Financial Analysis

NOTE 13: COMMITMENTS AND CONTINGENCIES Royalty and Consulting Agreements The Company utilizes royalty agreements with individuals and entities to provide compensation for items relating to developed products, websites and emails provided to our associates. The Company paid royalties of less than $0.1 million for each of the years ended December 31, 2025 and 2024 . Employment Agreements The Company has non-cancelable employment agreements with certain executives. If the employment relationships with these executives were terminated, as of December 31, 2025 , the Company would continue to be indebted to the executives for $0.5 million, payable through 2026. On March 13, 2024, the Company announced the retirement of Alfredo (Al) Bala as the Companys Chief Executive Officer effective April 1, 2024 and the engagement of Mr. Bala as an advisor to the Company effective April 1, 2024. At December 31, 2025 , the remaining balance of his severance was $0.1 million, payable over the next five months. …

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NOTE 11: NOTES PAYABLE Notes payable were $2.8 million and $3.0 million as of December 31, 2025 and December 31, 2024 , respectively. The current portion was $0.0 million and $0.1 million at December 31, 2025 and 2024 , respectively, as a result of insurance financing arrangements. The long-term portion of notes payable relates to three unsecured notes, described below. The long-term portion of notes payable was $2.8 million and $2.9 million December 31, 2025 and 2024 , respectively. On April 23, 2024, the Company issued an unsecured note payable to Jade Capital in the amount of $2.5 million. The note bears interest at 16% per annum and requires quarterly interest payments beginning June 30, 2024. The Company has the right to prepay all or a portion of the Promissory Note at any time without premium or penalty. Tyler Rameson is an independent member of Mannatech's Board of Directors, and is the managing member of Jade Capital. As of December 31, 2025 , there was no current portion, and the long-term portion of the balance was $1.9 million. On September 9, 2025, the Company entered into a loan extension agreement with Jade Capital, extending the maturity date of the note from September 30, 2026, to March 31, 2027. Subsequently, on March 11, 2026, the Company and Mr. Rameson extended the maturity date of the note to September 30, 2027. All other terms of the note remained unchanged. On April 23, 2024, the Company issued an unsecured note payable to J. Stanley Fredrick in the am …

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NOTE 12: STOCK BASED COMPENSATION Stock Option Plan The Company currently has one active stock-based compensation plan, the 2017 Plan, which was adopted by the Companys Board of Directors on April 17, 2017 and was approved by its shareholders on June 8, 2017, and subsequently amended by the Board in February 2019, which was approved by the Company's shareholders on June 11, 2019. The Board has reserved a maximum of 370,000 shares of our common stock that may be issued under the 2017 Plan (subject to adjustments for stock splits, stock dividends or other changes in corporate capitalization). As of December 31, 2025 , the Company had a total of 49,875 shares available for grant under the 2017 Plan, which expires on April 16, 2027. The 2017 Plan provides for grants of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock and performance stock units to our employees, board members, and consultants. However, only employees of the Company and its corporate subsidiaries are eligible to receive incentive stock options. The exercise price per share for all stock options will be no less than the market value of a share of common stock on the date of grant. Any incentive stock option granted to an employee owning more than 10% of our common stock will have an exercise price of no less than 110% of our common stocks market value on the grant date. The majority of stock options vest over two or three yea …

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NOTE 3: FAIR VALUE The Company utilizes fair value measurements to record fair value adjustments to certain financial assets and to determine fair value disclosures. Fair Value Measurements and Disclosure (Topic 820 ) of the FASB establishes a fair value hierarchy that requires the use of observable market data, when available, and prioritizes the inputs to valuation techniques used to measure fair value in the following categories: Level 1Quoted unadjusted prices for identical instruments in active markets. Level 2Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all observable inputs and significant value drivers are observable in active markets. Level 3Model derived valuations in which one or more significant inputs or significant value drivers are unobservable, including assumptions developed by the Company. The primary objective of the Companys investment activities is to preserve principal while maximizing yields without significantly increasing risk. The investment instruments held by the Company are money market funds and interest bearing deposits for which quoted market prices are readily available. The Company considers these highly liquid investments to be cash equivalents. These investments are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. The Company does not …

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NOTE 8: INCOME TAXES The components of the Companys (loss) income before income taxes are attributable to the following jurisdictions for the years ended December 31 (in thousands) : 2025 2024 United States $ (5,315 ) $ 1 Foreign 2,426 3,739 (Loss) income before income taxes $ (2,889 ) $ 3,740 The components of the Companys income tax provision (benefit) for the years ended December 31 (in thousands) : Current provision: 2025 2024 Federal $ 170 $ 158 State 14 11 Foreign 620 1,240 804 1,409 Deferred provision (benefit): Federal State 79 (47 ) Foreign 11,441 (112 ) 11,520 (159 ) $ 12,324 $ 1,250 For the years ended December 31, 2025 and 2024 , the Companys effective tax rate was 426.6% and 33.4%, respectively. The Company's effective tax rate for the years ended December 31, 2025 and 2024 , differed from the statutory rate due to a mix of earnings across jurisdictions and the associated valuation allowance recorded on losses in certain jurisdictions. The 2025 effective tax rate of 426.6% was primarily driven by losses for which a full valuation allowance was recorded, combined with taxable income in foreign jurisdictions, resulting in tax expense despite consolidated pre-tax losses. A reconciliation of the Companys United States federal statutory income tax rate and effective income tax rate is summarized as follows, for the year ended December 31, 2025 (dollars in thousands) : 2025 Federal statutory income taxes 21.0 % $ (607 ) State and Local income taxes, net of federal bene …

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NOTE 14: LITIGATION Litigation in General As of December 31, 2025 , the Company had no open or pending litigation and no legal reserve was deemed necessary at December 31, 2025 . The Company has incurred several claims in the normal course of business. The Company believes such claims can be resolved without any material adverse effect on its consolidated financial position, results of operations, or cash flows. The Company maintains certain liability insurance; however, certain costs of defending lawsuits are not covered by or only partially covered by its insurance policies, including claims that are below insurance deductibles. Additionally, insurance carriers could refuse to cover certain claims, in whole or in part. The Company accrues costs to defend itself from litigation as they are incurred.

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"Recently Adopted Accounting Pronouncements Income Tax Reporting (ASU 2023 - 09 ) Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures (ASU 2023 - 09 ). In December 2023, the FASB issued accounting guidance to expand the annual disclosure requirements for income taxes, primarily related to the rate reconciliation and income taxes paid, including disaggregated information about federal, state, and foreign income taxes. The Company adopted ASU 2023 - 09, on a prospective basis, effective for our fiscal year beginning January 1, 2025. The adoption did not have an impact on the Company's consolidated financial statements but resulted in enhanced income tax disclosures within the notes to the consolidated financial statements. Accounting Pronouncements Issued But Not Yet Effective Income Statement Expenses (ASU 2024 - 03 ) Income Statement (Subtopic 220 - 40 ) - Reporting Comprehensive Income - Expense Disaggregation Disclosures. In November 2024, the FASB issued accounting guidance which is intended to improve expense disclosures, primarily by requiring disclosure of disaggregated information about certain income statement expense line items on an annual and interim basis. The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU 2024 - 03 becomes effective for annual r …

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NOTE 10: EMPLOYEE BENEFIT PLANS Employee Retirement Plan Effective May 9, 1997, the Company adopted a Defined Contribution 401 (k) and Profit Sharing Plan (the 401 (k) Plan) for its United States and Canada employees. The 401 (k) Plan covers all regular full-time and part-time employees who have completed three months of service and attained the age of twenty -one. United States employees can contribute up to 100 percent of their annual compensation but are limited to the maximum annual dollar amount allowable under the Internal Revenue Code. The 401 (k) Plan permits matching and discretionary employer contributions. The Companys matching contributions for its United States and Canada employees vest ratably over a five -year period. During each of the years ended December 31, 2025 and 2024 , the Company contributed approximately $0.2 million to the 401 (k) Plan for matching contributions. The Company also sponsors a non-U.S. defined benefit plan covering its employees in its Japan subsidiary (the Benefit Plan). Benefits under the Benefit Plan are based on a point system for position grade and years of service. The Company utilizes actuarial methods. Inherent in the application of these actuarial methods are key assumptions, including, but not limited to, discount rates and expected long-term rates of return on plan assets. Changes in the related Benefit Plan costs may occur in the future due to changes in the underlying assumptions, changes in the number and composition of pl …

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NOTE 9: TRANSACTIONS WITH RELATED PARTIES AND AFFILIATES In 2024, the Company issued unsecured notes payable with an aggregate amount of $3.6 million to certain members of the Company's Board of Directors. See Note 11, NOTES PAYABLE, for more information The Company made cash donations of $0.4 million to the M5M Foundation for each of the years ended December 31, 2025 and 2024 . The M5M Foundation is a 501 (c)( 3 ) charitable organization that works to combat the epidemic of childhood malnutrition on a global scale. Several of the Companys directors and officers and their family members serve on the board of the M5M Foundation, including: Landen Fredrick, the Company's Chief Executive Officer and son of J. Stanley Fredrick, the Companys Chairman of the Board and a major shareholder. Lorrie Jobe, daughter of Larry Jobe, a Director and Chair of the Audit Committee of the Board of Directors. We paid employment compensation of approximately $358,000 and $330,000 for the years ended December 31, 2025 and 2024 , respectively, for salary, bonus, and other compensation to Landen Fredrick. Mr. Fredrick also participated in the employee health care benefit plans available to all employees of the Company. Landen Fredrick also serves as Chairman of the Board of the M5M Foundation. Mr. Kevin Robbins is a member of the Company's Board of Directors, serving as the Chair of the Science and Marketing Committee, and is also an independent associate, holding a position in the Company's associat …

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NOTE 17: SEGMENT INFORMATION We operate as a direct seller in the nutritional supplement industry. The Company's sole reporting segment is one in which we sell proprietary nutritional supplements, skin care and anti-aging products, and weight-management and fitness products operating in twenty-five markets. We primarily sell our products through a network marketing distribution channel of active associates and preferred customer positions who we refer to as current associates and preferred customers. Each of our subsidiaries sells similar products and exhibits similar economic characteristics, such as selling prices, paying commissions and incentives, gross margins and operating characteristics. The Chief Operating Decision Maker (CODM) is the Companys Chief Executive Officer. The CODM regularly reviews consolidated financial information and performance used to make decisions about the Company as a whole and without distinguishing or grouping of operations based on asset type, revenue, geographic location, tenant or other factors. Accordingly, for disclosure purposes, the Company has a single reportable segment, which is reported on the Companys consolidated financial statements. The CODM evaluates performance and allocates resources based on net income as reported in the consolidated statements of operations. Total expenditures for long-lived assets are reported on the consolidated statements of cash flows. Measure of total assets is consistent with total assets reported on …

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NOTE 15: SHAREHOLDERS EQUITY Preferred Stock On May 19, 1998, the Company amended its Amended and Restated Articles of Incorporation to reduce the number of authorized shares of common stock from 100.0 million to 99.0 million and the Company authorized 1.0 million shares of preferred stock with a par value of $0.01 per share. No shares of preferred stock have ever been issued or outstanding. Treasury Stock On June 30, 2004, the Companys Board of Directors authorized the Company to repurchase, in the open market, the lesser of (i) 131,756 shares of its common stock and (ii) $1.3 million of its shares, (the June 2004 Plan). On August 28, 2006, the Company's Board of Directors authorized a second program permitting the Company to purchase, in the open market, up to $20 million of its outstanding shares (the August 2006 Plan). Under the June 2004 Plan and the August 2006 Plan, shares of Common Stock may be repurchased from time to time through open market transactions in compliance with applicable securities laws. The timing, manner, price and amount of any repurchases, as well as the capital resources to fund the repurchases, are determined by the Company, in its discretion, and depends on a variety of factors, including legal requirements, price and economic and market conditions. During the years ended December 31, 2025 and 2024 , there were no shares repurchased. As of December 31, 2025 , there was $12.6 million remaining for repurchase under the August 2006 Plan, and the tot …

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NOTE 18: SUBSEQUENT EVENTS Notes Payable Subsequent to the year ended December 31, 2025, on March 11, 2026, the Company extended the maturity date of each of the notes payable to Jade Capital, J. Stanley Fredrick, and Kevin Robbins from March 31, 2027, to September 30, 2027. Compensation of Directors Subsequent to the year ended December 31, 2025, on March 10, 2026, the Board approved changes to director compensation to be effective on 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. By or before March 13, 2026, the Company received final elections from all members of the Board of Directors regarding their choice to receive stock in lieu of cash for director retainers and related fees. Directors Jack Seifrick and Kevin Robbins elected to continue receiving all director compensation in cash with no changes to their current payout arrangements. Chairman Stan Fredrick elected to receive his $80,000 director retainer, in lieu of his chairman fee, in the form of Company stock to be granted at the end of each quarter. Directors Larry Jobe, Tyler Rameson, and Bob Toth each elected to receive their director retainers and fees in stock rather than cash, with grants to be issued at the end of each quarter. In addition, advisory director Eric Schrier elected to receive a quarterly stock grant in lieu of his monthly advisory director fee. The Company ex …

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