What changed in this filing

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Item 1. Business

2024-03-28 compared with 2023-03-17 · 64 added, 71 removed, 578 unchanged (19% of the section changed)

Mannatech, Incorporated ("Mannatech" or the "Company") is a global wellness solution provider, which was incorporated and began operations in November 1993.

We develop and sell innovative, high quality, proprietary nutritional supplements, topical and skin care and anti-aging products, and weight-management products that target optimal health and wellness.

We develop and sell innovative, high quality, proprietary nutritional supplements, skin care and anti-aging products, and weight-management products that target optimal health and wellness.

We currently sell our products in three regions:

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

We sell our products through network marketing distribution channels via our active associates (“independent associate” or “associates” or “distributors”) and to our “preferred customers,” which we believe is the most cost-effective way to introduce our products and communicate information about our business to the global marketplace quickly and effectively.

We sell our products principally through network marketing distribution channels via our active associates (“independent associate” or “associates” or “distributors”) and to our “preferred customers,” which we believe is the most cost-effective way to introduce our products and communicate information about our business to the global marketplace quickly and effectively.

Network marketing minimizes upfront costs, as compared to conventional marketing methods, and allows us to be more responsive to the ever-changing overall market conditions, as well as continue to research and develop high quality products and focus on controlled successful international expansion.

We believe the network marketing channel also allows us to effectively communicate the potential benefits and unique properties of our proprietary products to our consumers.

In addition, network marketing provides our business-building associates with an avenue to supplement their income and develop financial freedom by building their own business centered on our business philosophies and unique products.

In addition, network marketing provides our associates with an avenue to supplement their income by building their own business centered on our business philosophies and unique products.

As of December 31, 2023, we had approximately 145,000 active associate and preferred customer positions held by individuals in our network associated with the purchase of our products and packs and/or payment of associate fees within the last 12 months.

At the time of purchase, a customer may choose to sign up as a “preferred customer” to receive the same pricing on our products as our associates and to receive emails about our products and promotions.

Preferred customers do not participate in the Company’s compensation plan.

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

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Customs regulations in China include purchase limits to ensure that purchased products are for personal consumption.

Our common stock trades on The Nasdaq Global Select Market (“Nasdaq”) under the symbol “MTEX”.

Information for each of our two most recent fiscal years, with respect to our net sales, results of operations, and identifiable assets is set forth in the Consolidated Financial Statements of this report.

In June 2023, the Company launched a tiered affiliate program in the United States under the brand name, “Trulu™” (“Trulu”).

The Trulu brand is operated by our wholly owned subsidiary, New Economy Marketing Opportunities, LLC (“NEMO”), and is separate from our network marketing business.

Trulu affiliates earn commissions on the sale of Trulu products under a commission plan that is separate from the Mannatech network marketing commission plan.

Although Trulu’s affiliate program is a separate business model with its own compensation structure, our Mannatech associates may participate in the Trulu affiliate program and earn commissions on the sale of Trulu products.

Our common stock trades on The Nasdaq Global Select Market (“Nasdaq”) under the symbol “MTEX.” Information for each of our two most recent fiscal years, with respect to our net sales, results of operations, and identifiable assets is set forth in the Consolidated Financial Statements of this report.

Available Information

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Business Segment.

The Company's sole reporting segment is one where we sell proprietary nutritional supplements, skin care and anti-aging products, and weight-management and fitness products through network marketing distribution channels operating in twenty-four markets.

We operate in the nutritional supplement industry.

The Company sells its products in most markets through network marketing distribution channels.

Mannatech’s subsidiary in China, Meitai, operates under a cross-border e-commerce model, where consumers in China can buy Mannatech products directly from Meitai via the internet.

Mannatech's subsidiary, NEMO, operates an affiliate business model under the brand name, “Trulu”, in the United States.

Scientists have discovered that a healthy body consists of many sophisticated components working in harmony to achieve optimal health and wellness and requires cellular communication to function at an optimal level.

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Mannatech introduced two unique drink mixes in Mexico, MannaForce+ and M Gold+.

• In 2023, Mannatech's latest product launches included our Korean Luminovation skincare line in the United States and Australia.

Sleep and Stress Support gummies were introduced in the United States as part of the Essentials product line.

Korea had numerous product launches, including:

MannaTea, MultiVItaGummy, Immune Jelly, Luminovation Glyco, Collagen Capsule Kit, Waterfull Sun milk and Pet Food.

Additionally, our subsidiary, NEMO, launched the Trulu AM/PM product.

Mannatech offers products that include glyconutrients, a unique category of nutrients sourced from plants and designed to provide a variety of health benefits.

We focus on producing products that are from natural sources, as well as other scientifically based efficacious sources.

We focus on producing products that are from natural sources, as well as other scientifically based efficacious sources in the following product categories:

Integrative Health , which offers a variety of nutritional supplements that are designed to aid in optimizing overall health and wellness.

This category includes a variety of daily nutritional supplements, health solutions for children, and additional nutrients designed to help keep specific body systems at optimal levels.

This category includes a variety of daily nutritional supplements, health solutions for children, and additional nutrients designed to support the body's optimal levels.

Targeted Health , which is designed to give bodies an extra edge with products designed to target specific areas and provide additional nutrients that help support body system health.

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Catalyst™, Cognitate ® , Manapol ® Powder, MannaBears ® , MultiKids, Nutriverus™, Optimal Support Packets, PhytoMatrix ® , PLUS™, Chaga Cafe, Glycentials™, MannaTea™, PhytoCleanse, GlycoCafe®, MightyBears ® , MannaGel™, Tru-C™ and TruCoffee ®

Targeted Health BounceBack ® , CardioBALANCE ® , GI-ProBalance ® Slimstick, GI-Zyme ® , GI-Defense®, Blood Sugar ProBalance, ImmunoSTART ® , Manna-C ™, MannaBOOM ® Slimsticks, MannaCLEANSE™, Omega-3 with Vitamin D3, PhytAloe ® , I-Start, MannaAloe ® with AloePrime ® , Chlorophyll, MANNAGEL™, MegaKids, GlyCollagen con Aloe Prime, M Gold+ con aloe Prime™ and GlycoForce + con aloePrime™

Targeted Health BounceBack ® , CardioBALANCE ® , GI-ProBalance ® , GI-Zyme ® , GI-Defense®, Blood Sugar ProBalance, ImmunoSTART ® , Manna-C ™, MannaBOOM ® , MannaCLEANSE™, Omega-3 with Vitamin D3, PhytAloe ® , I-Start, MannaAloe ® with AloePrime ® , Chlorophyll, MANNAGEL™, MegaKids, GlyCollagen con Aloe Prime, M Gold+ con aloe Prime™ and GlycoForce + con aloePrime™ , EnzymeProBalance and Trulu ™ AM/PM

Weight and Fitness OsoLean ® , SPORT™, TruHealth™ Fat Loss System, including:

TruPLENISH™, TruPURE ® , TruSHAPE™, EMPACT+ ® , EM∙PACT ® and Mannashake

Skin Care Emprizone ® , FIRM with Ambrotose ® , Uth ® Facial Cleanser, Uth ® Skin Rejuvenation Crème, Uth ® Moisturizer, FreshDen ® , Luminovation™ and MannaDent

Essentials Catalyst™ Multivitamin, Eye Support, Liver Support, Joint Support and SUPERFOOD

Home Living SERENITY Oils and Blends, Organt® and PURO

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

Revenue from these products were as follows for the years ended December 31, 2022 and 2021 (in thousands, except percentages) :

product % of total

net sales Sales by

product % of total

Ambrotose Life ®

$ 28,734 20.9 % $ 28,776 18.0 %

15,730 11.5 % 18,010 11.3 %

Advanced Ambrotose ®

9,624 7.0 % 11,158 7.0 %

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 %

TruHealth™ Shake, TruHealth™ Cleanse, TruSHAPE™, EM∙PACT ® and Mannashake™

Skin Care Emprizone ® , FIRM with Ambrotose ® , FreshDen ® , Luminovation™ and MannaDent

Essentials Catalyst™ Multivitamin, Eye Support, Liver Support, Joint Support SUPERFOOD, Sleep Support gummies and Stress Support gummies

Home Living Organt® and PURO

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

Product Development .

Our product committee continues to focus on potential new products and compounds that help target or promote overall health and wellness.

When considering new products and compounds, our product committee considers the following criteria:

Our product development team continues to focus on potential new products and compounds that help target or promote overall health and wellness.

When considering new products and compounds, our product development team considers the following criteria:

• marketability and proprietary nature of the product;

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Certain of our supply agreements contain exclusivity clauses for the supply of certain raw materials and products, some of which are conditioned upon compliance with minimum purchase requirements.

In the event we become unable to source any products or ingredients from our suppliers, we believe that we would be able to replace those products with alternate suppliers, except Arabinogalactan and Manapol ® powder.

Due to the unique nature of each ingredient, important components used in the formulation of our Ambrotose ® complex, we are unable to identify an alternative supplier at this time for these ingredients.

In the event we become unable to source any products or ingredients from our suppliers, we believe that we would be able to replace those products with alternate suppliers, except Arabinogalactan.

Due to the unique nature of this ingredient and important components used in the formulation of our Ambrotose products, we are unable to identify an alternative supplier at this time for this ingredient.

Industry Overview

Nutrition Industry.

We operate in the nutritional supplement industry and distribute and sell our products through our own global network marketing channel.

We operate in the nutritional supplement industry and distribute and primarily sell our products through our own global network marketing channel.

The nutritional supplement industry is fast paced, highly fragmented, and intensely competitive.

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Under DSHEA, vendors of dietary supplements are now able to educate consumers regarding the effects of certain component ingredients.

Nutritional supplements are available through mass-market retailers, drug stores, supermarkets, discount stores, health food stores, mail order companies, and direct sales organizations.

Nutritional supplements are available through mass-market retailers, drug stores, supermarkets, discount stores, health food stores, direct-to-consumer companies, and direct sales organizations.

Direct selling, of which network marketing is a significant segment, has grown significantly and has been enhanced in the past decade as a distribution channel due to advancements in technology and communications resulting in improved product distribution and faster dissemination of information.

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High-Quality, Innovative, Proprietary Products .

We base our product concept on the scientific belief that certain glyconutrients, also known as glycans, monosaccharides and polysaccharides, are essential for maintaining a healthy immune system.

We base our product concept on the scientific findings that certain glyconutrients, also known as glycans, monosaccharides and polysaccharides, are essential for maintaining a healthy immune system.

We believe the addition of effective nutritional supplements to a well-balanced diet, coupled with an effective exercise program, will enhance and help maintain optimal health and wellness.

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We use systematic processes for the research and development of our unique proprietary product formulas, as well as the identification of quality suppliers and manufacturers.

Our research and quality assurance programs are outlined on our corporate websites, www.mannatechscience.org , www.mannatech.com , and www.allaboutmannatech.com .

Our research and quality assurance programs are outlined on our corporate websites, www.mannatech.com and www.allaboutmannatech.com .

Mannatech’s team of experienced researchers and scientists continually reviews the latest published research data, attends scientific conferences, and draws upon its vast knowledge and expertise to develop new products and support existing ones.

In addition, this team works in collaboration with other research firms, universities, institutions, and scientists.

Our products have been the focus of numerous pre-clinical and clinical studies.

Our products have been the focus of numerous preclinical and clinical studies.

To support our research and development efforts, we have strategic alliances with our suppliers, consultants, and manufacturers that allow us to effectively identify and develop high-quality, innovative, proprietary products that increase our competitive advantage in the marketplace.

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Support Philosophy for Our Independent Associates and Preferred Customers .

We are fully committed to providing the highest level of support services to our independent associates and preferred customers and believe that we meet expectations and build customer loyalty through the following:

W e are fully committed to providing the highest level of support services to our independent associates and preferred customers and believe that we meet expectations and build customer loyalty through the following:

▪ offering highly personalized and responsive customer service;

▪ offering a satisfaction guarantee product return policy;

▪ providing comprehensive corporate websites that provide instant access to Internet ordering, marketing, technical and educational information, and unique and innovative marketing tools (including www.mannatech.com, www.allaboutmannatech.com, www.mannatechscience.org, library.mannatech.com, training.mannatech.com, events.mannatech.com, and www.mannafest.com);

▪ maintaining an extensive web-based downline management system called Success Tracker™ that provides access to web conferencing and downline organization reporting for our independent associates at minimal costs;

▪ providing Mannatech+, an app and web-based platform that provides personalized web pages, to share videos, digital flyers, and more;

▪ providing Social Media Studio, an app that assists Associates in creating custom social media postings, while utilizing the latest methods to identify non-compliant posts and alert Associates to make alterations before posting;

▪ providing comprehensive corporate websites that provide instant access to Internet ordering, marketing, technical and educational information, and unique and innovative marketing tools (including www.mannatech.com, www.allaboutmannatech.com, library.mannatech.com, mannatechai.com, training.mannatech.com, events.mannatech.com, and www.mannafest.com);

▪ maintaining an extensive web-based downline management system called Success Tracker™ that provides access to downline organization reporting and sales reporting for our independent associates, free their first year as an associate and then at a minimal cost thereafter;

▪ providing Mannatech Now Tech, an app and web-based platform that provides a vast library of marketing resources, which are easily shareable and maintain full attribution to the associate who shares the resource.

This app is a hub for the associates’ business, providing prompts to help with delivering excellent customer care and maintaining a person connection with customers and downline members.

▪ offering, in the United States and Canada, an effective compilation of online marketing and training tools;

▪ offering updated training/orientation and compliance programs for our independent associates;

▪ offering updated compliance programs for our independent associates;

▪ providing strategically based distribution fulfillment centers to ensure products are shipped on time and at minimal cost;

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These events provide an interactive venue for introducing new products and services and allow interaction between our management teams, outside researchers, and independent associates.

Flexible Operating Strategy .

We believe efficiency, focus, and flexibility are paramount to our operations.

For more than a decade, we have contracted with third parties to supply and manufacture our proprietary raw materials and products, which we believe allows us to minimize capital expenditures, capitalize on such parties’ expertise, and build additional resources for strategic alliances in the areas of distribution and logistics, product registration, and export requirements.

By contracting with various suppliers and manufacturers and by outsourcing distribution for all of our operations, we believe we can quickly adapt operations to current demands in a timely, efficient, and cost-effective manner.

We monitor the performance of our third-party contractors to ensure they maintain a high quality of service.

In addition, we identify alternative sources for our raw materials suppliers and finished goods manufacturers to help prevent any risk of interruption in production should any existing contractors become unable to perform satisfactorily.

Experience and Depth of Our Management Team and Board of Directors .

We believe that our team of executives has extensive experience in every aspect of business operations and is highly focused on our success.

At December 31, 2022, our Board of Directors is composed of six directors, including four independent directors.

We believe our board members have a wealth of knowledge and experience in most aspects of our business operations and are especially well versed in network marketing, finance, nutritional products, regulatory matters, and corporate governance.

At December 31, 2023, our Board of Directors is composed of five directors, including three independent directors.

We believe our board members have a wealth of knowledge and experience in all aspects of our business operations and are especially well versed in network marketing, finance, nutritional products, regulatory matters, and corporate governance.

Our entire management team is committed to delivering high-quality products and superior service.

Business Strategy

Our long-term goal is to be one of the world’s leading network marketing companies founded on the best science-based proprietary products by incorporating a powerful global independent network distribution model into our charitable giving program.

Our long-term goal is to be one of the world’s leading direct sellers of nutritional supplements founded on the best science-based proprietary products by incorporating a powerful global independent network distribution model and our charitable giving program.

To achieve our goal, we believe we must focus on the following business priorities:

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We work to ensure that all associates and their customers have a great experience with each of our products that deliver tangible results, are supported by science, and are backed by a powerful satisfaction guarantee.

Mannatech has created a culture around Customer Obsession.

Our Customers are at the center of everything we do.

Mannatech has created a culture around “customer obsession.” Our customers are at the center of everything we do.

Intellectual Property

We pursue registrations for various trademarks associated with our key products and branding initiatives.

As of December 31, 2022, we had 41 registered trademarks in the United States and three trademark applications pending with the United States Patent and Trademark Office.

As of December 31, 2022, we had 592 registered trademarks in 40 countries and 16 trademark applications pending in 11 foreign jurisdictions.

As of December 31, 2023, we had 36 registered trademarks in the United States and five trademark applications pending with the United States Patent and Trademark Office.

As of December 31, 2023, we had 559 registered trademarks in 35 foreign jurisdictions and 42 trademark applications pending in 11 foreign jurisdictions.

Globally, the protection available in foreign jurisdictions may not be as extensive as the protection available to us in the United States.

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As of December 31, 2023, we had 13 patents for technology related to our Ambrotose ® formulation, all of which are in 11 f oreign jurisdictions.

Overall, as of December 31, 2022, 94 patents have been assigned, issued, granted or validated to Mannatech in major global markets for the technology relating to our Ambrotose ® , Ambrotose AO ® , Ambrotose Life ® , GI‑ProBalance™, PhytoMatrix ® , and NutriVerus™ product formulations, as well as in the field of biomarker assays.

Currently, we have six patent applications pending in various jurisdictions relating to the technology supporting many of the above listed products.

Overall, as of December 31, 2023, 96 patent s have been assigned, issued, granted or validated to Mannatech in major global markets for the technology relating to our Ambrotose ® , Ambrotose AO ® , Ambrotose Life ® , GI‑ProBalance™, PhytoMatrix ® , and NutriVerus™ product formulations, as well as in the field of biomarker assays.

Currently, we have two patent applications pending in two foreign jurisdictions relating to the technology supporting many of the above listed products.

Patent protection means that the patented invention cannot be commercially made, used, distributed or sold without the patent owner's consent.

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Associate Distribution System

Our sales philosophy is to distribute our products through network marketing channels where consumers purchase products for personal consumption or resale.

Independent associates and preferred customers purchase our products at a discounted wholesale value.

Our sales philosophy is to distribute our products to consumers for personal consumption or resale.

We principally distribute our products through network marketing channels where independent associates and preferred customers purchase our products at a discounted wholesale value.

Independent associates are eligible to participate in our global associate career and compensation plan.

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We remain actively committed to expanding the number of our independent associates through recruitment, support, motivation, and incentives.

We had approximately 145,000 active associate and preferred customer positions held by individuals that purchased our products and/or packs or paid associate fees during the year ended December 31, 2022, and we had approximately 163,000 active associate and preferred customer positions held by individuals that purchased our products and/or packs or paid associate fees during the year ended December 31, 2021.

We had approximately 145,000 active associate and preferred customer positions held by individuals that purchased our products and/or packs or paid associate fees during each of the years ended December 31, 2023, and 2022.

We have a loyalty program through which consumers earn loyalty points from qualified automatic orders, which can be applied to future purchases.

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• sponsoring various informative and science-based conference calls, web casts, and seminars;

• providing automated services through the Internet and telephone that offer a full spectrum of information and business-building tools;

• providing automated services through the Internet, mobile app and telephone that offer a full spectrum of information and business-building tools;

• maintaining an efficient decentralized ordering and distribution system;

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• offering 24-hour, seven days a week access to information and ordering through the Internet;

• offering Success Tracker ™ , a customized business-building genealogy system, which contains graphs, maps, alerts, reports, and web video conferencing for our independent associates;

• offering Success Tracker ™ , a customized business-building genealogy system, which contains sales reporting, graphs, maps, alerts, rank advancement guidance, and business volume reports;

• offering, in the United States and Canada, a compilation of online marketing and training tools, including personalized web pages;

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This includes a unique global training/orientation program that uses audio, video and web components to familiarize new associates with the Company, and includes short, segmented trainings on how to succeed as part of the sales force.

We also regularly provide training on using online tools such social media and our own suite of web marketing tools specifically designed for associates to use.

We also offer a variety of brochures, monthly newsletters, and other promotional materials to associates to assist in their sales efforts, training, and continuing education.

We also regularly provide training on using online tools, such as social media and our own suite of web marketing tools specifically designed for associates to use.

In addition, we offer a variety of printable brochures, monthly newsletters delivered electronically, and other promotional materials to assist in sales efforts, training, and continuing education.

We continually update our training and promotional materials to provide our associates with the most current information and motivational tools.

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Promotional materials and training aids are not assigned a point volume.

This point volume system, referred to as our global seamless downline structure, allows independent associates to build their network by expanding their existing downlines into all international markets except China.

This point volume system, referred to as our global associate career and compensation plan, allows independent associates to build their network by expanding their existing downlines into all international markets except China.

Our global associate career and compensation plan is intended to comply with all applicable governmental regulations that govern the various aspects of payments to independent associates in each country.

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All payments to our independent associates are made after they have earned their commissions.

We believe our global associate career and compensation plan fairly compensates our independent associates at every stage of building their business by quickly rewarding our independent associates for both their sales and the sales of those in their downline organization.

We believe our global associate career and compensation plan fairly compensates our independent associates at every stage of building their business by quickly rewarding our independent associates for their sales and the sales of those in their downline organization.

Our global associate career and compensation plan identifies and pays six types of commissions to our qualified independent associates, which are based on the following:

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However, we have limited control over the actions of our independent associates.

To aid in our monitoring efforts, we provide each independent associate with a copy of our policies and procedures prior to or upon signing up as an independent associate.

To aid in our monitoring efforts, we provide each independent associate with a copy of our policies and procedures prior to or upon sig ning up as an independent associate.

We engage a third-party service provider to assist in managing our compliance monitoring process.

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• Associate and Preferred Customer Product Return Policy.

This policy allows the associate or preferred customer to return an order within one year of the purchase date upon terminating his/her account.

If an associate or preferred customer returns a product unopened and in good condition, he/she may receive a full refund minus a 10% restocking fee.

This policy allows the associate or preferred customer to return an order within one year of the purchase date upon voluntarily terminating his/her account.

If an associate or preferred customer returns a product unopened and in good condition, he/she may receive a full refund minus a 10% processing fee.

We may also allow the associate or preferred customer to receive a full satisfaction guarantee refund if they have tried the product and are not satisfied for any reason, excluding promotional materials.

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MoCRA also grants the FDA the authority to initiate mandatory product recalls as well as the authority to suspend facility registration when warranted.

Once the FDA issues the requisite rulemaking, cosmetic manufacturers will be required to comply with cosmetics-specific current Good Manufacturing Processes.

Once the FDA issues the requisite rule-making, cosmetic manufacturers will be required to comply with cosmetics-specific current Good Manufacturing Processes.

We develop and maintain product substantiation dossiers, which contain the scientific literature pertinent to each product and its ingredients.

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• employment, service pay, retirement pay, and profit sharing requirements;

• data security and data privacy regulations;

• import/export regulations;

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Full-time employees 213 228

Part-time employees — 1

Total 213 228

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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 1. Business