December 31, 2021 and 2020, net finance lease right of use assets were $ 0.2 million and $ 0.3 million, respectively, and finance lease liabilities were $ 0.1 million and $ 0.2 million, respectively.

Right of use assets related to finance leases are presented on the Consolidated Balance Sheets as a component of “Property and equipment, net” with related lease liabilities recorded as “Current portion of finance leases” or as “Finance leases, excluding current portion”.

As of December 31, 2021, all of the Company’s finance leases pertain to certain equipment used in the business.

As of December 31, 2020 , our leased assets and liabilities consisted of the following (in thousands):

As of December 31, 2021 and 2020, our leased assets and liabilities consisted of the following (in thousands):

Leases Classification December 31, 2021 December 31, 2020

ROU Assets from operating leases Other assets $ 6,943 $ 5,568

ROU Assets from financing leases Property and equipment, net $ 288 $ 269

Right of Use Assets

Operating leases Other assets $ 4,625 $ 6,943

Finance leases Property and equipment, net 180 288

Total leased assets 4,805 7,231

Operating Accrued expenses $ 2,067 $ 1,622

Financing Current portion of finance leases $ 76 $ 87

Operating Other long-term liabilities $ 6,124 $ 5,307

Financing Finance leases, excluding current portion $ 129 $ 176

Lease Liabilities

Current Portion

Operating leases Accrued expenses 1,493 2,067

Finance leases Current portion of finance leases 68 76

Long-Term Portion

Operating leases Other long-term liabilities 4,318 6,124

Finance leases Finance leases, excluding current portion 66 129

Total leased liabilities $ 5,945 $ 8,396

We incurred the following lease costs related to our operating and finance leases (in thousands):

Lease Cost Classification Twelve Months Ended

December 31, 2020 Twelve Months Ended

December 31, 2019

Operating lease costs are recognized on a straight-line basis over the lease term.

Finance lease costs are composed of the amortization of the right of use asset and the amounts recorded as interest.

For the years ended December 31, 2021 and 2020, w e incurred the following lease costs related to our operating and finance leases (in thousands):

Lease Cost Classification 2021 2020

Operating leases

5 unchanged sentences

Total lease cost $ 2,676 $ 2,447

For the twelve months ended December 31, 2020 , cash paid amounts included in the measurement of lease liabilities included (in thousands):

Lease Payments Twelve Months Ended December 31, 2020 Twelve Months Ended December 31, 2019

Cash paid for amounts included in the measurement of lease liabilities

For the twelve months ended December 31, 2021 and 2020, cash paid for amounts included in the measurement of lease liabilities included (in thousands):

Operating cash flows from operating leases $ 2,164 $ 2,400

Financing cash flows from finance leases $ 87 $ 103

Lease term and discount rates related to the Company's leases are as follows:

December 31, 2020 December 31, 2019

As of December 31, 2021 and 2020 the Company's lease terms and discount rates were:

Operating leases

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Weighted-average discount rate 4.5 % 4.11 %

Financing leases

Finance leases

Weighted-average remaining lease term (years) 2.14 2.85

Weighted-average discount rate 6.57 % 6.55 %

As of December 31, 2020 and 2019 future minimum lease payments were as follows (in thousands):

As of December 31, 2021 future minimum lease payments were as follows (in thousands):

December 31, 2021

Maturity of lease liabilities Operating Leases Financing Leases

2021 2,644 98

Maturity of lease liabilities Operating Leases Finance Leases

2022 $ 1,715 $ 74

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Accrued compensation 2,566 1,879

Accrued royalties — 49

Accrued sales and other taxes 314 492

3 unchanged sentences

Accrued shipping and handling costs 356 399

Rent expense 20 39

Accrued legal and accounting fees 1,218 1,177

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Income before income taxes $ 8,892 $ 5,725

The components of the Company’s income tax expense for the years ended December 31 (in thousands) :

The components of the Company’s income tax provision (benefit) for the years ended December 31 (in thousands) :

Current provision (benefit):

Federal $ ( 17 ) $ ( 1,086 )

State ( 161 ) 114

Foreign 956 716

( 256 ) 1,383

Deferred provision (benefit):

Federal ( 1,183 ) —

State ( 131 ) —

Foreign ( 414 ) ( 280 )

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$ ( 950 ) $ ( 536 )

For the years ended December 31, 2021 and 2020, the Company’s effective tax rate was ( 10.7 )% and ( 9.4 )%, respectively.

The Company's effective tax rate for the year ended December 31, 2021 differed from the statutory rate due to the release of valuation allowance on U.S.

deferred tax assets due to the expectation of current and future utilization.

The Company's effective tax rate for the year ended December 31, 2020 differed from the statutory rate due to the carryback of U.S net operating losses as allowed by the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), enacted on March 27, 2020.

A reconciliation of the Company’s effective income tax rate and the United States federal statutory income tax rate is summarized as follows, for the years ended December 31:

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Global Intangible Low Taxed Income (GILTI) (1)

Federal Sub-Part F Income from foreign operation — 10.5

Section 78 gross up — 5.4

Section 250 deduction — ( 4.3 )

Effect of changes in tax rates — 0.5

Foreign Charitable Contributions 0.7 1.4

Prior year adjustments 1.3 8.2

Foreign tax credits — ( 10.9 )

Meals and entertainment — 0.7

Share Based Compensation — 1.2

Withholding taxes 2.5 3.2

Other permanent items — 1.9

Changes to uncertain tax positions ( 1.8 ) —

Expiration of tax attribute 17.4 —

Other ( 0.2 ) ( 1.1 )

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(1) This amount relates to the reversal of the 2018 GILTI inclusion due to the GILTI high-tax election the IRS made available in Q3 2020.

For the years ended December 31, 2020 and 2019, the Company’s effective tax rate was ( 9.4 )% and 42.5 %, respectively.

In 2020, the Company had a significant decrease in its rate due to the carryback of U.S net operating losses as allowed by the CARES Act.

In 2019, the Company had a higher effective rate due to the mix of earnings across jurisdictions and valuation allowance recorded on certain losses.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

4 unchanged sentences

Accrued expenses 1,352 1,034

Disallowed Interest Expense — —

Net operating loss (1)

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Gibraltar 216 — Indefinite

Hong Kong $ 24 $ 4 Indefinite

Japan $ 139 $ 48 Indefinite

Mexico 6,313 1,894 2022-2028

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Taiwan 3,422 684 2022-2031

United States - State $ 13,506 $ 804 2022-2040

9 2 Indefinite

United Kingdom 339 64 Indefinite

The United States fully utilized its federal net operation losses due to the passage of the CARES Act.

In addition to net operating loss attributes, the Company has recorded a foreign tax credit carryforward of $ 4.6 million, which will begin to expire in 2025.

The Company maintains a full valuation against the foreign tax credits.

United States - State 13,574 812 2022-Indefinite

foreign tax credit carryforwards of $ 3.4 million as of December 31, 2021, which will begin to expire in 2024.

The Company maintains a valuation allowance of $ 2.7 million against its foreign tax credit carryforwards.

At December 31, 2021 and 2020, the Company’s valuation allowance was $ 7.9 million and $ 11.9 million, respectively.

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Furthermore, the weight given to the potential effect of such evidence is commensurate with the extent the evidence can be objectively verified.

The valuation allowance against the Company's deferred tax assets consisted of the following at December 31 ( in thousands):

The valuation allowance against the Company's deferred tax assets consisted of the following at December 31 ( in millions):

Country 2021 2020

2 unchanged sentences

Colombia 0.5 0.6

Cyprus 0.2 0.2

Mexico 1.9 3.1

3 unchanged sentences

Taiwan 0.6 1.1

Ukraine — 0.1

United Kingdom — 0.1

United States 3.4 5.5

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Net deferred tax assets $ 2,825 $ 1,175

On January 1, 2007, the Company adopted FIN 48, which was codified into Topic 740, which prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements, uncertain tax positions that it has taken or expects to take on a tax return.

Topic 740 requires that a company recognize in its financial statements the impact of tax positions that meet a “more likely than not” threshold, based on the technical merits of the position.

The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

As of December 31, 2020 , the Company recorded $ 0.2 million in other long-term liabilities related to uncertain income tax positions and income tax reserves associated with various audits.

At December 31, 2020 , the Company had unrecognized tax benefits of $ 0.2 million that, if recognized, would impact the effective tax rate.

As of December 31, 2021, the Company had no unrecognized tax benefits.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows, for the years ended December 31, 2021 and 2020 (in thousands):

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The Company recognizes interest and/or penalties related to uncertain tax positions in current income tax expense.

For each of the years ended December 31, 2020 and 2019, the Company had accrued interest and penalties of $ 0.1 million in the consolidated balance sheet, of which $ 11 thousand and $ 13 thousand were expensed in the consolidated statement of operations, for December 31, 2020 and 2019, respectively.

As of December 31, 2021, the Company had no accrued interest and penalties in the consolidated balance sheet or the consolidated statement of operations.

As of December 31, 2020, the Company had accrued interest and penalties of $ 0.1 million in the consolidated balance sheet, of which $ 11 thousand were expensed in the consolidated statement of operations.

Although it is not reasonably possible to estimate the amount by which unrecognized tax benefits may increase or decrease within the next twelve months due to uncertainties regarding the timing of any examinations, the Company does not expect its unrecognized tax benefits to decrease during the next twelve months.

The Company files income tax returns in the United States federal jurisdiction and various state and foreign jurisdictions.

The Company is subject to examination by taxing authorities in the United States and various state and foreign jurisdictions.

As of December 31, 2021, the tax years that remained subject to examination by a major tax jurisdiction for the Company’s most significant subsidiaries were as follows:

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United States 2018-2020

The IRS has opened an audit for tax year 2019.

Audit work has not yet been scheduled so it is impossible to estimate any additional tax liability or penalty that could result from the audit.

We have not accrued a liability related to this audit at this time.

TRANSACTIONS WITH RELATED PARTIES AND AFFILIATES

The Company made cash donations of $ 0.6 million and $ 0.7 million to the M5M Foundation for the year ended December 31, 2020 and December 31, 2019, respectively.

The Company made cash donations of $ 0.6 million to the M5M Foundation for each of the years ended December 31, 2021 and December 31, 2020.

The M5M Foundation is a 501(c)(3) charitable organization that works to combat the epidemic of childhood malnutrition on a global scale.

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Prior to that, Mr.

Fredrick had served as Senior Vice President, Global Operations since August of 2016.

as Senior Vice President, Supply Chain and IT since August of 2015, Vice President, Global Operations since May of 2013, Vice President, North American Sales and Operations since January of 2011, Vice President, North American Sales since February of 2010 and as Senior Director of Tools and Training since his hire in May of 2006.

Fredrick had served as Senior Vice President, Global Operations since August of 2016, as Senior Vice President, Supply Chain and IT since August of 2015, Vice President, Global Operations since May of 2013, Vice President, North American Sales and Operations since January of 2011, Vice President, North American Sales since February of 2010 and as Senior Director of Tools and Training since his hire in May of 2006.

Landen Fredrick also serves as Chairman of the Board of the M5M Foundation.

Kevin Robbins is a member of the Company's Board of Directors, serving on the Science and Marketing Committee, and is also an independent associate, holding a position in the Company's associate global downline network marketing system.

He has also consulted on the associate commission plan in the past, but did not do so during the year ended December 31, 2020.

He has also consulted on the associate commission plan in the past, but did not do so during the years ended December 31, 2021 and 2020 .

In addition, several of Mr.

Robbins’ family members are independent associates.

The Company pays commissions and incentives to its independent associates and, during each of 2020 and 2019, the Company paid aggregate commissions and incentives to Mr.

Robbins and his family of approximately $ 1.9 million.

The Company pays commissions and incentives to its independent associates and, during 2021 and 2020, the Company paid aggregate commissions and incentives to Mr.

Robbins and his family of approximately $ 1.8 million and $ 1.9 million, respectively.

The aggregate amount of commissions and incentives paid to Mr.

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Components of Expense

Service Cost for the Benefit Plan is included within selling and administrative expenses and all other items noted in the table below (Interest Cost, Amortization of Transition Obligation, and Prior Service Cost) are included within other income (expense).

Pension costs, which are included within Consolidated Statement of Operations are detailed below for the years ended December 31 (in thousands) :

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Expired ( 14 ) 11.40

Forfeit ( 3 ) 15.70

Outstanding at end of year 244 $ 17.10 5.01 $ 5,174

1 unchanged sentence

During 2021, the Company issued 58,483 new shares upon the exercise of options and granted 10,000 new options to management and members of the Board.

Options exercised during the year ending December 31, 2020 and December 31, 2019 had a total intrinsic value, calculated as the difference between the exercise date stock price and the exercise price of $ 0.1 million and less than $ 0.1 million, respectively.

Non-vested shares at December 31, 2020 and 2019 were approximately 8,336 and 55,335 , respectively.

Options exercised during the year ending December 31, 2021 and December 31, 2020 had a total intrinsic value, calculated as the difference between the exercise date stock price and the exercise price of $ 1.2 million and $ 0.1 million, respectively.

Non-vested shares at each of December 31, 2021 and 2020 were approximately 8,336 .

Valuation and Expense Information Under FASB ASC Topic 718 Compensation – Stock Compensation

11 unchanged sentences

The weighted-average grant-date fair value of stock options granted during the years ended December 31, 2021 and 2020 was $ 6.77 and $ 4.00 per share, respectively.

The total fair value of awards vested during the years ended December 31, 2020 and 2019 was $ 0.3 million and $ 0.4 million, respectively.

The Company recorded the following amounts related to the expense of the fair values of options and restricted share awards during the years ended December 31, 2020 and 2019 (in thousands) :

The total fair value of awards vested during the years ended December 31, 2021 and 2020 was less than $ 0.1 million and $ 0.3 million, respectively.

The Company recorded the following amounts related to the expense of the fair values of options during the years ended December 31, 2021 and 2020 (in thousands) :

Selling, general and administrative expenses and income from operations before income taxes $ 50 $ 124

19 unchanged sentences

The Company utilizes royalty agreements with individuals and entities to provide compensation for items relating to developed products, websites and emails provided to our associates.

The Company paid royalties of $ 0.1 million for each of the years ended December 31, 2020 and December 31, 2019, respectively.

The Company paid royalties of less than $ 0.1 million for the year ended December 31, 2021 and $ 0.1 million for the year ended December 31, 2020.

Employment Agreements

1 unchanged sentence

If the employment relationships with these executives were terminated, as of December 31, 2021, the Company would continue to be indebted to the executives for $ 0.6 million , payable through 2022.

Administrative Proceedings

Mannatech Korea, Ltd.

Busan Custom Office , Busan District Court, Korea

On or before April 12, 2015, Mannatech Korea Co., Ltd.

(“Mannatech Korea”) filed a suit against the Busan Custom Office (“BCO”) to challenge BCO’s method of calculation regarding its assessment notice issued on July 11, 2013.

The assessment notice included an audit of Mannatech Korea’s imported goods covering fiscal years 2008 through 2012 and required Mannatech Korea to pay $ 1.0 million for this assessment, all of which was paid in January 2014.

Both parties submitted a response to the Court’s inquiry on January 15, 2016.

The final hearing for the case was held on May 26, 2016 where each party presented their respective arguments.

The Court set the decision hearing on October 27, 2016, and the Court decided the case in Mannatech Korea’s favor.

However, on November 18, 2016, BCO filed an appeal to the Busan High Court.

The first hearing occurred on March 31, 2017, and the second hearing occurred on April 21, 2017.

The final hearing was held on June 2, 2017.

The Court issued its decision on June 30, 2017 in favor of the BCO.

Mannatech Korea appealed this decision on August 24, 2017.

On December 24, 2020 Mannatech Korea received notice that the Court issued its decision and ruled to reject its appeal, which means the customs imposition is now final and conclusive.

Mannatech Korea and the Company consider this matter closed.

Korean Customs Audit

In November, 2021, the Busan Custom Office began an audit of the Korean customs values and while the audit continues, we have booked a $0.6 million charge to Other Operating Expenses for the most probable outcome.

As we process commissions monthly, Mannatech Korea receives from Mannatech Inc.

payments for members’ commissions and these intercompany payments are settled by way of netting set-off with other transactions.

We are seeking an official ruling from the Ministry of Economy and Finance involving the netting of receivables / payables in foreign currency between a Korean resident and a non-resident and whether this should be reported to the Bank of Korea or a designated foreign exchange bank under compliance with the Foreign Exchange Transactions Act ("FETA") of Korea.

If it is confirmed in the ruling that the above transactions are subject to the advance reporting requirement under the FETA, there is a possibility of a penalty for the violation.

Litigation - Product Liability

Meeja Kim, et al., v.

Mannatech Korea and Eunbee Cho, Seoul Southern District Court 2020-Gadan-216374

On March 4, 2020, a complaint was filed against Mannatech Korea.

Mannatech Korea was served on March 10, 2020.

The plaintiffs are the surviving spouse and three children (the “Plaintiffs”) of Kong Seokhwan, a cancer patient who died in October 2017.

The Plaintiffs allege that co-defendant and former independent associate, Eunbee Cho, instructed the deceased to take the Company’s products as treatment for cancer.

Eunbee Cho was found guilty of fraud and began serving a sentence of one year and six months in November 2019.

The Plaintiffs are seeking damages in the amount of 110 million KRW (USD $90,000.00) plus interest of 12% per year.

Mannatech Korea has engaged local counsel to defend this matter.

An evidentiary hearing was held on October 21, 2020.

Due to restrictions in place relating to COVID-19, hearings scheduled during the fourth quarter of 2020 for this matter were postponed;

an evidentiary hearing was held on March 10, 2021 where another hearing was scheduled for April 28, 2021.

It is not possible at this time to predict whether Mannatech Korea will incur any liability, or to estimate the ranges of damages, if any, which may be incurred in connection with this matter.

However, Mannatech Korea believes it has a valid defense and will vigorously defend this claim.

This matter remains open.

MTEX Hong Kong Limited and Beili Guan, Case No.

2019-Jin-0116-Civil-2339, Binhai New District Court, Tianjin, China

On or before September 2, 2019, MTEX Hong Kong Limited (“MTEX Hong Kong”) received service of process of the above-captioned matter.

Ruiguo Ma (the "Plaintiff") is alleging that his child suffered tooth decay after consuming the Company's MannaBears product and underwent several surgeries.

The Plaintiff is seeking damages of approximately $50,000 USD.

MTEX Hong Kong has engaged local counsel to defend this case.

The Company has provided notice to its insurance carrier.

At this time the potential damages do not meet the deductible;

therefore, the case has not been tendered to the carrier.

The first hearing occurred on September 11, 2019, and the second hearing occurred on October 30, 2019, where each party presented their respective arguments.

On August 25, 2020, the court denied all of the Plaintiff's motions and granted judgment in favor of MTEX Hong Kong.

The Plaintiff appealed the decision on September 21, 2020.

On January 27, 2021, the appellate court issued a judgment upholding the lower court’s decision.

MTEX Hong Kong and the Company consider this matter closed.

Beili Guan, MTEX Hong Kong Limited, and Mannatech, Incorporated, Case No.

2020-Jin-0116-

Civil-7655, Binhai New District Court, Tianjin, China

2020-Jin-0116-Civil-7655, Binhai New District Court, Tianjin, China

On November 16, 2020, MTEX Hong Kong received service of process of the above-captioned matter.

2 unchanged sentences

The Plaintiff is seeking damages of approximately USD $286,600.

On November 22, 2020, MTEX Hong Kong filed a motion challenging the court’s jurisdiction.

MTEX Hong Kong has engaged local counsel to defend this case.

On November 22, 2020, MTEX Hong Kong filed a motion objecting to the court’s jurisdiction.

On April 7, 2021, the Company received service of process of the above-captioned matter.

The claims that the Plaintiff alleges against the Company are the same as those against MTEX Hong Kong.

The Company has engaged the same counsel as above to defend this case.

The Company filed a motion objecting to the court’s jurisdiction on April 22, 2021.

MTEX Hong Kong and the Company received the court’s ruling rejecting the objection on jurisdiction on June 15, 2021 and June 21, 2021, respectively.

Both entities filed a petition to appeal.

On October 14, 2021, the District Appellate Court issued a decision to uphold the jurisdiction.

The final hearing for the case was held on December 17, 2021, where each party presented their respective arguments.

On December 29, 2021, the court issued judgment and decided in favor of the Company and MTEX Hong Kong.

On March 9, 2022, the Company and MTEX Hong Kong received notice from counsel that the Plaintiff appealed to the Tianjin Intermediate Court.

A hearing date has not yet been set.

It is not possible at this time to predict whether MTEX Hong Kong will incur any liability, or to estimate the ranges of damages, if any, which may be incurred in connection with this matter.

However, MTEX Hong Kong believes it has a valid defense and will vigorously defend this claim.

However, both entities believe that they have a valid defense and will vigorously defend this claim.

This matter remains open.

22 unchanged sentences

In August 2020, the Company’s Board of Directors approved a share repurchase program to acquire up to $1.0 million (of the original $20.0 million authorization) of the Company’s common stock through August 16, 2021.

As of August 8, 2017, the maximum number of shares available for repurchase under the June 2004 Plan was 19,084 , and the total number of shares purchased in the open market under the June 2004 Plan was 112,672 .

As of August 8, 2017, the total number of shares purchased in the open market under the June 2004 Plan was 112,672 , and the maximum number of remaining shares available for repurchase under the June 2004 Plan was 19,084.

As of December 31, 2021, there was $ 12.6 million remaining for repurchase under the August 2006 Plan, and the total value of shares repurchased in the open market under the August 2006 Plan was $ 1.5 million.

The Company does not have any stock repurchase plans or programs other than the June 2004 Plan and the August 2006 Plan.

On May 29, 2020, the Company commenced a modified Dutch auction cash tender offer to purchase up to $ 5.0 million of its outstanding common stock, par value $0.0001 per share, at a per share price not greater than $17.00 nor less than $15.00, to each seller in cash, less any applicable withholding taxes and without interest (the "tender offer").

On May 28, 2021, the Company commenced a cash tender offer to purchase up to 211,538 of its outstanding common stock, at a per share price of $ 26.00 per share to each seller in cash, less any applicable withholding taxes and without interest (the "tender offer").

The tender offer expired on June 25, 2021.

As a result of the tender offer, the Company accepted for purchase a total of 171,433 shares of its common stock, which were properly tendered and not properly withdrawn at the price of $ 26.00 per share, for an aggregate purchase price of $ 4.5 million, which was funded from cash on hand.

Due to the tender offer being oversubscribed, the Company purchased only a prorated p ortion of those shares properly tendered by each tendering shareholder (other than "odd lot" holders whose shares were purchased on a priority basis) at or below the final per share purchase price.

The final proration factor for the tender offer was approximately 86%.

The common shares represented approximately 12.31% of the Company's total outstanding shares as of April 30, 2020.

During the year ended December 31, 2020, the Company repurchased 351,581 shares of its common stock, which includes the 294,117 shares repurchased pursuant to the tender offer, at an average price of $ 17.79 .

During the year ended December 31, 2019, the Company repurchased 18,753 shares at an average price of $ 16.25 .

These shares of common stock represented approximately 8.31% of the Company's total outstanding shares as of April 30, 2021.

During the year ended December 31, 2021, the Company repurchased 200,115 shares of its common stock, which includes the 171,433 shares of its common stock repurchased pursuant to the tender offer, at an average price of $ 26.76 .

During the year ended December 31, 2020, the Company repurchased 351,581 shares of its common stock, which included 294,117 shares repurchased pursuant to the 2020 tender offer, at an average price of $ 17.79 .

Equity-Based Compensation

16 unchanged sentences

Balance as of December 31, 2021 $ 1,961 $ 381 $ 2,342

On February 14, 2020, the Board declared a dividend of $ 0.125 per share that was paid on March 27, 2020 to shareholders of record on March 13, 2020, for an aggregate amount of $ 0.3 million.

On March 2, 2021, the Board declared a dividend of $ 0.16 per share that was paid on March 30, 2021 to shareholders of record on March 16, 2021, for an aggregate amount of $ 0.3 million.

On May 24, 2021, the Board declared a dividend of $ 0.16 per share that was paid on June 14, 2021 to shareholders of record on June 2, 2021, for an aggregate amount of $ 0.3 million.

32 unchanged sentences

(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);

(iii) Asia/Pacific (Australia, Japan, New Zealand, the Republic of Korea, Singapore, Taiwan, Hong Kong and China).

and (iii) Asia/Pacific (Australia, Japan, New Zealand, the Republic of Korea, Singapore, Taiwan, Hong Kong and China).

Consolidated net sales shipped to customers in these regions, along with pack and product information for the years ended December 31, are as follows (in millions, except percentages) :

19 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures