What changed in this filing

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Item 9A. Controls and Procedures

2023-03-17 compared with 2022-03-15 · 254 added, 170 removed, 1008 unchanged (30% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal financial officer), have concluded, based on their evaluation as of the end of the period covered by this report, that our disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d – 15(e) under the Exchange Act) are effective to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and include controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal financial officer), have concluded, based on their evaluation as of December 31, 2022, that our disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d – 15(e) under the Exchange Act) are effective to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and include controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During the quarter ended December 31, 2021, there were no changes in our internal control over our financial reporting that we believe materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We have not experienced any material changes to our internal controls over financial reporting despite the fact that most of our employees are working remotely due to the COVID-19 pandemic.

We are continually monitoring and assessing the COVID-19 situation on our internal controls to minimize the impact on their design and operating effectiveness.

During the year ended December 31, 2022, there were no changes in our internal control over our financial reporting that we believe materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

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Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Documents Incorporated by Reference

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Consolidated Statements of Operations for the years ended December 31, 2022 and 2021 F- 5

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

Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2022 and 2021 F- 5

Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2022 and 2021 F- 6

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Jobe Director March 17, 2023

Schrier Director March 15, 2022

/s/ Tyler Rameson Director March 17, 2023

Tyler Rameson

/s/ John Seifrick Director March 17, 2023

John Seifrick

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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Opinion on 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”).

We have audited the accompanying consolidated balance sheets of Mannatech, Incorporated (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive (loss) income, shareholders’ equity, and cash flows for the years then ended, and the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, 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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Transfer Pricing

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, $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.

As indicated 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 2022, were generated outside of the United States.

As indicated in Note 7 to the consolidated financial statements, the Company's loss before income taxes of $0.5 million for the year ended December 31, 2022 comprised of a loss before income taxes of $7.8 million in the United States and income before income taxes of $7.3 million outside of the United States.

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

We identified the Company’s determination of appropriate transfer pricing policies as a critical audit matter.

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Property and equipment, net 3,759 4,239

Construction in progress 1,357 864

Long-term restricted cash 476 503

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Retained earnings 1,686 7,708

Accumulated other comprehensive income 2,342 5,150

Accumulated other comprehensive (loss) income ( 208 ) 2,342

Treasury stock, at average cost, 884,057 shares as of December 31, 2022 and 802,170 shares as of December 31, 2021 ( 20,679 ) ( 18,915 )

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Total operating expenses 104,553 116,564

Income from operations 9,049 4,491

(Loss) income from operations ( 405 ) 9,049

Interest income 88 66

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

Income before income taxes 8,892 5,725

Other (expense), net ( 162 ) ( 223 )

(Loss) income before income taxes ( 479 ) 8,892

Income tax (provision) benefit ( 4,011 ) 950

Net income $ 9,842 $ 6,261

Income per common share:

Net (loss) income $ ( 4,490 ) $ 9,842

(Loss) income per common share:

Basic $ ( 2.35 ) $ 4.95

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Diluted 1,913 2,088

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

Net income $ 9,842 $ 6,261

Other comprehensive income, net of tax:

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

Net (loss) income $ ( 4,490 ) $ 9,842

Other comprehensive loss, net of tax:

Foreign currency translations loss ( 2,546 ) ( 2,832 )

Pension obligations, net of tax provision of $10 and $13 in 2022 and 2021, respectively

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

Comprehensive income $ 7,034 $ 7,654

Other comprehensive Loss $ ( 2,527 ) $ ( 2,808 )

Comprehensive (loss) income $ ( 7,017 ) $ 7,034

See accompanying notes to consolidated financial statements.

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comprehensive

income Treasury

income (loss) Treasury

shareholders’

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

Stock option exercises — ( 419 ) — — 964 545

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

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Balance at December 31, 2021 $ — $ 33,277 $ 7,708 $ 2,342 $ ( 18,915 ) $ 24,412

Net Income — — 9,842 — — 9,842

Net Loss — — ( 4,490 ) — — ( 4,490 )

Payment of cash dividends — — ( 1,532 ) — — ( 1,532 )

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Issuance of unrestricted shares — 97 — — 143 240

Stock option exercises — ( 419 ) — — 964 545

Stock option exercises (cashless) — ( 75 ) — — 75 —

Repurchase of common stock — — — — ( 1,982 ) ( 1,982 )

Liquidation of subsidiary — — — ( 23 ) ( 23 )

Foreign currency translation — — — ( 2,546 ) — ( 2,546 )

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CASH FLOWS FROM OPERATING ACTIVITIES:

Net income $ 9,842 $ 6,261

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

Net (loss) income $ ( 4,490 ) $ 9,842

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

Depreciation and amortization 1,627 1,719

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Provision for inventory losses 543 638

Provision for doubtful accounts 246 208

(Gain) loss on disposal of assets 36 ( 5 )

(Recovery of) Provision for doubtful accounts ( 26 ) 246

Loss on disposal of assets 3 36

(Gain) on disposal of subsidiary ( 23 ) —

Stock-based compensation expense 337 260

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Deferred revenue 239 ( 605 )

Net cash provided by operating activities 10,774 6,030

Net cash (used in) provided by operating activities ( 2,599 ) 10,774

CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisition of property and equipment ( 1,063 ) ( 650 )

Proceeds from sale of assets — 2

Net cash used in investing activities ( 1,063 ) ( 650 )

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Payment of cash dividends ( 1,532 ) ( 4,347 )

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 financing obligations ( 817 ) ( 435 )

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Interest paid on finance leases and other financing obligations $ 32 $ 31

Accrued asset purchases $ — $ 709

Assets acquired through other financing arrangements $ 798 $ —

Right of use assets acquired in exchange for new operating lease liabilities $ 1,855 $ 70

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Only associates are eligible to earn commissions and incentives.

We also ship our products to customers in the following countries:

Belgium, France, Greece, Italy, Luxembourg, and Poland.

The Company operates a non-direct selling business in mainland China.

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The United States dollar is the functional currency for the majority of the Company’s foreign subsidiaries.

As a result, nonmonetary assets and liabilities are remeasured at their approximate historical rates, monetary assets and liabilities are remeasured at exchange rates in effect at the end of the year, and revenues and expenses are remeasured at weighted-average exchange rates for the year.

As a result, nonmonetary assets and liabilities are translated at their approximate historical rates, monetary assets and liabilities are translated at exchange rates in effect at the end of the year, and revenues and expenses are translated at weighted-average exchange rates for the year.

The local currency is the functional currency of our subsidiaries in Japan, Republic of Korea, Taiwan, Norway, Denmark, Sweden, Mexico and China.

These subsidiaries’ assets and liabilities are translated into United States dollars at exchange rates existing at the balance sheet dates, revenues and expenses are translated at weighted-average exchange rates, and shareholders’ equity and intercompany balances are translated at historical exchange rates.

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

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.

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

Foreign currency transactio n losses t otaled approximately $ 0.7 million and $ 0.2 million for the years ended December 31, 2022 and 2021, respectively, and are included in other (expense) income, net in the Company’s consolidated statements of operations.

Cash and Cash Equivalents

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and (iii) Australia building lease collateral.

As of December 31, 2021 and 2020, our total restricted cash was $ 1.4 million and $ 5.3 million, respectively.

At each of December 31, 2022 and 2021, our total restricted cash was $ 1.4 million.

The Company classifies the restricted cash held in Korea and Australia as long-term since it relates to assets and services contracted for longer than one year.

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The Company periodically evaluates its receivables for collectability based on historical experience, recent account activities, and the length of time receivables are past due and writes-off receivables when they become uncollectible.

As of December 31, 2021 and 2020, the Company held an allowance for doubtful accounts of $ 1.0 million and $ 0.8 million, respectively.

At each of December 31, 2022 and 2021, the Company held an allowance for doubtful accounts of $ 1.0 million.

Inventories consist of raw materials, finished goods, and promotional materials that are stated at the lower of cost (using standard costs that approximate average costs) or net realizable value.

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Prepaid expenses and other current assets were $ 2.4 million and $ 2.9 million at December 31, 2022 and 2021, 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.

Included in the December 31, 2022 and 2021 balances were $ 1.2 million and $1.1 million in other prepaid assets.

Also included in the balances at December 31, 2022 and 2021 were $ 0.9 million and $ 0.5 million for prepaid deposits, respectively.

Also included in the balances at December 31, 2022 and 2021 were $ 0.3 million and $ 1.3 million in prepaid inventory, respectively.

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Notes payable were $ 0.3 million and $ 0.2 million as of December 31, 2022 and December 31, 2021, 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 5.7 % and are collateralized by leasehold improvements and computer

hardware and software.

Payments are made monthly according to the terms of the agreements which have a weighted average effective interest rate of 8.3 % and are collateralized by leasehold improvements and computer hardware and software.

At December 31, 2022 and December 31, 2021, the current portion was $ 0.3 million and $ 0.2 million, respectively.

Other Long-Term Liabilities

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

Other long-term liabilities were $ 5.0 million at each of December 31, 2022 and 2021.

At December 31, 2022 and 2021, we recorded long-term lease liabilities related to operating leases of $ 4.2 million and $ 4.3 million, respectively.

See Note 5, Leases for more information.

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

As of December 31, 2022 and 2021, government mandated severance accruals in certain international offices amounted to $ 0.6 million and $ 0.5 million, respectively.

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

defined benefit plan for its Japan operations of $ 0.2 million and $ 0.4 million as of December 31, 2021 and 2020, respectively (See Note 9, Employee Benefit Plans ).

defined benefit plan for its Japan operations of $ 0.2 million at each of December 31, 2022 and 2021 (see Note 9, Employee Benefit Plans ).

Revenue Recognition

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The Company records revenue net of any sales taxes and records a reserve for expected sales returns based on its historical experience.

The Company recognizes revenue from shipped products when control of the product transfers to the customer, thus the performance obligation is satisfied.

The Company recognizes revenue from shipped products when delivered to the customer, thus the performance obligation is satisfied.

Corporate-sponsored event revenue is recognized when the event is held.

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Sales placed through a one-time order contain only the first performance obligation noted above - the sale of the product.

Payments are made immediately through credit card upon purchase of the products.

The Company provides associates with access to a complimentary three-month package for the Success Tracker TM and Mannatech+ online business tools with the first payment of an associate fee.

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Associates do not have complimentary access to online business tools after the first contractual period.

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.

With regard to both of the aforementioned contracts, the Company determines the standalone selling prices by using observable inputs which includes the Company’s standard published price lists.

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

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

Deferred commissions were $ 2.4 million and $ 2.3 million at December 31, 2021 and December 31, 2020, respectively.

Deferred commissions were $ 2.5 million and $ 2.4 million at December 31, 2022 and 2021, respectively.

The full $ 2.4 million balance at December 31, 2021 was amortized to commissions expense for the twelve months ended December 31, 2022.

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(ii) revenue from the loyalty program;

(iii) prepaid registration fees from customers planning to attend a future corporate-sponsored event;

(iii) prepaid

registration fees from customers planning to attend a future corporate-sponsored event;

and (iv) prepaid annual associate fees.

At December 31, 2021 and December 31, 2020, the Company’s deferred revenue was $ 4.9 million and $ 5.5 million, respectively.

At December 31, 2022 and 2021, the Company’s deferred revenue was $ 5.1 million and $ 4.9 million, respectively.

The full $ 4.9 million balance at December 31, 2021 was recognized as revenue for the twelve months ended December 31, 2022.

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Sales returns have historically averaged 1.5 % or less of our gross sales.

For the years ended December 31, 2021 and December 31, 2020, our sales return reserve consisted of the following (in thousands) :

At December 31, 2022 and December 31, 2021, our sales return reserve, which is a component of Accrued expenses, consisted of the following (in thousands) :

Sales reserve as of January 1, 2021 $ 71

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

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

Advertising and promotional expenses were $ 3.2 million and $ 3.5 million for the years ended December 31, 2022 and 2021, respectively.

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.

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The Company expenses research and development expenses as incurred.

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, including $0.3 million expenditure into clinical studies of Ambrotose ® and Manapol ® .

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 $ 1.0 million and $ 1.2 million for the years ended December 31, 2022 and 2021, respectively.

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

Stock-Based Compensation

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

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

During the years ended December 31, 2022 and 2021, the Company capitalized $0.4 million and $ 0.3 million of qualifying internal payroll costs, respectively.

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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Concentration Risk

A significant portion of our revenue is derived from our Ambrotose Life ® , TruHealth ™ , Advanced Ambrotose ® , Optimal Support Packets, and GI-Pro products.

A significant portion of our revenue is derived from our Ambrotose Life ® , TruHealth ™ , Advanced Ambrotose ® , Manapol® Powder and Optimal Support Packets.

A decline in sales value of such products could have a material adverse effect on our earnings, cash flows, and financial position.

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15,730 11.5 % 18,010 11.3 %

Manapol ® Powder

13,141 8.2 % 7,187 4.7 %

Advanced Ambrotose ®

9,624 7.0 % 11,158 7.0 %

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

Manapol ® Powder

7,909 5.8 % 13,141 8.2 %

Optimal Support Packets 6,916 5.0 % 7,593 4.7 %

Total $ 68,913 50.2 % $ 78,678 49.2 %

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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.

An adjustment has been made to the Consolidated Balance Sheet for fiscal year ended December 31, 2021, to reclassify Construction in Progress to Property and Equipment, net.

Fair Value of Financial Instruments

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At the point that trade receivables are recorded, they become subject to the CECL model and estimates of expected credit losses on trade receivables over their contractual life will be required to be recorded at inception based on historical information, current conditions, and reasonable and supportable forecasts.

The Company is currently evaluating whether the new guidance will have an impact on our consolidated financial statements or existing internal controls.

The Company has reviewed the pronouncement and not found any indication nor do we expect to find that the new guidance will have an impact on our consolidated financial statements or existing internal controls.

Other recently issued accounting pronouncements did not or are not believed by management to have a material impact on the Company's present or future financial statements.

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Total $ 3,759 $ 4,239

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.

The Company leases office space and equipment from third-party lessors and accounts for leases in accordance with ASC Topic 842.

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.

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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, 2022, all of the Company’s finance leases pertain to certain equipment used in the business.

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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):

For the years ended December 31, 2022 and 2021, we incurred the following lease costs related to our operating and finance leases (in thousands):

Lease Cost Classification 2022 2021

Operating leases

Operating lease costs Other operating cost $ 2,201 $ 2,074

Short term lease costs Other operating cost 339 245

Operating lease costs Other operating costs $ 2,137 $ 2,201

Short term lease costs Other operating costs 279 339

Finance leases

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Accrued compensation 1,737 2,566

Accrued royalties 41 —

Accrued sales and other taxes 290 314

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$ 7,510 $ 9,224

The components of the Company’s income before income taxes are attributable to the following jurisdictions for the years ended December 31 (in thousands) :

The components of the Company’s (loss) income before income taxes are attributable to the following jurisdictions for the years ended December 31 (in thousands) :

United States $ ( 7,822 ) $ 6,947

Foreign 7,343 1,945

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

(Loss) income before income taxes $ ( 479 ) $ 8,892

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

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For the years ended December 31, 2022 and 2021, the Company’s effective tax rate was ( 837.4 )% and ( 10.7 )%, respectively.

The Company's effective tax rate for the year ended December 31, 2022 differed from the statutory rate due to additional taxes assessed as a result of the settlement of the income tax audit in Korea, the Company recording a valuation allowance on U.S.

deferred tax assets largely driven by changes in expected earnings mix between jurisdictions, and the relative impact of these items on decreased earnings.

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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Difference in foreign and United States tax on foreign operations ( 24.8 ) 0.7

Assessments from taxing authorities ( 278.5 ) —

Effect of changes in valuation allowance ( 383.7 ) ( 45.0 )

CARES NOL Carryback Benefit — ( 25.3 )

Foreign Derived Intangible Income (FDII) deduction — ( 8.1 )

Global Intangible Low Taxed Income (GILTI) (1)

Credits generated 15.2 ( 0.5 )

Effect of changes in tax rates 19.4 0.2

Foreign charitable contributions ( 12.5 ) 0.7

Prior year adjustments 1.3 8.2

Return to provision adjustments ( 43.4 ) 1.3

Withholding taxes ( 50.3 ) 2.5

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( 837.4 ) % ( 10.7 ) %

(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.

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.

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Lease liability 673 763

Capitalized research & development 218 —

Other 968 664

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Bermuda 73 — N/A

China 606 151 2024-2026

Colombia 1,654 496 Indefinite

Cyprus 1,373 172 2023-2027

Denmark 1 — Indefinite

Gibraltar 253 32 Indefinite

Mexico 6,136 1,840 2023-2028

Netherlands 5 1 Indefinite

Norway 267 59 Indefinite

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United Kingdom 275 69 Indefinite

United States - Federal 2,835 596 Indefinite

United States - State 14,248 835 2023-Indefinite

7 unchanged sentences

Country 2022 2021

Australia $ — $ 0.2

China $ 0.4 $ 0.5

8 unchanged sentences

Total $ 9.8 $ 7.9

Deferred tax assets (liabilities) are classified in the accompanying Consolidated Balance Sheets at December 31 as follows (in thousands) :

Deferred tax assets $ 2,828 $ 1,178

Deferred tax liabilities ( 3 ) ( 3 )

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

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):

Balance as of January 1 $ 79 $ 79

Additions for tax positions related to the current year — —

Additions for tax positions of prior years — —

Reductions of tax positions of prior years — —

Settlements ( 79 ) —

Balance as of December 31 $ — $ 79

As of December 31, 2022 and 2021, the Company had no unrecognized tax benefits.

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

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.

As of December 31, 2022 and 2021, the Company had no accrued interest and penalties in the consolidated balance sheet or the consolidated statement of operations.

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

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United States 2019-2021

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

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We paid employment compensation of approximately $ 477,000 and $ 375,000 in 2022 and 2021, respectively, for salary, bonus, auto allowance, and other compensation to Landen Fredrick.

Landen Fredrick is the son of J.

Stanley Fredrick, the Company’s Chairman of the Board and a major shareholder.

In addition, Landen Fredrick participated in the employee health care benefit plans available to all employees of the Company.

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The Company’s matching contributions for its United States and Canada employees vest ratably over a five -year period.

During each of the years ended December 31, 2021 and 2020, the Company contributed approximately $ 0.3 million and $ 0.2 million to the 401(k) Plan for matching contributions, respectively.

During each of the years ended December 31, 2022 and 2021, the Company contributed approximately $ 0.3 million to the 401(k) Plan for matching contributions.

The Company also sponsors a non-U.S.

13 unchanged sentences

Benefits paid to participants — ( 171 )

Special termination benefit — 8

Foreign currency ( 27 ) ( 32 )

15 unchanged sentences

Net periodic cost $ 3 $ 7

Current year actuarial (gain) loss ( 4 ) 6

Current year actuarial gain ( 6 ) ( 4 )

Amortization of transition obligation ( 3 ) ( 4 )

Total recognized in other comprehensive income (loss) ( 8 ) 2

Total recognized in comprehensive income $ ( 1 ) $ 12

As of December 31,

Total recognized in other comprehensive loss ( 9 ) ( 8 )

Total recognized in comprehensive (loss) income $ ( 6 ) $ ( 1 )

Years Ended December 31,

Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive gain (in thousands) :

1 unchanged sentence

Prior service cost 38 84

Net actuarial gain (loss) 4 ( 7 )

Net actuarial gain 6 4

Total recognized in accumulated other comprehensive gain $ 89 $ 137

As of December 31,

Amounts included in Accumulated Other Comprehensive Income (Loss) (in thousands) :

Net actuarial gain $ 657 $ 628

Deferred tax provision ( 257 ) ( 247 )

Net cumulative amount included in accumulated other comprehensive income (loss) $ 400 $ 381

Estimated amounts of amortized transition obligation (in thousands):

9 unchanged sentences

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 (expense) income, net.

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, Loss and Prior Service Cost) are included within other

(expense), net.

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

2 unchanged sentences

Amortization of transition obligation 3 4

Gain (loss) ( 4 ) ( 6 )

Special termination — 8

Loss ( 4 ) ( 4 )

Prior service cost ( 36 ) ( 43 )

19 unchanged sentences

price Weighted

contractual life

(in years) Aggregate

2 unchanged sentences

Exercised ( 11 ) 16.93

Expired ( 14 ) 11.40

Outstanding at end of year 244 $ 17.35 4.33 $ 418

Options exercisable at year end 234 $ 17.14 4.13 $ 418

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, 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 .

During 2022, the Company issued 11,334 treasury shares upon the exercise of options and granted 11,807 new options to management and members of the Board.

Options exercised during the years ending December 31, 2022 and 2021 had a total intrinsic value, calculated as the difference between the exercise date stock price and the exercise price of $ 0.1 million and $ 1.2 million, respectively.

Non-vested shares at December 31, 2022 and 2021 were approximately 10,003 and 8,336 , respectively.

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

The Company is required to measure and recognize compensation expense related to any outstanding and unvested stock options previously granted, and thereafter recognize, in its consolidated financial statements, compensation expense related to any new stock options granted after implementation using a calculated fair-value based option-pricing model.

The Company uses the Black-Scholes option-pricing model to calculate the fair value of all of its stock options and its assumptions are based on historical information.

The following assumptions were used to calculate the compensation expense and the calculated fair value of stock options granted each year:

The following assumptions were used to calculate the fair value of stock options granted each year:

Dividend yield:

2.6 - 3.9 % 2.4 %

Risk-free interest rate:

2.9 - 3.4 % 0.7 %

Expected market price volatility:

10 unchanged sentences

Effect on net income $ 60 $ 38

At each of the years ended December 31, 2022 and 2021, the Company had $0.2 million of compensation expense related to the issuance of unrestricted shares.

As of December 31, 2022, the Company had less than $ 0.1 million of total unrecognized compensation expense related to stock options currently outstanding, to be recognized in future years, ending December 31, as follows (in thousands):

9 unchanged sentences

The Company maintains supply agreements with its suppliers and manufacturers.

Some of the supply agreements contain exclusivity clauses and/or minimum annual purchase requirements.

In November 2016, the Company entered into a four -year supply agreement to purchase an aloe vera powder in whole leaf aloe form and an aloe vera gel extract from Natural Aloe de Costa Rica, S.A.

The agreement changed from a 2 year auto-renew to 1 year and extended until November 2022 with a 6 month transition period.

In 2016, the Company entered into a four-year supply agreement with a vendor to purchase an aloe vera powder in whole leaf aloe form and an aloe vera gel extract.

The agreement has been amended and renews annually.

As of December 31, 2022, the Company is required to purchase an aggregate of $ 7.9 million through 2024.

2 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 less than $ 0.1 million for the year ended December 31, 2021 and $ 0.1 million for the year ended December 31, 2020.

The Company paid royalties of less than $ 0.1 million for each of the years ended December 31, 2022 and 2021.

Employment Agreements

2 unchanged sentences

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.

We resolved the Busan Customs Office audit of the Korean customs values for $0.1 million, which was $0.4 million lower than that had been accrued in the prior year.

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

2 unchanged sentences

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

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

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.

Hong Wang (the “Plaintiff”) is alleging that various Mannatech’s products that she purchased violate the China Food Safety Law.

In addition, Plaintiff alleges that her son suffered from tooth decay after consuming the MannaBears product and that the product violates the China Consumer Protection Law.

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

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

This matter remains open.

Litigation in General

6 unchanged sentences

The outcome of litigation is uncertain, and despite management’s views of the merits of any litigation, or the reasonableness of the Company’s estimates and reserves, the Company’s financial statements could nonetheless be materially affected by an adverse judgment.

The Company believes it has adequately reserved for the contingencies arising from current legal matters where an outcome was deemed to be probable, and the loss amount could be reasonably estimated.

The Company reserves for contingencies arising from current legal matters where an outcome was deemed to be probable, and the loss amount could be reasonably estimated.

No legal reserve was deemed necessary at December 31, 2022.

12 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 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.

In September 2021, the Company's Board approved a share repurchase program to acquire up to $1.0 million (of the original $20.0 million authorization) of our common stock through September 21, 2022.

In September 2022, our Board approved a share repurchase program to acquire up to $1.5 million (of the original $20.0 million authorization) of our common stock through September 18, 2023.

As of December 31, 2022, 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 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.

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 .

During the year ended December 31, 2022, the Company repurchased 99,293 shares of its common stock, at an average price of $ 21.87 .

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

Equity-Based Compensation

During 2021, 58,483 shares were issued for stock option exercises and a total of 11,238 shares were issued to the members of the Board as compensation for their work on the Board.

During 2022, 11,334 treasury shares were issued for stock option exercises and a total of 6,072 treasury shares were issued to the members of the Board as compensation for their work on the Board.

Accumulated Other Comprehensive Income

5 unchanged sentences

Comprehensive

Income (Loss), Net

Balance as of December 31, 2020 $ 4,793 $ 357 $ 5,150

4 unchanged sentences

Current-period change before reclassifications ( 2,546 ) — ( 2,546 )

Disposition of foreign entity ( 23 ) — ( 23 )

Amounts reclassified from accumulated other comprehensive income (loss) — 29 29

1 unchanged sentence

Balance as of December 31, 2022 $ ( 608 ) $ 400 $ ( 208 )

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.

On August 31, 2021, the Board declared a dividend of $ 0.20 per share that was paid on September 29, 2021 to shareholders of record on September 15, 2021, for an aggregate amount of $ 0.4 million.

On November 22, 2021, the Board declared a dividend of $ 1.70 per share that was paid on December 29, 2021 to shareholders of record on December 15, 2021, for an aggregate amount of $ 3.3 million.

This dividend combined the quarterly dividend amount of $ 0.20 per share with a special dividend amount of $ 1.50 per share.

During the year ended December 31, 2022, the Company declared and paid dividends amounting to an aggregate of $ 1.5 million.

2 unchanged sentences

EARNINGS PER SHARE

The Company calculates basic Earnings per Share ("EPS") by dividing net income by the weighted-average number of common shares outstanding for the period.

The Company calculates basic Earnings per Share ("EPS") by dividing net income (loss) by the weighted-average number of common shares outstanding for the period.

Diluted EPS also reflects the potential dilution that could occur if common stock were issued for awards outstanding under the Mannatech, Incorporated 2017 Stock Incentive Plan.

In determining the potential dilution effect of outstanding stock options during 2021, the Company used the average common stock close price of $ 27.36 per share.

For the year ended December 31, 2021, there were 1.99 million weighted-average common shares outstanding used for the basic EPS calculation.

For the year ended December 31, 2021, approximately 0.10 million shares subject to options were included in the calculation resulting in 2.09 million dilutive shares used to calculate diluted EPS.

For the year ended December 31, 2021, approximately 0.1 million of the Company's common stock subject to options were excluded from the diluted EPS calculation as the effect would have been antidilutive.

For the year ended December 31, 2022, shares of the Company's common stock subject to options were excluded from the diluted EPS calculation as their effect would have been antidilutive.

The Company reported a net loss for the year ended December 31, 2022.

In determining the potential dilution effect of outstanding stock options during 2021, the Company used the average common stock close price of $ 27.36 per share.

8 unchanged sentences

The Company sells its products through its independent associates who occupy positions in our network and distribute products through similar distribution channels in each country.

No single independent associate has ever accounted for more than 10 % of the Company’s consolidated net sales.

The Company also operates a non-direct selling business in mainland China.

28 unchanged sentences

Total $ 14.7 $ 12.0

SUBSEQUENT EVENTS

In February 2023, the Daegu Customs Office began an audit of our Korean subsidiary, Mannatech Korea, reviewing point of origin for compliance with free trade agreement terms.

Several products imported between July 2017 and December 2021 have been identified as subject of this audit.

Depending on the outcome of this audit, duty tariff rates could be modified which could result in additional customs, VAT and penalties.

As it is early in the audit, the Company is not able to estimate the financial impact from this audit on its results of operations, financial condition, or liquidity for fiscal year 2023.

List of Subsidiaries

As of December 31, 2022 the Company has these wholly-owned subsidiaries located throughout the world, as follows:

1.Mannatech Australia Pty Limited

2.Mannatech Japan, G.K.

3.Mannatech Korea Co., Ltd.

4.Mannatech Limited (a New Zealand Company)

5.Mannatech Limited (a UK Company)

6.Mannatech Taiwan Corporation

7.Mannatech Payment Services Incorporated

8.Mannatech Products Company Inc.

9.Internet Health Group, Inc.

10.Mannatech (International) Limited

11.Mannatech, Incorporated Malaysia Sdn.

12.Mannatech Singapore Pte.

13.Mannatech Canada Corporation

14.Mannatech South Africa (Pty) Ltd

15.Mannatech Bermuda Holdings Limited

16.Mannatech Denmark ApS

17.Mannatech (Gibraltar) Holdings Limited

18.Mannatech Swiss Holdings GmbH

19.Mannatech Swiss International GmbH

20.Mannatech Malaysia Trading Co.

21.Mannatech Norge A/S

22.Mannatech Sverige AB

23.MTEX Mexico SRL CV

24.MTEX Mexico Services SRL CV

25.Mannatech Cyprus Limited

26.Mannatech Ukraine LLC

27.MTEX Hong Kong Limited

28.Mannatech RUS Ltd.

29.Meitai Daily Necessity & Health Products Co., Ltd.

30.Meitai Daily Necessity & Health Products Co., Ltd.

Guangzhou Branch

31.Mannatech Netherlands B.V.

32.Mannatech Products Hong Kong Limited

33.New Economy Marketing Opportunities, LLC

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Mannatech, Incorporated

Flower Mound, Texas

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos.

333-72767, 333-77227, 333-94519, 333-47752, 333-113975, 333-153199, 333-182676, 333-197400, 333-220539 and 333-233418) of Mannatech, Incorporated and Subsidiaries of our report dated March 17, 2023, relating to the consolidated financial statements and financial statement schedule, which appear in this Form 10-K.

/s/ BDO USA, LLP

March 17, 2023

CERTIFICATION

PURSUANT TO 17 CFR 240.13a-14

PROMULGATED UNDER

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Alfredo Bala, certify that:

I have reviewed this annual report on Form 10-K of Mannatech, Incorporated;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

March 17, 2023

/s/ Alfredo Bala

Chief Executive Officer

(principal executive officer)

CERTIFICATION

PURSUANT TO 17 CFR 240.13a-14

PROMULGATED UNDER

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

Johnson, certify that:

I have reviewed this annual report on Form 10-K of Mannatech, Incorporated;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

March 17, 2023

Chief Financial Officer

(principal financial officer)

CERTIFICATION PURSUANT TO

SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Mannatech, Incorporated (the “Company”) on Form 10-K for the period ending December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alfredo Bala, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

March 17, 2023

/s/ Alfredo Bala

Chief Executive Officer

(principal executive officer)

A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906 HAS BEEN PROVIDED TO MANNATECH, INCORPORATED AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST.

CERTIFICATION PURSUANT TO

SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Johnson, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

March 17, 2023

Chief Financial Officer

(principal financial officer)

A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906 HAS BEEN PROVIDED TO MANNATECH, INCORPORATED AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST.

MANNATECH, INCORPORATED AND SUBSIDIARIES

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

(in thousands)

Year Charged to

Expenses Charged to

Accounts Deductions Balance at

Year Ended December 31, 2021

Deducted from asset accounts:

Allowance for doubtful accounts $ 817 246 — ( 76 ) $ 987

Allowance for obsolete inventories $ 471 638 — ( 662 ) $ 447

Valuation allowance for deferred tax assets $ 11,933 ( 3,999 ) — — $ 7,934

Included in accrued expenses:

Reserve for sales returns $ 71 767 — ( 783 ) $ 55

Year Ended December 31, 2022

Deducted from asset accounts:

Allowance for doubtful accounts $ 987 ( 26 ) — 12 $ 973

Allowance for obsolete inventories $ 447 543 — ( 573 ) $ 417

Valuation allowance for deferred tax assets $ 7,934 1,838 — — $ 9,772

Included in accrued expenses:

Reserve for sales returns $ 55 779 — ( 775 ) $ 59

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