What changed in this filing

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Item 1A. Risk Factors

2025-03-26 compared with 2024-03-28 · 90 added, 77 removed, 415 unchanged (29% of the section changed)

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Although we have entered into employment agreements with certain senior executive officers, and do not believe that any of them are planning to leave or retire in the near term, we cannot assure you that our senior executive officers or members of our senior management team will remain with us.

As previously disclosed, on January 8, 2024, we were notified by David A.

Johnson, the Company's Chief Financial Officer, of his resignation from his position effective January 22, 2024.

Additionally, as previously disclosed, on March 13, 2024, the Company announced the retirement of Alfredo (Al) Bala, the Chief Executive Officer, on April 1, 2024.

Landen Fredrick will be promoted to President and Chief Executive Officer, and he will continue to serve as interim Chief Financial Officer.

We are conducting a search for a permanent Chief Financial Officer, but there is no assurance that we will be able to identify, attract or hire a replacement in a timely manner.

The loss or limitation of the services of any of our executive officers or members of our senior management team, including our regional and country managers, or the inability to attract additional qualified management personnel could have a material adverse effect on our business, financial condition, results of operations, or independent associate relations.

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We have filed patent applications for the technology relating to our Ambrotose ® , Ambrotose AO ® , Ambrotose Life ®, PhytoMatrix ® , NutriVerus™, and GI-ProBalance ® products in the United States and certain foreign countries.

As of December 31, 2023, we had 13 pat ents for the technology relating to our Ambrotose ® formulation, all of which were issued, granted, and validated in 11 foreign jurisdictions.

As of December 31, 2024, we had 17 patents for the technology relating to our Ambrotose ® formulation, all of which were issued, granted, and validated in 15 foreign jurisdictions.

In addition, we have entered into confidentiality agreements with our independent associates, suppliers, manufacturers, directors, officers, and consultants to help protect our proprietary rights.

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However, our business, profitability, and growth prospects could be adversely affected if we fail to receive adequate protection of our proprietary rights.

Although several patents pertaining to our Ambrotose ® technology have expired, Mannatech continues to actively explore additional patent protection of its technology and pursue expanded patent protection strategies.

Our Ambrotose ® product formulation has proprietary elements and we have contractual arrangements with certain suppliers affording us exclusive access to certain ingredients in those formulations.

If we fail to maintain exclusivity with those suppliers, our business could be adversely affected.

We have a number of pending patent applications for additional protection of Ambrotose ® -related technology.

The pending patent applications are at various stages of processing, depending on the timeline of each market’s patent offices.

Most of our patents for the Ambrotose AO ® , GI-ProBalance ® ™, PhytoMatrix ® , NutriVerus™, and PhytoBlend ® formulations and our patents in the field of biomarker assays do not expire for another two or more years.

Our inability to develop and introduce new products that gain independent associate, preferred customer, and market acceptance could harm our business.

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Factors that could affect our ability to continue to introduce new products include, among others, government regulations, the inability to attract and retain qualified research and development staff, the termination of third-party research and collaborative arrangements, proprietary protections of competitors that may limit our ability to offer comparable products, and the difficulties in anticipating changes in consumer tastes and buying preferences.

Our inability to develop products, sales platforms, affiliate opportunities, and other initiatives or maintain an affiliate salesforce and market acceptance for our new Trulu brand and products could harm our business.

The failure of our Trulu brand and products to attract or gain acceptance from affiliates or consumers could negatively affect our operating results.

Our operating results have been and could be adversely affected if the Trulu products, affiliate platform, and business opportunity do not generate sufficient enthusiasm and financial benefit to attract affiliates who are interested in selling the Trulu products, building a customer base, and promoting the affiliate program.

In 2023, our Trulu product sales and affiliate participation were below expectations.

Potential factors affecting interest in the Trulu affiliate program and its products include, among other things, perceived product quality and value, similarities to other products, product effectiveness, growth of the gig economy, perceived economic success in the affiliate business opportunity, our technology infrastructure and capabilities, restrictions in social or digital media for sharing products and attracting consumers, and regulatory restrictions on claims.

If we are unable to anticipate changes in consumer preferences and trends, our business, financial condition, and operating results could be materially adversely affected.

Additionally, if we are unable to anticipate changes in the gig and sharing economies and adapt our business opportunity accordingly, our ability to capture growth trends in the social-selling e-commerce marketplace could be materially adversely affected.

Our failure to appropriately respond to changing consumer preferences and demand for new products or product enhancements could significantly harm our relationship with independent associates and preferred customers, our product sales, as well as our financial condition and operating results.

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Our business depends in large part on our ability to maintain consumer confidence in the safety and quality of our products.

We have rigorous product safety and quality standards,

which we expect our third-party contract manufacturers to meet.

We have rigorous product safety and quality standards, which we expect our third-party contract manufacturers to meet.

However, despite our commitment to product safety and quality, our contract manufacturers may not always meet these standards, particularly as we expand our manufacturing operations and product offerings.

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We are also subject to delays caused by any interruption in the production of these materials including weather, disease, crop conditions, climate change, energy costs, currency fluctuations, logistics service capacities, transportation interruptions, and natural disasters or other catastrophic events.

For example, in March 2020, the WHO declared the outbreak of COVID-19 as a pandemic, which spread throughout our international regions and throughout the United States.

Beginning in 2020 and continuing through 2023 , the Company experienced challenges in getting certain materials and ingredients to our contract manufacturers and finished products to our distribution centers resulting from reductions in global transportation capacity and other logistical issues within the supply chain.

The extent to which COVID-related factors impact our future operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the continued use of updated COVID-19 vaccines, the impact of variants of COVID-19 and post-COVID conditions often referred to as “Long COVID” or “long-haul COVID,” among others.

In particular, the spread of new COVID-19 variants or other rapidly spreading communicable diseases globally could adversely impact our operations, including among others, our manufacturing and supply chain, sales and marketing and clinical trial operations and could have an adverse impact on our business and our financial results.

We maintain supply agreements with our suppliers and manufacturers.

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.

One of our supply agreements, under which the supplier provides us with certain aloe vera-based raw materials, requires us to purchase raw materials in an aggregate amount of $1.1 million through 2025.

Failure to satisfy minimum purchase requirements could result in the loss of exclusivity, which could adversely affect our business.

Failure to purchase minimum amounts could adversely affect our business and operating results.

If we are exposed to product liability claims, we may be liable for damages and expenses, which could affect our overall financial condition, results of operations and cash flows.

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Concentration Risk

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

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

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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Such competition could adversely affect our business and current market share.

A downturn in the economy, including as a result of continuing COVID-related factors such as variants and post-COVID conditions, or other communicable and rapidly spreading diseases could affect consumer purchases of discretionary items such as the health and wellness products that we offer, which could have an adverse effect on our business, financial condition, profitability, and cash flows.

A downturn in the economy, could affect consumer purchases of discretionary items such as the health and wellness products that we offer, which could have an adverse effect on our business, financial condition, profitability, and cash flows.

We appeal to a wide demographic consumer profile and offer a broad selection of health and wellness products.

A downturn in the economy, including as a result of the continuation of COVID-related factors or other rapidly spreading communicable diseases, could adversely impact consumer purchases of discretionary items such as health and wellness products.

The United States and global economies may slow dramatically as a result of a variety of problems, including turmoil in the credit and financial markets, concerns regarding the stability and viability of major financial institutions, the state of the housing markets, and volatility in worldwide stock markets.

A downturn in the economy could adversely impact consumer purchases of discretionary items such as health and wellness products.

housing markets, volatility in worldwide stock markets, or another pandemic.

In the event of such economic downturn, the U.S.

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state laws generally cover specific categories of sensitive personal data (e.g., social security numbers, bank account numbers, and credit card numbers), the GDPR notification requirements will apply to incidents involving any personal data, meaning any data related to an identified person.

Other countries have enacted and will be enacting similar laws.

In Canada, the Personal Information Protection and Electronic Documents Act (“PIPEDA”) went into effect on November 1, 2018.

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Under PIPEDA, an organization must notify individuals of any breach of the security of safeguards involving their personal information if it is reasonable to believe that the breach creates a “real risk of significant harm.” Concurrently, the organization must also report to the Privacy Commissioner of Canada.

As noted above, many states have enacted data protection requirements.

The California Consumer Privacy Act ("CCPA"), a state statute signed into law on June 28, 2018 and effective on January 1, 2020, provides enhanced data privacy protections to California residents.

The CCPA applies to companies with annual gross revenues in excess of $25 million.

On December 31, 2024, the South Korean Personal Information Protection Commission announced draft Consolidated Guidelines on Personal Information Processing for the recently amended Personal Information Protection Act.

The South Africa Protection of Personal Information Act (“POPI”) went effective on July 1, 2021.

POPI shares similarities with both the EU GDPR and the CCPA.

Most recently, China passed the PIPL on August 20, 2021.

The PIPL is designed to protect online users’ data privacy, effective on November 1, 2021.

Regarded as China’s version of the GDPR, the PIPL lays out a comprehensive set of rules on how business operators should collect, use, process, share, and transfer personal information in China.

POPI shares similarities with both the EU GDPR and the California Consumer Privacy Act (“CCPA”).

On August 20, 2021, the Personal Information Protection Law (“PIPL”) became effective in China.

PIPL is designed to protect online users’ data privacy.

Regarded as China’s version of the GDPR, PIPL lays out a comprehensive set of rules on how business operators should collect, use, process, share, and transfer personal information in China.

Our failure or inability to comply with data protection regimes domestically and in foreign countries could result in fines, penalties, injunctions, or material litigation expenditures.

As noted above, many states have enacted data protection requirements.

California enacted CCPA, effective on January 1, 2020, as amended by the California Privacy Rights Act to provide enhanced data privacy protections to California residents.

CCPA applies to companies with annual gross revenues in excess of $25 million and other thresholds.Virginia, Colorado, Connecticut, Utah, Iowa, Indiana, Tennessee, Montana, Texas, Florida, Delaware, and Oregon all have adopted laws introducing privacy obligations and many other states are considering similar legislation.

A broad range of legislative measures also have been introduced at the federal level.

The FTC and state attorneys general also review privacy and data protection for consumers.

With increased frequency in recent years, cyber-attacks against companies have resulted in breaches of data security.

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If our third-party vendors do not maintain adequate security measures, do not require their sub-contractors to maintain adequate security measures, do not perform as anticipated and in accordance with contractual requirements, or become targets of cyber-attacks, we may experience breach of customer data or operational difficulties and increased costs, which could materially and adversely affect our business.

Any substantial compromise of our data security, whether externally or internally, or misuse of associate, customer, or employee data, could cause considerable damage to our

reputation, cause the public disclosure of confidential information, and result in lost sales, significant costs, and litigation, which would negatively affect our financial position and results of operations.

Any substantial compromise of our data security, whether externally or internally, or misuse of associate, customer, or employee data, could cause considerable damage to our reputation, cause the public disclosure of confidential information, and result in lost sales, significant costs, and litigation, which would negatively affect our financial position and results of operations.

Although we maintain policies and processes surrounding the protection of sensitive data, which we believe to be adequate, there can be no assurances that we will not be subject to such claims in the future.

We use artificial intelligence in our business, and challenges with properly managing its use could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations.

We incorporate various artificial intelligence (“AI”) solutions into our digital infrastructure, services, offerings and features, and these applications are becoming important in our operations.

We have not established definitive policies regarding the use of AI platforms and algorithms in our business and with our data and information, and we do not have systems in place that inventory all of the AI-based applications that may be in use in our enterprise.

Our competitors or other third parties may incorporate AI into their products and operations more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations.

Additionally, if the content, analyses, search results or recommendations that AI applications assist in producing are, or are alleged to be, deficient, inaccurate, biased or in violation of third parties’ intellectual property rights, our business, reputation, financial condition, and results of operations could be adversely affected.

The use of AI applications may result in cybersecurity incidents that implicate the personal data of consumers.

Any such cybersecurity incidents related to our use of AI applications could adversely affect our reputation and results of operations.

AI also presents emerging ethical issues, such as the proper use of copyrighted material with AI applications, and if our use of AI becomes controversial, we may experience brand or reputational harm, competitive harm, or legal liability.

The rapid evolution of AI, including the government regulation of AI, will require significant resources to develop, test and maintain our platform, offerings, services, and features to help us implement AI ethically in order to minimize unintended, harmful impact.

Interruption or failure of our information technology and communications systems could impair the delivery of our service and harm our business.

We rely on our own systems and systems of third party vendors to assist our business.

Any degradation in the quality, or any failure, of our systems could reduce our revenues, cause us to lose customers and damage our brands.

Although we have implemented practices designed to maintain the availability of the information technology and service delivery systems we rely on and mitigate the harm of any unplanned interruptions, we cannot anticipate all eventualities.

We occasionally experience

unplanned outages or technical difficulties.

We could also experience loss of data or processing capabilities, which could cause us to lose customers and could harm our reputation and operating results.

We rely on internal systems and external systems maintained by manufacturers, distributors and service providers to take, fulfill and handle customer service requests and host certain online activities.

Any interruption or failure of our internal or external systems could prevent us from servicing customers or cause data to be unintentionally disclosed.

Our services have experienced, and we expect them to continue to experience, periodic service interruptions and delays involving our own systems and those of our vendors.

Our data centers and our information technology and communications systems are vulnerable to damage or interruption from natural disasters, malicious attacks, fire, power loss, telecommunications failures, computer viruses or other attempts to harm our systems.

The occurrence of any of these events could result in interruptions in our services and unauthorized access to, or alteration of, the content and data contained on our systems and that these third party vendors store and deliver on our behalf.

Damage or interruption to data centers and information technology and communications centers could expose us to data loss or manipulation, disruption of service, monetary and reputational damages, competitive disadvantage and significant increases in compliance costs and costs to improve the security and resiliency of our computer systems.

The compromise of personal, confidential or proprietary information could also subject us to legal liability or regulatory action under evolving cybersecurity, data protection and privacy laws and regulations enacted by the U.S.

federal and state governments or other foreign jurisdictions or by various regulatory organizations.

As a result, our ability to conduct our business and our results of operations might be adversely affected.

We rely upon our existing cash balances and cash flow from operations to fund our business and meet our contractual obligations.

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Additional funding may not be available or may only be available on unfavorable terms.

We have outstanding debt with our directors.

Such indebtedness could adversely affect our cash flow and our ability to pursue desirable business opportunities.

On April 23, 2024, we entered into an unsecured Loan and Promissory Note agreements with three related parties, who are members of our Board of Directors, and who are current stockholders, in an aggregate principal amount of $3.6 million.

The purpose of the borrowing was to provide funds for general working capital needs, including payment to vendors, expansion of the non-US operations, technology investment primarily for improving the customer ordering process and software updates to improve visibility of sales associate activity.

As of December 31, 2024, the aggregate outstanding principal balance was $2.9 million and the interest payable was $0.1 million.

See Note 10, NOTES PAYABLE, for more information

We may also incur additional indebtedness in the future, Our current debt service obligations require us to use a portion of our cash flow to pay interest and principal on debt instead of for other corporate purposes.

If our cash flow and capital resources are insufficient to service our debt obligations, we may be forced to seek additional equity or debt capital or restructure our debt.

However, these measures might be unsuccessful or inadequate in permitting us to meet scheduled debt service obligations.

We are subject to liquidity risk, which could adversely affect our financial condition and results of operations

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Our access to funding sources in amounts adequate to finance our activities could be impaired by factors that affect us specifically or the direct selling industry in general.

Factors that could detrimentally impact our access to liquidity sources include credit availability through commercial banking, foreign exchange controls, limitations on the repatriation of funds, and changes in currency policies or practices of foreign jurisdictions.

Factors that could detrimentally

impact our access to liquidity sources include credit availability through commercial banking, foreign exchange controls, limitations on the repatriation of funds, and changes in currency policies or practices of foreign jurisdictions.

Deterioration in economic conditions may increase our cost of funding and limit our access to some sources of liquidity.

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If our international markets are not successful, our business could suffer.

We currently sell our products in the international markets of Canada, Mexico, Austria, the Czech Republic, Denmark, Estonia, Finland, Germany, the Republic of Ireland, Namibia, Netherlands, Norway, South Africa, Spain, Sweden, the United Kingdom, Australia, Japan, New Zealand, the Republic of Korea, Singapore, Taiwan, Hong Kong and China.

We operate in China on a non-direct selling business model instead of our traditional network marketing model.

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• political, economic, and social conditions;

• the continuing effects of COVID-related factors;

• a pandemic;

• changes to trade practice laws or regulations governing direct selling and network marketing;

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For example, our 2024 net sales decreased 8.6% on a Constant dollar basis (see Item 7, Non-GAAP Financial Measures ), and unfavorable foreign exchange caused a $2.7 million decrease in GAAP net sales as compared to 2023.

In other words, 2023 sales would have been $2.3 million higher than the reported value, except for the impact of foreign exchange.

In other words, 2024 sales would have been $2.7

million higher than the reported value, except for the impact of foreign exchange.

There can be no assurance that foreign currency fluctuations will not have a material adverse effect on our business, assets, financial condition, liquidity, results of operations or cash flows.

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To date, we have not entered into any hedging contracts or participated in any hedging or derivative activities.

COVID-related factors and the possibility of other epidemics or rapidly spreading communicable disease may continue to negatively impact our business.

Due to the person-to-person nature of our direct selling business model, our financial results have been, and will likely continue to be, harmed if the fear of a communicable and rapidly spreading disease results in travel restrictions or cause people to avoid group meetings or gatherings or interaction with other people.

It is difficult to predict the impact on our business, if any, of the emergence of COVID-19 variants, COVID-related factors such as “Long COVID” or “Long-haul COVID” remain ongoing, new epidemics, or other crises.

The outbreak of COVID-19 in 2020 and ensuing pandemic resulted in significant contraction of economies around the world and interrupted global supply chains as many governments issued shelter-in-place orders to combat the spread of COVID-19.

Government-imposed restrictions and public hesitance regarding in-person gatherings, travel and visiting public places reduced our associates’ ability to hold sales meetings, resulted in cancellations of corporate-sponsored and associate-sponsored events, and incentive trips.

Our supply chain and logistics incurred some interruptions and cost impacts, and we could experience more significant interruptions and cost impacts or face more significant closures in the future, whether due to the ongoing effects of COVID-19 directly, or other related factors such as resistance to vaccines or resistance to vaccine requirements.

These factors and other events related to COVID-19 have negatively impacted our sales and operations and could continue to negatively affect our business and our financial results.

Although some of the negative impacts of COVID-19 have improved and many government restrictions have been lifted, this situation continues to be fluid and there is uncertainty regarding its duration and future impacts.

For example, COVID-19 variants have caused some of the pandemic’s negative impacts to return, and COVID-related factors affected our business in some of our Asian markets.

Risks Related to Regulation

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The letter is the first step in a process for the FTC to impose “civil monetary penalties of up to $43,792 per violation.” Nearly all Direct Selling Association (“DSA”) member companies received the notice along with non-members of the DSA in the direct selling channel, gig companies, franchise companies, and other companies offering business opportunities.

In March 2022 the FTC issued an Advanced Notice of Public Rulemaking:

Trade Regulation Rule on the Use of Earnings Claims that proposes to regulate how the Company and its associates advertise and represent the business.

Additionally, in November 2022, the FTC issued an Advanced Notice of Public Rulemaking regarding changes to the Business Opportunity Rule, which requires business opportunity sellers to give prospective buyers specific information to help evaluate a business or work-from-home opportunity.

In January 2025, the FTC issued a Notice of Proposed Rulemaking:

Earnings Claim Rule Regarding Multi-Level Marketing, which proposes to ensure that prospective distributors have an accurate understanding of their potential for earnings under a multi-level marketing company’s compensation plan.

Additionally, in January 2025, the FTC issued an Advanced Notice of Public Rulemaking:

Earnings Claim Rule Regarding Multi-Level Marketing (Additional Provisions), which seeks comment on whether the proposed rule should include additional provisions such as a net earnings disclosure requirement and a “cooling off” period.

Additionally, in January 2025, the FTC issued a Notice of Public Rulemaking regarding changes to the Business Opportunity Rule, which would expand the scope to cover money-making opportunities and proposed a definition of “earnings” and “earnings claims” and includes recordkeeping and substantiation requirements.

As a direct selling company, we are currently exempt from the Business Opportunity Rule.

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Laws regarding independent contractor status in certain jurisdictions, including the U.S., continue to evolve and have been applied unfavorably to gig economy companies, platform companies, and some of our counterparts in the direct selling channel.

If federal, state, or local laws and regulations or the interpretation of those laws and regulations require us to treat our independent associates or Trulu affiliates as employees, or if they are deemed by local regulatory authorities in one or more of the jurisdictions in which we operate to be our employees rather than independent contractors, under existing laws and interpretations, we may be deemed to be responsible for a variety of obligations that are imposed upon employers relating to their employees, including social security and related taxes in those jurisdictions, wages, employee benefits, plus any related assessments and penalties, which could harm our financial position and operations.

If federal, state, or local laws and regulations or the interpretation of those laws and regulations require us to treat our independent associates as employees, or if they are deemed by local regulatory authorities in one or more of the jurisdictions in

which we operate to be our employees rather than independent contractors, under existing laws and interpretations, we may be deemed to be responsible for a variety of obligations that are imposed upon employers relating to their employees, including social security and related taxes in those jurisdictions, wages, employee benefits, plus any related assessments and penalties, which could harm our financial position and operations.

Challenges by private parties to the form of our network marketing system could harm our business.

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DSA, we are required to adhere to a code of ethics that protects our associates and their customers, and ensures all DSA members remain accountable to regulators, consumers, independent distributors, and the public.

On January 4, 2019, the DSA established a third party self-regulatory program to be administered by the Council of Better Business Bureaus.

The new entity, the Direct Selling Self-Regulatory Council (“DSSRC”), will engage in active monitoring of the entire direct selling marketplace, including websites and social media of direct selling companies and their respective independent distributors in the areas of income representations and product claims.

The DSSRC will report potentially non-compliant companies to the appropriate government agencies and will manage consumer/company complaint resolution.

On January 4, 2019, the DSA established a third party self-regulatory program administered by the Council of Better Business Bureaus.

The new entity, the Direct Selling Self-Regulatory Council (“DSSRC”), monitors the entire direct selling marketplace, including websites and social media of direct selling companies and their respective independent distributors in the areas of income representations and product claims.

The DSSRC reports potentially non-compliant companies to the appropriate government agencies and manages consumer/company complaint resolution.

Legal and regulatory requirements concerning network marketing systems, however, involve a high level of subjectivity, are inherently fact-based, and are subject to judicial interpretation.

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For example, changes regarding health and safety and food and drug regulations for our nutritional products could require us to reformulate our products to comply with such regulations.

On May 4, 2022, the Company received notice from its customs broker that the FDA held, inspected, and took samples for testing from shipments imported from Costa Rica of its Ambrotose Life ® and Ambrotose ® Complex products.

We cooperated with the FDA and supplied requested documentation from our third-party manufacturer.

The products were eventually released with the exception of one lot of Ambrotose Life ® powder which was denied entry.

There was an inconsistency in the results obtained by the FDA as compared to the results obtained by both the manufacturer and two independent labs engaged by the Company to conduct testing.

Additionally, we engaged a food-safety expert to analyze the testing results.

The third-party testing results were all within established specifications and at levels customarily seen with raw botanical powders.

In addition to the extensive testing and analysis completed by the Company, the food safety expert reviewed FDA’s test results, the two third-party labs’ test results, and the documentation and testing from our manufacturer.

The expert’s report was included as an exhibit to the Company’s response to the FDA.

The expert’s report concluded that the Company’s analytical data from samples of the same lot that the FDA tested, supported a conclusion favoring the Company’s results.

However, on February 9, 2023, we received notice that the FDA was refusing admission of the product.

We scheduled return of that lot to the manufacturer.

On October 3, 2022, the Company received notice that the Ambrotose Life ® powder product was being detained due to a labeling issue asserting that there are formatting issues on the supplement facts panel.

The formatting issues, which have been corrected, centered on stating “O g” or “0%” instead of “< 1g” or less than “< 1%” for sugar and sodium, respectively.

We were also asked to remove the statement, “Not a significant source of saturated fat, trans fat, cholesterol, protein, vitamin D, calcium, or iron.” While the labeling issues raised by the FDA have been corrected, we continued to experience FDA holds and future holds and requested changes could cause delays within our supply chain resulting in potential back orders, which could reduce associate and customer confidence and have a negative impact on our sales.

Between October 2022 and September 2024, the Company's Ambrotose Life ® and and Ambrotose ® Complex products and its manufacturer Natural Aloe de Costa Rica (“NACR”) were placed on two separate import alerts requiring the goods to be detained without physical examination (“Import Alert(s)”).

The first Import Alert for Ambrotose Life powder asserted that formatting issues on the supplement facts panel.

The formatting issues, which were immediately corrected, centered on stating “O g” or “0%” instead of “< 1g” or less than “< 1%” for sugar and sodium, respectively.

We were also asked to remove the statement, “Not a significant source of saturated fat, trans fat, cholesterol, protein, vitamin D, calcium, or iron.” The FDA’s second Import Alert asserted there was an improper claim for Ambrotose Complex powder on our website.

While we reasoned that we held the requisite substantiation for that claim, the Company opted to remove the claim from its website to expedite release of the product.

While both the labeling issues and the claim issue raised by the FDA were promptly addressed, we continued to experience FDA holds due to the Import Alerts.

The FDA released the Company’s Ambrotose Life product and NACR from the first Import Alert on February 6, 2024.

The FDA released the Company’s Ambrotose Complex product and NACR from the second Import Alert on September 23, 2024.

Future holds and requested changes by the FDA could cause delays within our supply chain resulting in potential back orders, which could reduce associate and customer confidence and have a negative impact on our sales.

In some foreign countries, nutritional products are considered foods, while other countries consider them drugs.

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The suspension of issuing direct selling licenses continues.

The Chinese government has not re-opened the application review process for direct selling licenses and has not indicated when or if it plans to do so.

The Chinese government's scrutiny of the direct selling industry remains high following the 2019 review.

Many direct selling companies operating in China are still experiencing negative effects to their business operations including limited sales meetings, media scrutiny, and unfavorable consumer sentiment towards direct selling companies.

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The price of our common stock in the open market could fluctuate based on factors that have little or nothing to do with us or that are outside of our control.

For example, general economic conditions, such as the COVID-19 pandemic, recession or interest rate or currency rate fluctuations in the United States or abroad, could negatively affect the market price of our common stock in the future.

For example, general economic conditions, recession or interest rate or currency rate fluctuations in the United States or abroad, could negatively affect the market price of our common stock in the future.

Certain shareholders, directors, and officers own a significant amount of our stock, which could allow them to influence corporate transactions and other matters.

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In addition, the Texas Business Organization Code restricts, subject to exceptions, business combinations with any “affiliated shareholder.” Any or all of these provisions could delay, deter or help prevent a takeover of our Company and could limit the price investors are willing to pay for our common stock.

Our failure to comply with The Nasdaq Global Select Market continued listing standards may adversely affect the price and liquidity of our shares of common stock as well as our ability to raise capital in the future.

Our common stock is currently listed on The Nasdaq Global Select Market.

Our failure to comply with The Nasdaq Capital Market continued listing standards may adversely affect the price and liquidity of our shares of common stock as well as our ability to raise capital in the future.

Prior to September 30, 2024, the Company’s common stock was traded on The Nasdaq Global Select Market.

As previously disclosed, on August 19, 2024, the Company received a notice from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) indicating that the Company was not in compliance with the minimum net equity requirement of $10.0 million under the Nasdaq Listing Rules for The Global Select Market tier.

The Company opted to apply to Nasdaq to transfer the listing of its common stock to the Nasdaq Capital Market tier under Listing Rule 5810(c)(3)(A).

As previously reported on our Current Report on Form 8-K filed on September 27, 2024, Nasdaq approved the Company’s application on September 26, 2024.

The Company’s common stock began trading on The Nasdaq Capital Market on September 30, 2024.

The Company's common stock continues to trade under the symbol "MTEX." The Nasdaq Capital Market is a continuous trading market that operates in substantially the same manner as The Nasdaq Global Market.

All companies listed on The Nasdaq Capital Market must meet certain financial requirements and adhere to Nasdaq’s corporate governance standards.

Continued listing of a security on Nasdaq is conditioned upon compliance with various continued listing standards.

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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 1A. Risk Factors