What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2026-04-15 compared with 2025-03-26 · 307 added, 1 removed, 8 unchanged (97% of the section changed)

3 unchanged sentences

Our common stock is currently trading on Nasdaq under the symbol “MTEX.”

As of March 18, 2025, there were 1,031 s hareholders of record.

As of April 8, 2026, there were 984 shareholders of record.

The declaration and payment of future dividends will be at the discretion of the board of directors and will depend, among other things, on future earnings, general financial condition and liquidity, success in business activities, capital requirements and general business conditions in addition to legal requirements.

2 unchanged sentences

Issuer Purchases of Equity Securities .

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is intended to assist in the understanding of our consolidated financial position and our results of operations for each of years ended December 31, 2025 and 2024.

This discussion should be read in conjunction with “Item 15.1 – Consolidated Financial Statements” beginning on page F-1 of this report and with other financial information included elsewhere in this report.

Unless stated otherwise, all financial information presented below, throughout this report, and in the consolidated financial statements and related notes includes Mannatech and all of our subsidiaries on a consolidated basis.

Refer to the Non-GAAP Financial Measure section herein for a description of how Constant dollar (“Constant dollar”) growth rate (a Non-GAAP financial metric) is determined.

COMPANY OVERVIEW

Mannatech 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, skin care and anti-aging products, and weight-management products that target optimal health and wellness.

We currently sell our products in three regions:

(i) the Americas (the United States, Canada and Mexico);

(ii) Europe/the Middle East/Africa (“EMEA”) (Austria, the Czech Republic, Denmark, Estonia, Finland, Germany, the Republic of Ireland, Namibia, the Netherlands, Norway, South Africa, Spain, Sweden and the United Kingdom);

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

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

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

During 2025, the Company liquidated its entity in Denmark, Mannatech Denmark ApS.

We conduct our business as a single operating segment and primarily sell our products through a network of approximately 114,000 active associates and preferred customer positions held by individuals that purchased our products and/or paid associate fees during the last twelve months, who we refer to as current associates and preferred customers .

New associate fees in connection with new positions in our network are leading indicators for the long-term success of our business.

New associate or preferred customer positions are created in our network when our associate fees are paid and/or products are purchased for the first time under a new account.

We review and analyze net sales by geographical location and by products on a consolidated basis.

Each of our subsidiaries sells similar products and exhibits similar economic characteristics, such as selling prices and gross margins.

Because we sell our products principally through network marketing distribution channels, the opportunities and challenges that affect us most are:

recruitment of new and retention of current associates and preferred customers that occupy sales or purchasing positions in our network;

entry into new markets and growth of existing markets;

niche market development;

new product introduction;

and investment in our infrastructure.

Our subsidiary in China, Meitai, is currently operating as a traditional retailer under a cross-border e-commerce model.

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

Current Economic Conditions and Recent Developments

Consolidated net sales for the year ended December 31, 2025 was $108.0 million, as compared to $117.9 million for the year ended December 31, 2024.

Net sales decreased $9.9 million, or 8.3%, for 2025, as compared to 2024.

Our 2025 net sales declined $8.0 million, or 6.8%, on a Constant dollar basis (see Non-GAAP Financial Measures, below), and unfavorable foreign exchange caused a $1.9 million decrease in GAAP net sales as compared to 2024.

We incurred an operating loss of $0.4 million for the year ended December 31, 2025, as compared to operating income of $1.4 million for the same period last year.

Our 2025 operating income, on a Constant dollar basis (see Non-GAAP Financial Measures, below), was $0.1 million.

Our 2024 operating income, on a Constant dollar basis (see Non-GAAP Financial Measures, below), was $2.2 million.

Net loss was $15.2 million, or $8.00 per diluted share, for the year ended December 31, 2025, as compared to net income of $2.5 million, or $1.32 per diluted share for the year ended December 31, 2024.

Deferred Tax Asset (DTA) and Deferred Tax Liability (DTL) Recent Developments

The reported net loss for the year ended December 31, 2025, was significantly impacted by non-cash income tax charges totaling approximately $12.3 million, of which $11.5 million relates to deferred income tax expense.

These charges are balance sheet adjustments and do not reflect operating cash outflows.

Long-Term Deferred Tax Assets — $1.7 Million

During the fourth quarter of 2025, the Company recorded an incremental allowance against a portion of its long-term deferred tax assets (DTA).

The total amount of the incremental allowance recorded of approximately $1.7 million was charged to income tax expense.

The incremental allowance was driven by a change in expected earnings mix across jurisdictions and decreased domestic earnings, which created significant uncertainty regarding the future realization of these deferred tax benefits.

As of December 31, 2025, gross deferred tax assets were $11.1 million, against which the Company maintained a valuation allowance of $9.7 million, resulting in net deferred tax assets of $1.4 million, compared to a net deferred tax asset of $3.2 million as of December 31, 2024.

The Company's effective tax rate for the year ended December 31, 2025, was 426.6%, compared to 33.4% for the same period in 2024.

The significant change in effective tax rate was primarily attributable to the valuation allowance recorded on deferred tax assets, driven by changes in the expected earnings mix between domestic and foreign jurisdictions and the relative impact of these items on decreased earnings and recognition of deferred tax liability on unremitted foreign earnings.

Recognition of Deferred Tax Liability on Unremitted Foreign Earnings — $9.7 Million (ASC 740-30)

The most significant non-cash tax charge for the year ended December 31, 2025, relates to the recognition of a deferred tax liability (DTL) of approximately $9.7 million under ASC 740-30, associated with the estimated tax cost of unremitted earnings of certain foreign subsidiaries.

The DTL computation was performed across multiple foreign jurisdictions — including Japan, Republic of Korea, Denmark, Sweden, Ukraine, and Hong Kong — applying applicable blended tax rates and withholding rates to accumulated unremitted retained earnings.

The combined DTA allowance adjustment and DTL recorded resulted in an additional $11.5 million charge to deferred tax expense, bringing the total net deferred tax position from a net deferred tax asset of $1.8 million at December 31, 2024, to a net deferred tax liability of $9.7 million at December 31, 2025.

Management notes that the DTL recorded as of December 31,2025, reflects the Company's current assessment of the provision under ASC 740-30 with respect to undistributed earnings of foreign subsidiaries and does not represent a current cash tax obligation.

The Company continues to evaluate available planning strategies and structural options to mitigate the long-term impact of its tax structure, including those related to intercompany balances and applicable tax treaties across its international subsidiary network.

RESULTS OF OPERATIONS

Year Ended December 31, 2025 compared to Year Ended December 31, 2024

The tables below summarize our consolidated operating results in dollars and as a percentage of net sales for the years ended December 31, 2025 and 2024 (in thousands, except percentages) .

Cost of sales

Operating expenses:

Commissions and incentives

Selling and administrative expenses

Total operating expenses

(Loss) income from operations

Interest expense, net

Other (expense) income, net

(Loss) income before income taxes

Income tax expense

Net (loss) income

Non-GAAP Financial Measures

To supplement our financial results presented in accordance with generally accepted accounting principles in the United States ("GAAP"), the table below summarizes operating results that have been adjusted to exclude the impact of changes due to the translation of foreign currencies into U.S.

dollars, including changes in:

Net Sales, Gross Profit, and (Loss) Income from Operations.

We refer to these adjusted financial measures as Constant dollar items, which are Non-GAAP financial measures.

We believe these measures provide investors an additional perspective on trends and our operating results.

To exclude the impact of changes due to the translation of foreign currencies into U.S.

dollars in the current year, we calculate current year results at a constant exchange rate utilizing the prior year’s rate.

Currency impact is determined as the difference between the actual GAAP results and the recalculated results for the current year at the constant dollar rates.

At December 31, 2025, our net sales declined $8.0 million, or 6.8% on a Constant dollar basis (see reconciliation of Non-GAAP Financial Measures in the table below);

unfavorable foreign exchange caused a $1.9 million decrease in GAAP net sales as compared to the same period in 2024.

A reconciliation of non-GAAP financial measures to GAAP results for the year ended December 31, 2025 and 2024 is presented as follows (in millions, except percentages):

Constant Dollar Change

(Loss) income from operations

Net Sales by Region

For the year ended December 31, 2025, our operations outside of the Americas accounted for 69.9% of our consolidated net sales, as compared to 66.3% in 2024.

Consolidated net sales by region for the years ended December 31, 2025 and 2024 were as follows (in millions, except percentages) :

Consolidated domestic and foreign net sales for the years ended December 31, 2025 and 2024 were as follows (in millions, except percentages) :

Sales for the Americas decreased by $7.2 million, or 18.1%, to $32.5 million for 2025 as compared to $39.7 million for the same period in 2024.

This decrease was primarily due to a 12.9% decline in the number of active independent associates and preferred customers and a 4.0% decrease in revenue per active independent associate and preferred customer.

Sales in the Americas includes the Mexico region.

As a result of the weakening of the Mexican Peso in 2025, foreign currency exchange had the effect of decreasing revenue by $0.3 million for the year ended December 31, 2025, as compared to the same period in 2024.

During 2025, Asia/Pacific sales decreased by $2.6 million, or 3.8%, to $66.4 million as compared to $69.0 million for 2024.

Foreign currency exchange had the effect of decreasing revenue in 2025 by $1.8 million, as compared to the same period in 2024.

The currency impact is primarily due to the weakening of the Korean Won.

In addition, net sales in the Asia/Pacific region was negatively impacted by a 13.9% decrease in the number of active independent associates and preferred customers, which was partially offset by a 17.0% increase in revenue per active independent associate and preferred customer.

For the year ended December 31, 2025, EMEA sales decreased by $0.1 million, or 1.1%, to $9.1 million as compared to $9.2 million for 2024.

This decrease was primarily due to a 3.8% decrease in the number of active independent associates and preferred customers, which was partially offset by a 0.4% increase in revenue per active independent associate and preferred customer.

Foreign currency exchange had the effect of increasing revenue by $0.2 million for the year ended December 31, 2025, as compared to the same period in 2024.

The currency impact is primarily due to the strengthening of the South African Rand.

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

Constant Dollar Change

Product sales

Associate fees

Product Sales

Our product sales consist primarily of sales made to our independent associates and preferred customers at published wholesale prices.

Product sales for the year ended December 31, 2025 decreased by $9.9 million, or 8.5%, to $106.0 million, as compared to $115.9 million for the same period in 2024.

On a constant dollar basis, product sales in 2025 decreased $1.9 million, or 1.8%, as compared to 2024.

The decrease in product sales in 2025 reflects a 3.8% decrease in the number of orders processed and a decrease in the average order value of $166.0, as compared to $172.0 for the same period in 2024.

We attribute the lower number of orders processed in 2025 to the loss of continuing independent associates and preferred customers as compared to the recruitment of new independent associates and preferred customers.

As a group, continuing independent associates and preferred customers place more orders than new recruits.

Therefore, the decline in continuing independent associates and preferred customers had a larger impact on the number of orders we received in 2025.

The approximate number of active new and continuing active associates and preferred customers who purchased our products and/or paid associate fees during the years ended December 31 was as follows:

Associate Fees

The Company collects associate fees in certain markets.

Associate fees are paid annually by new and continuing associates to the Company, which entitle them to earn commissions and incentives for that year.

The Company collected associate fees within the United States, Canada, South Africa, Japan, Australia, New Zealand, Singapore, Hong Kong, Taiwan, Austria, the Czech Republic, Denmark, Estonia, Finland, Germany, the Republic of Ireland, the Netherlands, Norway, Spain, Sweden and the United Kingdom.

In the Republic of Korea and Mexico, packs may still be purchased by our associates who wish to build a Mannatech business, but associate fees are not sold as a standalone item.

These packs contain products that are discounted from both the published retail and associate prices.

There are several pack options available to our associates.

In certain of these markets, pack sales are completed during the final stages of the registration process, entitling the Associates to earn commissions and incentives for that year.

These packs can provide new associates with valuable training and promotional materials, as well as products for resale to retail customers, demonstration purposes, and personal consumption.

Business-building associates in these markets can also purchase an upgrade pack, which provides the associate with additional promotional materials.

Associate fees for the year ended December 31, 2025 decreased by $0.1 million, or 20.0%, to $0.4 million, as compared to $0.5 million for the same period in 2024.

We also do not collect associate fees or sell packs in our non-direct selling business in mainland China.

Other sales consisted of:

(i) sales of promotional materials;

(ii) monthly fees collected for the Success Tracker™ and Mannatech+ customized electronic business-building and educational materials, databases and applications;

and (iii) training and event registration fees.

Promotional materials, training, database applications and business management tools are utilized to support our independent associates, which in turn helps stimulate product sales.

For the years ended December 31, 2025 and 2024, other sales were $1.6 million and $1.5 million, respectively.

For the year ended December 31, 2025, gross profit decreased by $10.5 million, or 11.5%, to $81.0 million, as compared to $91.5 million for the same period in 2024.

The decrease in gross profit in dollar terms is principally due to the decline in sales.

Gross profit as a percentage of net sales decreased to 74.9% for 2025, as compared to 77.6% for 2024, largely due to increased costs related to supply chain challenges, including increased product costs and increased freight costs.

Commission and Incentives

Commission expenses decreased $5.6 million, or 12.1%, to $40.6 million, for the year ended December 31, 2025, as compared to $46.2 million for the same period in 2024.

Commissions are earned on sales.

Commission expense in dollar terms decreased in 2025 primarily due to a decline in our sales in the year.

Commissions as a percentage of net sales was 37.6% for the year ended December 31, 2025 and 39.2% for the same period in the prior year.

Incentive costs decreased for the year ended December 31, 2025 by 47.6%, or $1.0 million, to $1.1 million as compared to $2.1 million for the same period in 2024.

The decrease was related to travel incentives in the Americas and Asia/Pacific.

The costs of incentives, as a percentage of net sales, decreased to 1.1% for the year ended December 31, 2025, as compared to 1.8% for the same period in 2024.

Selling and Administrative Expenses

Selling and administrative expenses include a combination of both fixed and variable expenses.

These expenses consist of compensation and benefits for employees;

temporary and contract labor;

accounting, legal and consulting fees;

compensation to our board of directors;

warehouse and fulfillment costs;

depreciation and amortization;

marketing-related expenses;

travel and entertainment expenses;

credit card processing fees;

costs for software maintenance agreements;

charitable contributions;

office lease expense;

and other miscellaneous operating expenses.

For the years ended December 31, 2025 and 2024, overall selling and administrative expenses were $39.6 million and $41.7 million, respectively.

The decrease of $2.1 million primarily includes a $1.6 million decrease in payroll related costs, a $0.6 million decrease in warehouse costs, a $0.1 million decrease in travel and entertainment costs, a $0.1 million decrease in charitable contributions, a $0.1 million decrease in miscellaneous administrative expenses, which was offset by a $0.4 million increase in marketing costs.

Depreciation and Amortization Expense

At December 31, 2025 and 2024, depreciation and amortization expense was $1.1 million and $1.5 million, respectively.

Other Income (expense), net

Primarily due to foreign exchange losses, other expense was $2.1 million for the year ended December 31, 2025.

At December 31, 2024, other income was $2.6 million, primarily due to foreign exchange gains.

Income Tax (Provision) Benefit

Provision for income taxes include current and deferred income taxes for both our domestic and foreign operations.

Our statutory income tax rates by jurisdiction are as follows, for the years ended December 31:

Republic of Korea

United States (1)

(1) Includes blended state effective rate of 1.2% for 2025 and 2024 in addition to the U.S federal statutory rate of 21%.

Income from our international operations is subject to taxation in the countries in which we operate.

Although we may receive foreign income tax credits that would reduce the total amount of income taxes owed in the United States, we may not be able to fully utilize our foreign income tax credits in the United States.

For the years ended December 31, 2025 and 2024, the Company’s effective tax rate was 426.6% and 33.4%, respectively.

In 2025 and 2024, the Company’s effective tax rate differed from the statutory rate due to the mix of earnings across jurisdictions and the associated valuation allowances recorded on losses in certain jurisdictions, as well as the deferred tax liability recorded for unremitted earnings of certain foreign subsidiaries.

The Company recording a valuation allowance on deferred tax assets was largely driven by changes in earnings mix between jurisdictions, and the relative impact of these items on decreased earnings.

There are variations in the activity of our associates and customers in many of our markets in the first and fourth quarters attributable to events such as Christmas and Lunar New Year.

We have experienced and believe we will continue to experience variations on our quarterly results of operations in response to, among other things:

the timing of the introduction of new products and incentives;

our ability to attract and retain associates and preferred customers;

the timing of our incentives and contests;

the general overall economic outlook;

government regulations;

the perception and acceptance of network marketing;

the consumer perception of our products and overall operations;

cultural events and vacation patterns (for example, most Asian markets celebrate their respective local New Year in the first quarter, which generally has a negative effect on that quarter).

As a result of these and other factors, our quarterly results may vary significantly in the future.

Period-to-period comparisons should not be relied upon as an indication of future performance since we can give no assurances that revenue trends in new markets, as well as in existing markets, will follow our historical patterns.

The market price of our common stock may also be adversely affected by the above factors.

LIQUIDITY, CAPITAL RESOURCES AND GOING CONCERN

Cash and Cash Equivalents

Cash and cash equivalents was $6.2 million at December 31, 2025, as compared to $11.4 million as of December 31, 2024.

The Company is required to restrict cash for (i) direct selling insurance premiums and credit card sales in the Republic of Korea;

(ii) reserve on credit card sales in the United States and Canada;

and (iii) Australia building lease collateral.

The current portion of restricted cash was $0.6 million at each of December 31, 2025 and 2024, respectively.

The long-term portion of restricted cash was $0.2 million and $0.6 million at December 31, 2025 and 2024, respectively.

Fluctuations in currency rates resulted in a decrease of $0.7 million in cash and cash equivalents in 2025.

Our principal use of cash is to pay for operating expenses, including commissions and incentives, capital assets, inventory purchases, and periodic cash dividends.

We have historically funded our business objectives, operations, and expansion of our operations through net cash flows from operations rather than incurring long-term debt.

Working Capital

Working capital represents total current assets less total current liabilities.

At December 31, 2025, our working capital was $1.8 million as compared to $5.2 million at December 31, 2024.

The decrease in working capital principally reflects the decrease in our cash balance, which was utilized to fund our operations in 2025, as well as pay down our current liabilities and fund financing activities.

Net Cash Flows

Our net consolidated cash flows consisted of the following, for the years ended December 31 (in millions) :

Provided by / (used in):

Operating activities

Investing activities

Financing activities

Operating Activities

Cash used in operating activities was $3.0 million for the year ended December 31, 2025, as compared to cash provided of $2.3 million in the prior year.

The primary factors driving the decline in cash flow from operating activities were net loss of $15.2 million compared to net income of $2.5 million and an unrealized foreign currency loss of $1.6 million compared to an unrealized foreign currency gain of $3.3 million for the years ended December 31, 2025 and 2024, respectively.

Investing Activities

For the years ended December 31, 2025 and 2024, we invested approximately $1.4 million and $0.3 million in back-office software projects and equipment, reported as property and equipment, respectively.

Financing Activities

For the year ended December 31, 2025, our financing activities used cash of $0.5 million as compared to cash provided of $2.0 million for the same period of 2024.

During 2025, we used $0.3 million in the repayment of finance lease obligations and $0.2 million in the repayment of notes payable.

For the year ended December 31, 2024, we received $3.6 million from the issuance of notes payable (see Note 11, Notes Payable) and we used $1.6 million in the repayment of finance lease obligations and other long-term liabilities.

Liquidity and Going Concern

In accordance with ASC 205-40, Presentation of Financial Statements — Going Concern , management evaluated whether conditions and events, considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements are issued.

As of December 31, 2025, the Company had cash and cash equivalents of $6.2 million and working capital of $1.8 million, compared to cash and cash equivalents of $11.4 million and working capital of $5.2 million as of December 31, 2024.

Cash and cash equivalents were $7.7 million and working capital was $1.9 million as of December 31, 2023.

Management has considered these historical liquidity levels and trends, including fluctuations in working capital and cash balances, in evaluating the Company’s ability to meet its future obligations.

Management identified the following conditions that raised substantial doubt about the Company’s ability to continue as a going concern:

Decline in net sales, operating losses, and negative cash flows from operations;

Capital expenditure requirements that have historically reduced available liquidity;

An organizational structure that is no longer aligned with the Company’s current operating scale, resulting in inefficiencies and elevated fixed costs

To address these conditions, management has implemented and/or plans to implement the following actions:

Capital Discipline :

The Company has suspended non-essential capital expenditures, and no discretionary capital projects are planned for fiscal year 2026, which is expected to significantly reduce cash outflows.

Cost Reduction Plan :

Management has developed and begun executing a comprehensive cost reduction plan designed to better align the Company’s cost structure with its current operations.

This includes cost reduction of certain functional areas and a reduction in fixed selling, general, and administrative expenses.

Margin Improvement Initiatives :

The Company is implementing targeted price increases and continues to focus on supply chain optimization to improve gross margins.

Compensation and Cost Controls :

The Company has implemented adjustments to compensation structures and other cost control measures to reduce operating expenses and improve cash flow.

Revenue Growth Focus :

Management is prioritizing initiatives aimed at stabilizing and increasing revenue to support improved operating performance and liquidity.

ERP Systems Improvement :

During 2025 we had several issues with one of our order processing systems in North America.

This issue resulted in an estimated loss of over $6.0 million in revenue.

The Company believes this loss in revenue affected its ability to generate operating income for the remainder of the year 2025.

Additional Cost-Cutting measures effective March 31, 2026

Subsequent to December 31, 2025, and prior to the issuance of these financial statements, the Company implemented the following additional measures effective March 31, 2026:

Director compensation — conversion to equity:

On March 10, 2026, the Board of Directors approved changes to director compensation effective April 1, 2026, enabling directors to elect to receive the remaining balance of their 2026 retainer and other fees as stock grants in lieu of cash for the remainder of the calendar year.

The Company received final elections from all Board members by March 13, 2026.

The conversion of Board fees from cash to equity is expected to generate an annual cash preservation benefit of approximately $0.8 million, with approximately $0.6 million expected to be realized during the remainder of fiscal 2026 .

Headcount and personnel cost reductions:

The Company implemented meaningful headcount-related reductions across headquarters personnel, while preserving key capabilities in finance, legal, operations, and revenue support.

These reductions are expected to generate significant cost savings over the next 12 months, with a proportionate benefit anticipated over the remainder of fiscal 2026.

Facilities and overhead actions:

Management is evaluating lease renegotiation and sublease alternatives to reduce facilities expenses.

Management has prepared cash flow projections that incorporate these plans, as well as historical liquidity trends, and reflect its best estimates of future operating performance and liquidity needs.

While management plans to take appropriate actions to increase its liquidity, there can be no assurance that the Company will be successful in its efforts, and there can be no assurance that, assuming the Company is able to strengthen its cash position, it will achieve sufficient revenue or profitable operations to continue as a going concern.

In addition, while the Company continues to closely monitor the results of mitigating these plans, it is evaluating other options for external capital injection.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Long Term Liquidity

During the year ended December 31, 2025, the Company modified its assertion regarding the indefinite reinvestment of certain foreign earnings, as part of its ongoing evaluation of liquidity needs, capital allocation priorities, and operational requirements.

Any resulting deferred tax liabilities recorded in connection with this reassessment represent non-cash charges at the time of recognition and do not have an immediate impact on cash flows from operations.

Cash tax payments associated with such amounts would only be incurred upon the future repatriation of foreign earnings or as the underlying temporary differences reverse.

The Company will continue to evaluate its assertion based on changes in facts and circumstances, and any updates will be reflected in the financial statements in the period in which they occur, in accordance with applicable guidance under ASC 740.

We believe our cash flows from operations should be adequate to fund our normal expected future business operations and possible international expansion costs for the long term.

As our primary source of liquidity has historically been from our cash flows from operations, this will be dependent on our ability to maintain and/or improve revenue as compared to operational expenses.

However, if our existing capital resources or cash flows become insufficient to meet anticipated business plans and existing capital requirements, we may be required to raise additional funds, which may not be available on favorable terms, if at all.

Our future access to the capital markets may be adversely impacted if we fail to maintain compliance with the Nasdaq Marketplace Rules for the continued listing of our stock.

We continuously monitor our compliance with the Nasdaq continued listing rules.

Please see “Quantitative and Qualitative Disclosure about Market Risk” under Item 7A of this Form 10-K for additional information about our Market Risks.

CRITICAL ACCOUNTING ESTIMATES

Our consolidated financial statements are prepared in accordance with GAAP.

The application of GAAP requires us to make estimates and assumptions that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of Mannatech at the date of our financial statements.

We use estimates throughout our financial statements, which are influenced by management’s judgment and uncertainties.

Our estimates are based on historical trends, industry standards, and various other assumptions that we believe are applicable and reasonable under the circumstances at the time the consolidated financial statements are prepared.

Our Audit Committee reviews our critical accounting policies and estimates.

We continually evaluate and review our policies related to the portrayal of our consolidated financial position and consolidated results of operations that require the application of significant judgment by our management.

We also analyze the need for certain estimates, including the need for such items as allowance for credit losses, inventory reserves, tax valuation allowances, revenue recognition, sales returns, deferred revenues, and accounting for stock-based compensation.

Historically, actual results have not materially deviated from our estimates.

However, we caution readers that actual results could differ from our estimates and assumptions applied in the preparation of our consolidated financial statements.

If circumstances change relating to the various assumptions or conditions used in our estimates, we could experience an adverse effect on our financial position, results of operations, and cash flows.

We have identified the following applicable critical estimates as of December 31, 2025:

Inventory Reserves

Inventory consists 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.

We record the amounts charged by the vendors as the costs of inventory.

Typically, the net realizable value of our inventory is higher than the aggregate cost.

Determination of net realizable value can be complex and, therefore, requires a high degree of judgment.

In order for management to make the appropriate determination of net realizable value, the following items are considered:

inventory turnover statistics, current selling prices, consumer demand, regulatory changes, competitive pricing, and performance of similar products.

If we determine the carrying value of inventory is in excess of estimated net realizable value, we write down the value of inventory to the estimated net realizable value.

We also review inventory for obsolescence in a similar manner and any inventory identified as obsolete is reserved or written off.

Our determination of obsolescence is based on assumptions about the demand for our products, product expiration dates, estimated future sales, and general future plans.

We monitor actual sales compared to original projections, and if actual sales are less favorable than those originally projected by us, we record an additional inventory reserve or write-down.

Historically, our estimates have been close to our actual reported amounts.

However, if our estimates regarding inventory obsolescence are inaccurate or consumer demand for our products changes in an unforeseen manner, we may be exposed to additional material losses or gains in excess of our established estimated inventory reserves.

At December 31, 2025 and 2024, our inventory reserves were $0.1 million and $0.6 million, respectively.

Tax Valuation Allowances

We review the estimates and assumptions used in evaluating the probability of realizing the future benefits of our deferred tax assets and record a valuation allowance when we believe that a portion or all of the deferred tax assets may not be realized.

If we are unable to realize the expected future benefits of our deferred tax assets, we are required to provide a valuation allowance.

We use our past history and experience, overall profitability, future management plans, and current economic information to evaluate the amount of valuation allowance to record.

As of December 31, 2025, we maintained a valuation allowance of $9.7 million against our gross deferred tax assets of $11.1 million, as these assets did not meet the “more likely than not” criteria for realization as defined by the recognition and measurement provisions of FASB ASC Topic 740, Income Taxes.

The increase in the valuation allowance during the year ended December 31, 2025, was driven primarily by a change in the expected earnings mix between domestic and foreign jurisdictions and decreased domestic profitability, which resulted in significant uncertainty regarding the future realization of deferred tax assets.

Accordingly, the Company recorded an incremental valuation allowance against a portion of its long-term deferred tax assets, resulting in a non-cash charge of approximately $1.7 million.

Net deferred tax assets decreased to $1.4 million as of December 31, 2025, from $3.2 million as of December 31, 2024.

Transfer Pricing

In many countries, including the U.S., we are subject to transfer pricing and other tax regulations designed to ensure that appropriate levels of income are reported as earned by our U.S.

and foreign entities and are taxed accordingly.

In the normal course of business, we are audited by federal, state and foreign tax authorities, and subject to inquiries from those tax authorities regarding the amount of taxes due.

These inquiries may relate to the timing and amount of deductions and the allocation of income among various tax jurisdictions.

We believe that our tax positions comply with applicable tax law and intend to defend our positions, if necessary.

Our effective tax rate in each financial statement period could be impacted if we prevailed in matters for which reserves have been established or were required to pay amounts more than established reserves.

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 5. Market for Registrant’s Common Equity